Venmo's card integration is the next step in 'digital first' payments
Venmo's and PayPal’s strategy towards a varied merchant and end consumer digital payment ecosystem is facilitated through the launch and shows how Venmo is diversifying on the end consumer side.
PayPal has been strategically widening its footprint in the ever-growing market of digital payments, which is forecasted to see a compound annual growth rate of 17.6% until 2025: a $132.5B market by that time, according to Grand View Research.
This move is strategic and most likely valuable from one key perspective. Having almost doubled its overall user base in the last 2 years to +52M users and almost tripled the overall payment volume to over $100B, Venmo's portfolio extension will allow it to increase its share of wallet on its existing user base.
Eighty-three percent of Venmo users are between the ages of 18-34, the young and wealthy building U.S. population. Offering digital solutions that help bridge their payment needs will allow Venmo to grow with its audience who need more diversified payment solutions through different life phases.
Its seamless integration of some of its digital services, like splitting a bill, into the credit card space further amplifies Venmo's simplicity oriented and digital-first product development focus. A seamless O2O integration, also in Venmo's social feed is key, while its simplistic and personalized physical look can be counted as a bonus for its existing users.
If its competitive, personalized loyalty/rewards program creates attraction for Venmo for new, more established and senior audiences is yet to be seen and a challenge in the very competitive U.S. credit card market.
What is most exciting about the move is that PayPal, with Venmo, is continuing to build an end-to-end digital payment ecosystem in the U.S., similar to solutions like Alipay or WeChat pay in China, the world's most mature market in digital payments.
The opportunity for payment innovation in the benefit of the consumer is vast, more so as it helps to create a competitive landscape with other established digital payment solutions, like Apple, pay moving forward. With significant digital payment growth in the future consumers can look forward to continuously seeing new and better solutions as the market matures.