cashing in

Venmo, beloved millennial app, is finally trying to make some money

Obsession
Future of Finance
Obsession
Future of Finance

Since launching in 2009, Venmo has been great at one thing: letting people easily send money to each other. However, to date, it hasn’t been very good at making any money. Now, with a new feature called Pay With Venmo, the PayPal subsidiary is going to finally try to change that.

The feature will be released tomorrow (Jan. 27), according to people with knowledge of the rollout. Based on publicly available code reviewed by Quartz, Pay With Venmo will be a payment option for people shopping within apps, similar to the PayPal button that online shoppers are familiar with. When a Venmo user is ready to make a purchase in an app, they won’t have to plug in their credit card info, instead they will simply sign in and pay with their Venmo account.

PayPal has previously acknowledged that this is how it intended to monetize Venmo, but never announced a date for officially launching the function. The feature started beta-testing on Dec. 3, according to the code and people familiar with the product. Some of the first partners will be on-demand food app Munchery and sports-ticket app Gametime, sources say.

Sources told Quartz that the feature will eventually be rolled out to PayPal merchants. And Venmo is likely to leverage the relationships of its fellow PayPal subsidiary Braintree, which processes payments for popular apps like Uber, AirBnB, and Stubhub.

Venmo declined to comment, citing a pre-earnings call blackout period. (PayPal reports its fourth-quarter earnings tomorrow.) GameTime declined to comment, and Munchery did not immediately respond to a request for comment.

With PayPal now an independent company after being spun off by eBay in July, there’s more pressure from shareholders to monetize assets like Venmo. Venmo has demonstrated the popularity of peer-to-peer payments—it grew 202% over the past year and processed $2.1 billion in transactions in the third quarter of 2015. But profit margins for money transfer services are extremely thin, and technology is quickly making the act of sending money a commodity.

That hasn’t scared off tech giants like Facebook and Google from the industry, and Apple is reportedly interested as well. Venmo’s edge is its highly engaged and coveted demographic of millennials, who use it to split bills, pay rent, and other tasks.

PayPal CEO Dan Shulman said in its most recent earnings call that Venmo will charge its merchant partners the same cut that PayPal charges.

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