Amazon is letting consumers pay with Venmo on its platform. The eCommerce giant is currently piloting the program for select customers. Amazon will be rolling it out to all U.S. consumers by Black Friday.
More Payment Methods Drive Sales
The partnership between eCommerce giant Amazon and Venmo was first announced in Nov. 2021. Rolling it out during one of the biggest holiday shopping days will give consumers more payment method options. And in turn, bolster revenue for Amazon. A recent article highlighted that Amazon may be hoping to use new payment methods to help drive sales:
Amazon’s move to offer more payment options comes as sluggish sales numbers have pushed the company to put brakes on its warehouse expansion plans. Retailers have also been more skittish about the holiday shopping season, and are offering more discounts to clear out their bloated inventories and lure in inflation-hit consumers.
First-Mover Advantage
According to Jordan Hirschfield, Director of Prepaid at Mercator Advisory Group, the move gives Venmo first-mover advantage on Amazon. This is over competitors like Cash App and Zelle, where Venmo is competing most directly for market share.
Mercator research shows that Cash App and Venmo have similar share, 36% and 35% respectively. Zelle is slightly behind, at 29%, in terms of peer-to-peer (P2P) services that consumers have used. The move may also help Venmo differentiate itself internally in comparison to parent company PayPal. Venmo is acting as a pure consumer focused transactional platform. PayPal is acting as a broader consumer and commercially focused platform.
One key area that Amazon and Venmo need to clearly articulate is the ability of each to prevent fraudulent activity in the purchase cycle, says Hirschfield. Mercator’s recent P2P report highlights the lower satisfaction consumers have with resolving eCommerce customer service issues for P2P transactions at just over 50% of consumers satisfied. Much of this is because there are fewer protections and options for recourse for fraudulent use of P2P accounts. It’s imperative for both sides of the transaction to highlight additional transactional protections and verification beyond the typical Venmo peer-to-peer payment process.