{"id":7085,"date":"2018-03-05T23:45:02","date_gmt":"2018-03-06T04:45:02","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-digit\/submission\/venmo-the-leader-in-peer-to-peer-payments\/"},"modified":"2018-03-05T23:45:02","modified_gmt":"2018-03-06T04:45:02","slug":"venmo-the-leader-in-peer-to-peer-payments","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-digit\/submission\/venmo-the-leader-in-peer-to-peer-payments\/","title":{"rendered":"Venmo: The Leader (?) in Peer to Peer Payments"},"content":{"rendered":"

In 2009, Venmo co-founders Iqram Magdon-Ismali and Andrew Kortina were traveling in New York City, and one co-founder lost his wallet; the pair were forced to deal in cash \/ checks, and the idea for Venmo was born.[1]<\/a> The founders went on to build a company that in under ten years came to process over $18B in transactions per year[2]<\/a>; how did Venmo create such a massive payment processing platform? Three facets of the founders\u2019 approach led to this success: 1) utilizing strong growth in existing networks, 2) leveraging the power of social virality, and 3) a frictionless experience for users.<\/p>\n

Venmo started as an SMS application, but the founders quickly realized the power of mobile through the growth of smartphones, and developed a mobile application. Integration with Facebook made it easy for users to sign up and create accounts; from the get go, Venmo was riding two mega waves \u2013 mobile and social. Additionally, the founders understood that the historical ledger of Venmo payments and transactions contained rich information about the whereabouts of others and activities within a user\u2019s network; they immediately codified this social news stream into the application.1 Adding a social feed increased members engagement, and reinforced same-side network effects: the more of my friends I add on Venmo, the more social data I can see and the more I can transact. At one point, to further strengthen these same-side network effects and add to the virality of its growth, Venmo offered users a small \u201cfinder\u2019s fee\u201d for referring additional users to the platform. This combination of riding mega trends and strengthening network effects through social virality and financial incentives led to Venmo\u2019s exponential growth.<\/p>\n

In order to complement these tactics, from its founding Venmo created a very frictionless experience for users. I can send cash to any Venmo user, regardless of which bank I use. I can link a credit card to Venmo if I don\u2019t have a bank account, and pay users through my credit card. I can even simply use my Venmo balance to accept payment and then pay others through my Venmo balance, without needing a link to a credit card or bank account. Throughout its growth stage, Venmo never charged users, not even for costly credit card transactions.[3]<\/a> Smartly, the company knew that in order to drive adoption and cross the chasm, charging was not an option. If I have a job to be done of transferring cash, I have multiple free options available to me \u2013 cash, credit card, check, etc. Because I can \u201cmulti-home\u201d with these other options that accomplish the same job to be done, the Venmo app needed to be even more frictionless, and free.<\/p>\n

After achieving significant growth and being acquired by PayPal, Venmo has started monetizing by offering its platform of users via API to other business \/ applications for a fee of 2.9%. The company is leveraging its strong network of users to monetize without disturbing its frictionless user experience. Venmo will need the cash in the face of stiff competition from Zelle, a mobile payment application funded by Bank of America, U.S. Bancorp, Wells Fargo, Chase, and Capital One.3 Will Venmo be able to maintain its position as market leader? My intuition says yes \u2013 network effects are very strong in this business, and Venmo has the first-mover advantage. Additionally, Zelle is limited to the banks that fund it, while Venmo is bank-neutral. Being bank-neutral offers a larger base of users, further strengthening network effects. What do you think? Will Venmo persist?<\/p>\n

[1]<\/a> https:\/\/thehustle.co\/how-venmo-started<\/p>\n

[2]<\/a> https:\/\/www.fastcompany.com\/40400786\/how-peer-to-peer-payment-pioneer-venmo-grew-up-and-got-serious<\/p>\n

[3]<\/a> https:\/\/www.investopedia.com\/articles\/personal-finance\/010715\/venmo-its-business-model-and-competition.asp<\/p>\n","protected":false},"excerpt":{"rendered":"

