Venmo's app succeeded in becoming a ubiquitous way for young people to send money back and forth. It has been less successful at creating a sustainable business.
Dan Schulman, chief executive officer of Venmo parent company PayPal Holdings Inc., said that while it hasn't happened yet, the app will make money someday.
“I have full confidence that we will monetize Venmo,” Schulman said at the Morgan Stanley Technology, Media & Telecom Conference on Tuesday. “We are clearly seeing the network effects of Venmo.”
On the same day, PayPal settled with the U.S. Federal Trade Commission over allegations that Venmo failed to properly disclose that funds transferred by customers to their banks could be frozen or removed by the company. It also misled customers about privacy controls in the app, the agency alleged. The company must release new disclosures and submit to compliance assessments for the next decade.
PayPal acquired Venmo in 2013. The service is popular with millennials, but PayPal has been pushing to expand its appeal and find ways to eke out a profit. Late last year, PayPal announced that the peer-to-peer payments service can be used to make mobile purchases at more than 2 million U.S. retailers. At the time, Chief Operating Officer Bill Ready said Venmo will be much more than a digital wallet used between friends but “also a ubiquitous digital wallet that helps consumers spend wherever and however they want to pay, regardless of device.”
In the last six months, the app added more active users than at any other period in its history, Schulman said at the conference in San Francisco. Venmo handled $10.4 billion in payment volume in the fourth quarter, an increase of 86 percent year-over-year.
But competition for Venmo has been increasing, with more than 30 U.S. banks and credit unions working together on a service called Zelle. Schulman said there's no reason for concern.
“We're seeing no impact from Zelle or any others,” he said. “Banks have had peer-to-peer payments for 10 years.”
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