Pay Pal has been piloting the ability for Venmo users to transfer funds they have received in a person-to-person transaction (P2P) more quickly into their bank account, through the use of Mastercard Send or Visa Direct, the card networks’ push payment platforms. The pilot is ready to launch to all users. Business Insider commented:
Venmo, the PayPal-owned digital peer-to-peer (P2P) transfer service, is officially launching instant bank transfers following a pilot held last summer. The new service requires a Visa or Mastercard debit card, and will allow users to instantly (within 30 minutes) cash out their Venmo balance for a flat $0.25 fee.
It will be interesting to see, if Pay Pal is willing to share the information, how many Venmo users are willing to pay $.25 to receive funds “within 30 minutes”. Particularly when banks are offing Zelle which transacts instantly between integrated banks for free. This article suspects that the fee is one attempt to try and monetize the popular app:
Venmo needs to monetize while also innovating enough to stay afloat in an increasingly competitive space. Venmo isn’t yet profitable for PayPal, which could prove increasingly problematic as its growth begins to eat into PayPal’s overall volume. And at the same time, the industry is becoming crowded, with a mounting threat from bank-based Zelle, which has access to 86 million users, the entrance of Apple Pay, and the fast growth of Square Cash, which is outpacing Venmo in active user growth.
It’s going to take a lot of quarters to turn Venmo into a profitable product on a standalone basis.
Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group
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