UBER ADDS VENMO AS A PAYMENT OPTION: Uber announced a new partnership with PayPal-owned peer-to-peer (P2P) app Venmo, enabling Uber customers to pay for their rides in-app with their Venmo balance, according to CNBC. The partnership also extends to Uber Eats, Uber’s food delivery segment.

This partnership could accelerate PayPal’s goal of monetizing Venmo as volume surges. Venmo processed over $12 billion in volume in Q1 2018, marking 80% annual growth. Venmo is becoming more valuable to PayPal — the segment’s volume comprised 9% of PayPal’s total payment volume (TPV) in the period, up by two percentage points from the prior Q1 — which means monetization will become increasingly important. P2P services are hard to monetize because they aren’t free for the firms that provide them, but they are often free for users, putting providers at a loss. PayPal has been working hard to monetize Venmo, bolstering several initiatives already this year. 

This partnership could complement Venmo’s other monetization initiatives: 

  • Venmo has formed similar partnerships. PayPal has given 2 million retailers in the US, including Foot Locker and Forever 21, the ability to accept Venmo payments, allowing it to earn per-transaction fees from merchants. Notably, earlier this year Venmo partnered with Grubhub, a digital food ordering platform that also owns Seamless and Eat24, to become a payment option on all three platforms. This move enabled customers to pay with their Venmo balances and split bills upon ordering without leaving the app, which could show a similar, service-based use case for the payment method. 
  • And it recently launched another major monetization push. In Venmo’s most recent effort to monetize, it announced the upcoming launch of its physical debit card, which allows users to spend their balances in-store rather than transferring funds to their attached accounts. The card could allow Venmo to collect fees from merchants on a per-transaction basis, essentially giving it an added revenue channel. And the card, which offers ATM access, overdraft protection, and in-app transaction history tracking, could improve Venmo’s competitive positioning — since its rivals like Square Cash and Apple Pay Cash both offer card products — which could boost engagement on top of helping monetization. 

And Uber could be an especially strategic partner for Venmo. More than 6 million Venmo users put “Uber” as the caption for their Venmo transfers in the last year, indicating a shared use case and a clear opportunity for Venmo to capitalize on. Because splitting rides within Uber is already an option, it’s likely that Venmo users opt into that, rather than using Venmo to pay back their share of the ride. However, adding the option to pay for and split rides using their Venmo balances within Uber could cause that 6 million figure to increase, especially since Venmo has such strong brand recognition. And Uber Eats — which is the fastest-growing meal delivery service in the US — could be another good source of volume for Venmo, especially since P2P transactions tend to happen around social payments, like splitting the cost of a meal. Partnering with high-volume companies like Uber will be instrumental in opening more sources of revenue for the firm and accelerating Venmo’s push toward monetization.



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