Digital funds: They’re not just for retailers anymore.
With mobile payments on the rise, and predicted to reach $90 billion by the end of 2017, digital funds are increasingly flowing from friend to friend or even employer to employee.
Among the payment apps aimed at this growing market is Venmo, which aspires to make peer-to-peer payments free, speedy and — for millennials who insist on sharing everything they eat, drink and do among their networks — social.
Some businesses, like NYC-based maid service start-up GetMaid, are even using Venmo to pay their employees.
Venmo allows for free transfer of money between individuals by using a bank or debit card. Using a credit card incurs a 3 percent transaction fee.
Consumer-to-consumer dealings are instantaneous — one is notified by text message of funds landing in their Venmo account. According to Andrew Kortina, co-founder of Venmo, in almost all cases, Venmo cash-outs arrive in bank accounts overnight.
The notion of “adding your friends” goes hand-in-hand with Venmo’s social connectivity platform. The app has a newsfeed-like functionality because, as Kortina puts it, “payments are by nature social.”
“If you think about the things you spend money on with your friends, you’re generally paying each other back.
“Getting lunch with colleagues, going to a concert — these are things people naturally talk about after the fact anyway. Nearly all of the things you spend money on are topics of conversation,” explains Kortina.
According to one Brooklyn resident, “I think the best part about Venmo is you don’t need any kind of account info at all. Your friends just join. … When I found out all you have to do is add your friends, I was kind of shocked.” She uses the app to pay her roommate for rent every month.
Parent company Braintree is processing $10B in annualized payment volume, of which Venmo makes up a portion. But right now, there are no plans to monetize the app, says Kortina.
With last week’s announcement of the launch of Lemon Network from mobile-wallet company Lemon, Venmo, Paypal and others are in for more competition in the ever-growing mobile purchasing space.