The real secret to Venmo is that it’s not just a payment transaction, it’s really a social experience, says PayPal CEO Dan Schulman. “It really is tying into this desire in the millennial generation to tie into your social network,” noted Schulman. “It’s really a social experience. You do a payment, you tag it, you put an emoji next to it, you share it with your friends, and they see what you’re doing. It’s exploded.”
The Real Secret to Venmo is the Social Experience
Venmo grew at 80 percent year-over-year in terms of its volume process. This year we will process over a $100 billion on the Venmo platform. The real secret to Venmo is that it’s not just a payment transaction. It really is tying into this desire in the millennial generation to tie into your social network. It’s really a social experience. You do a payment, you tag it, you put an emoji next to it, you share it with your friends, and they see what you’re doing. It’s exploded.
We’re adding more and more services to that like enabling you to use Venmo to buy things at merchants, to take money off instantaneously, and to have a debit card associated with your Vemma account. That’s allowing us to also monetize Venmo. We’re really seeing a tremendous turn in our ability to take that business model and turned it into a very profitable one for us over the medium to long term.
We exited last year at an approximately $200 million run rate for Venmo. That’s practically up from nothing twelve months ago. It’s obviously hitting an inflection point in terms of its revenues. But in terms of profitability people shouldn’t expect it to be profitable in the next one to two quarters. My view on Venmo is it’s an incredibly precious asset for us. We ought to keep investing in it, adding more services to it, continue to monetize it, and see the revenue start to scale quite nicely. Eventually, that will lead to profitability, but I wouldn’t predict exactly what quarter we will turn profitable on that.
Peer to Peer Payments Are Exploding
I don’t think it’s unfair at all that the banks partnered to create Zelle. That’s the way of the world that companies are coming together and sharing platforms. We share our platform with other banks and financial institutions as well. P2P or peer-to-peer payments is exploding in the market. It’s a multi-hundred billion dollar marketplace. This will definitely not be a winner-take-all.
The difference between a Venmo and a Zelle is pretty stark. On average a Zelle transaction is $250. The average Venmo transaction is about $50. The average Zelle transaction happens about once a month. Venmo happens four or five times a week. It’s a very different market and I think both will both will grow. We’re seeing all-time record net new actives coming into Venmo. The amount we’re processing is accelerating. I think the two will live side by side and it won’t be a winner-take-all.
This is a $100 Trillion Market
Asia is one of our fastest growing regions in the world. It has been for quite some time. That’s the thing about digital payments. It’s a great industry. It could be you know a $100 trillion market. That’s the total addressable market we’re playing in. We may have one to two percent share of that market today. Every region of the world is one that we can expand in, but every region of the world today, almost equally, is growing at a double-digit pace for us. I’m quite pleased with our progress in Asia but I think we can do so much more there still.
India is one very large opportunity and we’re gaining traction there. We launched domestically in India about a year ago and I’m really pleased with the traction we’re getting. You look at Japan, Indonesia, China, and they’re all great opportunities for us including other markets there.
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