How Venmo's card keeps the attention on its app

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Despite a reputation for being the go-to P2P app of digital natives, Venmo is once again pushing its market in the opposite direction with the debut of a plastic card.

The card follows a move to prune web-based P2P payments, keeping the Venmo experience focused on mobile devices. Even the card's application page directs users to open the Venmo app to reserve one of the limited-issue Venmo-branded Mastercards.

In addition to making retail payments, the Venmo card can be used to reload Venmo balances via ATMs. Venmo did not immediately return a request for comment, including a query on how the Mastercard impacts Venmo's relationship with Visa, which had a Venmo card in beta. TechCrunch reports the Visa test customers will have the option to migrate to the Mastercard, which is being issued by The Bancorp Bank, but cannot continue to use the Visa-branded Venmo cards.

Venmo mentioned the card's "anywhere you shop" and in-store access prominently in its announcement, suggesting the card is part of the brand's broader push as a retail option. The card will be offered in six colors, giving it a chance to stand out in the user's wallet. This is no small detail; many credit cards — including one offered by PayPal, which owns Venmo — use colored cores to distinguish themselves visually in the tiny space that's still visible when cards are stuffed into a traditional wallet.

Despite the benefits of offering plastic cards, they are not always a good fit for a digital payment brand. The plastic Google Wallet card was meant for the same purpose as the Venmo card — allowing a digital wallet to be used at merchants that don't otherwise accept it — and was phased out in 2016. And Venmo's own plastic card went through a first iteration as a Visa card that featured a bland lump of pizza dough as its design, and drew immediate criticism for that choice of art.

Nevertheless, cards are relatively inexpensive to issue, and can be used to measure consumer appetite for different retail use cases, making it a low-risk move. Square also debuted a card earlier this year.

And PayPal is trying to do more with Venmo. The app is popular with younger consumers, but PayPal also wants to broaden Venmo's attractiveness to older shoppers, and a plastic card could help. PayPal also plans to use Venmo's social tools as a way to appeal to merchants as an in-store option by providing messaging and targeted marketing opportunities. Venmo's large user base and recognizable brand give PayPal reason to be bullish on Venmo's future, but some change is necessary since Venmo's recognition and youth appeal haven't translated to the balance sheet.

That's not the only pressure on Venmo. Its bank-operated rival Zelle is gaining a usage advantage, and Apple is among Venmo's emerging competitors in the peer transfer market.

Venmo reportedly plans to de-emphasize the internet—halting web payments and planning future tweaks. A mix of mobile apps and cards works better than PCs for in-store shopping and payments, and it fits better with Venmo's adoption, which has come more from mobile than the internet.

Venmo is positioning its new plastic card for people who want to patronize cash-only businesses, cafes and boutiques, pairing quick access to an ATM with Venmo's app. Venmo also mentions group payments that are charged to one card and offers transaction tracking and Venmo account loads via ATMs.

Card purchases will appear on the user's Venmo account with the option to split with a group and share on the Venmo feed (the card purchases will default to private). As of June 25, the card is in limited release and Venmo is taking reservations.

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Payment cards Mobile payments P-to-P payments Venmo