Who Owns Venmo?- Full History

Who Owns Venmo?

Today, let’s know Who Owns Venmo? Venmo is owned by PayPal. Both companies are prominent mobile payment services. Facilitating fund transfers via the mobile app is supported on both Android and iOS. Venmo users have to be US citizens for using the app. Launched in 2009 with the founders aiming at making splitting bills among friends easier, Venmo soon gained popularity among people of all age groups. During the first quarter of 2018, Venmo was responsible for handling the sum of $159 billion in customer transactions.

Venmo was launched as a solution for cashless transactions but that does not mean that it did not attract its fair share of controversies. Venmo’s default design was to publish every transaction made by its users publicly. Even though the published data excluded the amount in each peer-to-peer transaction, the practice was still criticized as a privacy risk. Even though Venmo settled with the FTC in 2018 concerning possible privacy and security violations, the company still attracts attention for the unnecessary exposure of its users to privacy risks.

No matter the controversies, Venmo is still a popular app used by many across the United States. The first acquisition in Venmo’s brief history occurred in 2012 when it was acquired by Braintree for a sum of $26.2 million. The following year, the parent company Braintree was in turn acquired by PayPal. Venmo thus is owned by PayPal, another cashless transaction service.


Iqram Magdon-Ismail and Andrew Kortina, the founders of Venmo, met as roommates at the University of Pennsylvania. They aimed to create a transaction solution that would work well among peers. The creation was also influenced by their friend’s business, a yogurt shop, as they came to realize the traditional sales software and its various drawbacks. Along with these factors, many other coincidental situations emerged that contributed to the innovation of Venmo.

Magdon-Ismail and Kortina attended a jazz show and decided to buy an MP3 of the show. However, the balance could not be settled as on a visit to Kortina’s residence, Magdon-Ismail forgot his wallet. The inability to settle the debt without cash was a major inconvenience in this case as transactions could very well be done over mobile phones. 

The founders found a solution where they enabled transferring money back and forth through mobile phones. Venmo was launched in 2009. Their initial prototype worked to send money to and fro via text message but was soon developed into a smartphone app that made transactions more convenient. 

Acquisition and PayPal 

In the year following its launch, Venmo succeeded in raising seed money amounting to $1.2 million in a financing round. Venmo went ahead to be acquired by Braintree in 2012 for the price of $26.2 million. The company changed owners again when Braintree was acquired by PayPal in December 2013 for the price of $800 million.

Venmo is an app that offers free services to its customers. If the payment between two contacts is made by Venmo balance, the convenience fee is waived. The revenue the company thus generates solely comes from the 3% fee that is applicable to credit cards. Venmo, while in use extensively, prohibited various merchants from accepting Venmo payments which remained so till 2015. After acquisition by PayPal, it was announced in 2016 that Venmo was working with a list of merchants, including Gametime and Munchery, who would be accepting Venmo payments. Another change was that all merchants that accept payments via PayPal could now use Venmo as payment as well.

Venmo’s merchant product prohibited selling products and services in person as of May 2018. However, there were several cases found in New York City that showed mobile phone trends among Chinese food trucks and takeouts where they used their personal Venmo QR codes to accept business payments from customers. This trend was similar to that of other Chinese applications like Alipay and WeChat that were also being used among the same circle of establishments.

Keeping with the changing market, PayPal announced in October 2020 that both Venmo and PayPal could now be used to buy cryptocurrencies like Litecoin, Ethereum, Bitcoin, and Bitcoin Cash. Users could not only purchase but also make use of these cryptocurrencies in international markets. These services were announced to begin in the first half of the following year.

PayPal’s Vision for Venmo

Darrell Esch, the general manager of Venmo and a PayPal veteran, has his sights on making Venmo a true asset to its parent company. He intends to “seize the moment” and make Venmo a source of cash inflow for PayPal. 

Venmo has already gone way past its initial idea for which it was invented. Along with being a way for friends to split the bill after a night of movies and dinner, Venmo now allows for commercial payments and has become a true source of convenience in light of the Covid-19 pandemic. This expansion in the range of payments naturally means more revenue generated under Venmo’s name, as the service can charge the merchants accepting payments while the customers continue to use the service for free. This is exactly how PayPal generates revenue and Esch plans on using business payments as a way of generating more profit. 

PayPal knows the market since it offers the same service and has been on the lookout for ways to expand the business portfolio of Venmo. The parent company is now ready to launch new functions on the app. PayPal expects to lose some of its revenue which came from eBay and plans to equip Venmo to recover that loss. And with a reason as Venmo generated a record revenue during the quarter when the pandemic affected many businesses but facilitated the growth of e-commerce. Venmo has over 60 million users that PayPal plans to take advantage of.

Esch’s vision is to make Venmo more than just an app that supports transactions between friends. Based on the transaction trends and the function of wireless transactions, the manner of making payments allowed Venmo to be transformed into an app that supports both transactions between friends and payments between businesses and customers. Following through with this vision of expanding the range of services, a debit card was released by Venmo for its users in 2018. Since Venmo allows users to connect their social media accounts to find contacts easily, it already has a large user base and does not need to be promoted via marketing strategies. What remains for PayPal to do is to build on the existing functions to make it more accessible in a variety of situations. 

The idea of Venmo offering direct deposits would bring Venmo to the mainstream allowing for PayPal to earn immense profits. The company already allows their users to receive their stimulus payments via Venmo in their Venmo accounts but now intends to make people send their regular paycheck to their Venmo accounts as well. Direct deposit is an alluring area to expand into because the customers who were before just engaging in transactions, paying a small fee for the same (Venmo earned most of its revenue this way), would now be depositing their money with the company. Revenue through direct depositing would be generated when the customers spend their deposited money via purchases through the services provided.

Where Venmo Stands with PayPal

Chief Executive of PayPal, Dan Schulman, is confident that introducing new features such as that of paying bills which allows the user to handle payments of all their services via a single platform would make Venmo even more favored than it already is. He believes that the regular users of Venmo would engage enthusiastically in the new features introduced. 

Schulman is also aware of the new trends that have emerged because of the pandemic that seems to be bringing in business. Whether it is the live stream training courses or online art shows or concerts, the business has found ways to shift and thrive online. Since Venmo is immensely benefited from cashless transactions, Schulman calls it PayPal’s “crown jewel.”

PayPal reported an increase in the revenue of Venmo by 60% in 2020 as compared to that of the previous year. The revenue run rate of Venmo was reported to be $550 million in January 2020. While these figures are promising, PayPal is already generating a revenue of more than $21 billion, leaving the business of Venmo with enough room to grow.

Both the leaders of Venmo and PayPal are aware that Venmo is a platform that could become a source of significant revenue generation for the parent company and are utilizing their resources to harness the potential that Venmo has to owe to its user base of 60 million. By adding new functions and features like business transactions, direct deposits, and cryptocurrencies, Venmo is being made into a platform that attracts users and keeps them attached to the sheer number of services available for their benefit. If Venmo continues on this path of creative innovation, it will soon become a platform that is preferred by all citizens rather than just millennials. 

Who Owns Venmo?- Full History

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