By Taylor Hall
On a recent weekend, South Loop resident Christina Rojas and a handful of her closest friends flew from Chicago to Las Vegas for a weekend trip.
“Between all the cabs and food and drinks, I think I Venmo’d every ten minutes,” the 25-year-old University of Illinois at Chicago medical student said. “I actually don’t know anyone who doesn’t have Venmo,” Rojas added.
Venmo is a mobile payment app that combines the pay-sharing features of PayPal with the social aspects of Twitter. In the competitive mobile payments industry, it appears to be sweeping the country, one Millennial and smartphone at a time.
“It’s just the most efficient way to pay money,” Rojas said. “When people ask me to write a check, it’s like, checks are obsolete. And nobody carries cash. Venmo is just the easiest.”
Different from mobile wallet platforms like Apple Pay that let you use your phone to pay at partnered retail locations, Venmo allows users to make free person-to-person transfers from their phones, making it easier to split a tab for pizza, brunch or beers without cash.
Venmo payments totaled $1.3 billion for the first three months of 2015, a spokeswoman said, putting it on pace to double its total 2014 volume of $2.4 billion and dominate peer-to-peer mobile payments in the U.S.
“Once it becomes a verb, you know that that’s a real thing. So when you actually use the word like — ‘Oh, I’ll Venmo you,’ It’s embedded in the culture, for sure,” Blake Bakkila, a 20-year-old Northwestern University student, said.
Venmo’s sweet spot is the portion of the U.S. population born between 1980 and the early 2000s, known as Millennials. Roughly 80 percent of them own a smartphone, according to BBVA Research, and they make up more than half of all mobile payments.
According to Forrester Research, mobile peer-to-peer payments in the U.S. will reach $7.3 billion this year and $16.8 billion by 2019.
Venmo distinguishes itself from other mobile payment systems, such as Google Wallet and Square, in ways that appeal especially to young digital natives.
Sign up for a Venmo account and you’re immersed in a feed of your friends’ public transactions, such as “Thanks for drinks!” “Coffee date” or “April rent.” These transactions post to a public user feed and to all the user’s Venmo contacts, much like Twitter.
Last month, Venmo launched emoji autocomplete, which suggests emojis for users as they type payment notes. Users can even donate to charities directly through the app.
“It has become a mini social media platform,” Rojas said. “Obviously I put emojis for everything. But if you can’t figure out the right emoji to use it can be really stressful. There’s definitely pressure to be creative or witty with your Venmos.”
The potential to capture Venmo’s share of the Millennial market attracted the interest of larger tech companies early on.
Braintree, a Chicago-based company that provides tools and platforms for online payments, bought Venmo in 2012 for $26.2 million, just three years after it was founded by University of Pennsylvania roommates in 2009. eBay’s Paypal then bought Braintree in 2013 for $800 million.
PayPal and Braintree executives say that offering Venmo as a free service is part of the company’s overall strategy to boost market share, courtesy of eBay’s deep pockets. It’s unclear whether that strategy will remain in place once PayPal and Venmo split off from eBay later this year.
Venmo has not been without some growing pains. The company faced criticism after hackers successfully drained several user accounts this year, drawing attention to holes in security and data encryption policies.
“Personally I don’t trust it with access to my account,” said Lucy Horns, a 27-year-old Lakeview resident. “Plus I don’t understand the whole social media aspect. My financial transactions are my business. It creeps me out.”
So far, security issues haven’t slowed growth or deterred others from entering the mobile peer-to-peer payments market, including in other countries.
“We have learned that the [Venmo] model works and that there is a huge demand for it. We wish that Venmo was available in Canada,” said Natalie Cartwright, co-founder and COO for the Canadian service Payso, which launched in January.
Companies must clear many regulatory hurdles before they can offer international peer-to-peer remittances.
“Venmo is not coming anytime soon so we are building something similar because we believe that Canadians deserve better. We love the movement towards payments being fun, social and mobile,” she said.
Cartwright said the Payso app is targeting 18-35 year olds, who she said would rather go to the dentist than visit their bank.
At its recent annual developer conference, Google announced an overhaul of its Google Wallet, with plans to reintroduce the app with a focus on peer-to-peer payments.
Apple is expected to announce peer-to-peer enhancements to its Apple Pay program, and Facebook, SnapChat, Uber and MasterCard have all recently entered the field. Popmoney and Square Cash have also made inroads.
But for the time being, Venmo is the mobile peer-to-peer payment king.
“No one’s ever said to me, ‘Oh, can you Google Wallet me for lunch?’” said Alex Letterman, a 19-year-old Northwestern sophomore. “Venmo is the go-to app for making financial transactions.”