Venmo on track to process $100 billion in 2019
Venmo processed transactions worth $19 billion in the fourth quarter and $62 billion in 2018. PayPal (PYPL) says Venmo is on track to do almost $100 billion worth of transaction volumes in 2019 and generate more than $200 million in revenue. PayPal currently doesn’t break out Venmo’s revenue as a separate item.
Venmo started off as a free peer-to-peer payment service. Recently, PayPal has been adding more capabilities to Venmo that are monetizable. One of the ways PayPal makes money from Venmo is by allowing people to use their balances to pay for purchases from merchants, who in turn pay PayPal a transaction fee. In 2017, Venmo announced that its payment service had achieved acceptance with more than 2.0 million merchants across the United States.
The merchants powering Venmo’s monetization
Some of the big brands powering Venmo’s robust growth are Uber, Hulu, Shopify (SHOP), GrubHub (GRUB), and Tidal, the online music subscription service affiliated with Jay-Z. Uber is the dominant ride-hailing company in the United States, controlling nearly 70% of the market as of the end of 2018, according to estimates by Second Measure. Hulu is one of the top online video services in the United States, with 25 million paying subscribers as of the end of 2018.
Shopify is one of the online marketplace operators that has been taking sellers from Amazon (AMZN). Some 17% of Amazon sellers have listings on Shopify as well, according to data from Feedvisor. GrubHub is one of the leading online food ordering services in the United States. It bought Yelp’s (YELP) Eat24 food delivery service in 2017 to strengthen its competitive position against Caviar, the rival food delivery service run by PayPal competitor Square (SQ).