What I think is next for Venmo

I’ve blogged about “first screen” applications before, and I thought that I should spend some time blogging about one of my favorite apps to make it to my first screen over the past few months. Venmo started off as a text-message payment system that has involved into a mobile-focused P2P payment application that easily allows friends to pay and receive money. I’ve been using it more and more often since moving to New York, paying for things such as splitting the bill cabs, and rent. Just 5 months after launching, Venmo was purchased by Braintrain for $26.2, which has recently been in the news due to their acquisition by PayPal for a cool $800MM.

The value hypothesis for Venmo is based on a mobile-first approach and the bet is that in the next 5 years, people will be using their phone more than a plastic card for payments. Braintree has been slowly expanding the use cases for Venmo, introducing the ability to pay any merchant that utilizes the Venmo Touch platform as long as you’ve linked a card or bank account previously. I believe that Braintree/PayPal have a lot more in store for Venmo and I thought it could be fun to hypothesize what’s next!

B2C:

Braintree has already begun exploring the B2C mobile market with the implementation of Venmo Touch, which I believe is a first step towards a white labeled mobile payment solution which could be an interesting source of revenue, especially with something so commoditized as payments. Mobile e-commerce has been growing at an exponential rate in the past few years, part of which is due to an increased focused on the smartphone customer experience, but mobile payment solutions have yet to experience to same amount of innovation. Phone purchasing is still marred by jarring transitions to payment landing pages, which often disrupts the seamless experience that many apps seek to create. Through the Venmo Touch platform, Braintree could possibly create a white-labeled solution that completely integrates with an e-commerce application and create a seamless experience from browsing to checkout.

B2B/C2B:

Braintree also recently announced the Venmo Payouts API, which gives merchants the ability to programatically send and receive money. Although the payout payment market is somewhat crowded, including players such as Stripe, Balanced, etc, the specialty that Venmo once again offers is the mobile experience. Nevertheless, the easiest way to make money at scale with a payments solution is simply through volume. The company that can figure out how to gain significant marketshare through recurring payments such as payroll, mortgages, insurance, etc will be the first to disrupt the revenue model of traditional banks. Whether or not Venmo’s uniquely mobile bet will win is still up in the air, but nonetheless it’ll be interesting to see which segments they’ll target outside of the typical technology-inclined start-ups + ecommerce.