As competition from the bank-powered Zelle mounts, the popular social P2P app Venmo is phasing out support for online payments in favor of its mobile app.
News of the change started circulating among technology blogs Friday afternoon when readers reported getting emails from Venmo, and a policy update makes reference to the change. The policy update suggests Venmo will likely remove other functions from its website, though it's not releasing details at this time.
The Ebay Inc. Venmo application (app) is arranged for a photograph on an Apple Inc. iPhone 5s in Washington, D.C., U.S., on Friday, Aug. 22, 2014. After downloading the Venmo mobile-payment app onto a smartphone, users can connect them to bank and credit-card accounts, and then link up with friends to send and receive money on-the-go. Venmo, based in New York, alone handled $314 million in mobile payments in the first quarter of this year, up 62 percent from the prior quarter. Photographer: Andrew Harrer/Bloomberg
Andrew Harrer/Bloomberg
Venmo, and its corporate parent PayPal, did not return a request for comment Friday afternoon, but told TechCrunch most of the service's payments come via its mobile app. Venmo's website are also reportedly receiving a redirect to Google Play or the App Store for the "pay" and "charge" functions.
Venmo did not make a formal announcement, which comes as Zelle's growth rate puts it on pace to pass Venmo this year in number of mobile phone P2P users, and widen its lead over Square Cash. A release from Fiserv, which is a partner to Zelle, says the bank service is adding more than 100,000 new users daily. Zelle, the former clearXchange, has long enjoyed a lead over Venmo in transaction volume due to Zelle's integration with bank apps.
The PayPal subsidiary also faces a new challenge from Apple Pay P2P and myriad social payment startups, all while it tries to improve its financial performance—Venmo is still not making money, according to the company. This would suggest a strategy to emphasize higher use channels.
Venmo is also making other adjustments as it tries to diversify beyond P2P transfers as the social appeal of P2P transfers becomes less of a novelty. It's trying to attract more e-commerce merchants to compliment PayPal's in-store strategy, and Venmo is also seeking to move beyond its base of younger consumers.
Unexpected changes in spending patterns on the P2P app caused the company to miss internal and analyst targets, resulting in a more cautious shift in its annual guidance and a plummeting stock in afterhours trading.
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