Venmo’s markets pitch: “It’s like your phone and your wallet had a beautiful baby.” The Philadelphia-based startup makes it easy to send money to friends using text messages from your mobile phone and easier still, by using an app designed for your smartphone. Unlike other mobile phone payment apps, such as Google Wallet, Venmo is limiting its service, for now, to peer-to-peer payments.
The Venmo team, comprised of young former college friends from the University of Pennsylvania, is determined to merge the fun aspects of social media with the act of paying your share for a night of beer and burgers. It seems to be catching on with the hip, technically savvy 20-somethings, who wouldn’t dream of leaving the house without their smartphones. Better still, Venmo’s service is now faster than PayPal. A user can cash out a Venmo payment to a bank account and receive the money overnight. PayPal transfers typically take three to five days for the funds to hit your bank account. PayPal had better watch its back.
How Does Venmo Work?
Venmo is still in the beta-testing stage and is operating on an invitation only basis, but invitations are easy to get from existing users. And once you download the app, you can register and use the service. From start to finish, Venmo’s service is easier, cheaper and faster than PayPal’s. You register for a Venmo mobile phone account, link your phone to a credit card and a bank account, download the smartphone app for your iPhone or Android device, and start sending and receiving electronic payments. The Venmo registration process offers instant bank account verification, as opposed to PayPal’s, which takes several days. The service is also free. Venmo doesn’t charge a transaction fee, like PayPal does.
A user can also send a digital payment to a friend without a Venmo account, using their mobile phone number, email or Twitter name. The recipient of the Venmo payment is then notified, and claims the funds by creating an account. Splitting a bar tab, paying your share of rent, utility bills or travel expenses has never been easier.
Venmo’s Social Payments Integrates Social Media
Venmo co-founder Andrew Kortina, told CNN Money during an interview that he designed Venmo to provide “emotional” and “historic” value to users. He envisions Venmo users instantly alerting their friends on Twitter and Facebook, after texting an electronic payment. “The problem we’re solving is one of utility, but it’s also one of social interaction,” said Kortina.
And that’s where Venmo is uniquely different from PayPal and other micro-payment services. Social media platforms, including Facebook, Twitter and Foursquare are not only integrated with the Venmo app, they are an integral part of the experience. Venmo is a social payments service. It’s all about the online social connections that we all have. After sending a pal some electronic dough, while on a fun outing, it makes sense that users would broadcast that fact on social media. That’s what Venmo is banking on, to market its brand and grow its subscriber base.
Venmo’s Gifi App Lets Users Leave Cash for a Friend After Foursquare Check-In
Venmo’s Gifi iPhone app is an expansion of the social component of its peer-to peer payments system. When a friend checks-in using Foursquare, a text message appears announcing a Venmo user sent a cash gift to spend at the particular venue. You can send $5.00 for a cappuccino on you, or $10.00 for a vodka martini. The Gifi app also allows a user to add more fun to the experience by leaving a clue to unlock the Venmo gift. Of course, Gifi also encourages Foursquare check-ins, which is a win-win for both companies
Social Media Sets Venmo Apart
Venmo’s text-based electronic payments service is certainly nothing new. And numerous other mobile payments apps offer more utility with NFC point-of-sale support. But Venmo is trying to change the way friends exchange money in social relationships. And the quirky startup may be on to something. The company also manages to provide quick and easy electronic transfers that make PayPal look a bit long in the tooth. If PayPal wants to stay relevant in this age of online connections and use of social media, it should pay attention to Venmo’s social payments model.