How Venmo founders created a leading platform in the mobile payment space. <\/p>\n","protected":false},"author":1784,"featured_media":7086,"comment_status":"open","ping_status":"closed","template":"","categories":[650,146,555],"class_list":["post-7085","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry","category-finance","category-fintech","category-peer-to-peer-lending-networks-fintech","hck-taxonomy-organization-venmo","hck-taxonomy-industry-financial-services","hck-taxonomy-country-united-states"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-digit\/assignment\/growing-businesses-in-the-age-of-platforms-2018\/","yoast_head":"\nVenmo: The Leader (?) in Peer to Peer Payments - Digital Innovation and Transformation<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/d3.harvard.edu\/platform-digit\/submission\/venmo-the-leader-in-peer-to-peer-payments\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Venmo: The Leader (?) in Peer to Peer Payments - Digital Innovation and Transformation\" \/>\n<meta property=\"og:description\" content=\"How Venmo founders created a leading platform in the mobile payment space.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/d3.harvard.edu\/platform-digit\/submission\/venmo-the-leader-in-peer-to-peer-payments\/\" \/>\n<meta property=\"og:site_name\" content=\"Digital Innovation and Transformation\" \/>\n<meta property=\"og:image\" content=\"https:\/\/d3.harvard.edu\/platform-digit\/wp-content\/uploads\/sites\/2\/2018\/03\/logoblue-1.png\" \/>\n\t<meta property=\"og:image:width\" content=\"786\" \/>\n\t<meta property=\"og:image:height\" content=\"149\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/png\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data1\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-digit\\\/submission\\\/venmo-the-leader-in-peer-to-peer-payments\\\/\",\"url\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-digit\\\/submission\\\/venmo-the-leader-in-peer-to-peer-payments\\\/\",\"name\":\"Venmo: The Leader (?) in Peer to Peer Payments - Digital Innovation and Transformation\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-digit\\\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-digit\\\/submission\\\/venmo-the-leader-in-peer-to-peer-payments\\\/#primaryimage\"},\"image\":{\"@id\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-digit\\\/submission\\\/venmo-the-leader-in-peer-to-peer-payments\\\/#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-digit\\\/wp-content\\\/uploads\\\/sites\\\/2\\\/2018\\\/03\\\/logoblue-1.png\",\"datePublished\":\"2018-03-06T04:45:02+00:00\",\"breadcrumb\":{\"@id\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-digit\\\/submission\\\/venmo-the-leader-in-peer-to-peer-payments\\\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\\\/\\\/d3.harvard.edu\\\/platform-digit\\\/submission\\\/venmo-the-leader-in-peer-to-peer-payments\\\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-digit\\\/submission\\\/venmo-the-leader-in-peer-to-peer-payments\\\/#primaryimage\",\"url\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-digit\\\/wp-content\\\/uploads\\\/sites\\\/2\\\/2018\\\/03\\\/logoblue-1.png\",\"contentUrl\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-digit\\\/wp-content\\\/uploads\\\/sites\\\/2\\\/2018\\\/03\\\/logoblue-1.png\",\"width\":786,\"height\":149},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-digit\\\/submission\\\/venmo-the-leader-in-peer-to-peer-payments\\\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-digit\\\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Submissions\",\"item\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-digit\\\/submission\\\/\"},{\"@type\":\"ListItem\",\"position\":3,\"name\":\"Venmo: The Leader (?) in Peer to Peer Payments\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-digit\\\/#website\",\"url\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-digit\\\/\",\"name\":\"Digital Innovation and Transformation\",\"description\":\"MBA Student Perspectives\",\"potentialAction\":[{\"@type\":\"性视界Action\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-digit\\\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Venmo: The Leader (?) in Peer to Peer Payments - Digital Innovation and Transformation","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/d3.harvard.edu\/platform-digit\/submission\/venmo-the-leader-in-peer-to-peer-payments\/","og_locale":"en_US","og_type":"article","og_title":"Venmo: The Leader (?) in Peer to Peer Payments - Digital Innovation and Transformation","og_description":"How Venmo founders created a leading platform in the mobile payment space.","og_url":"https:\/\/d3.harvard.edu\/platform-digit\/submission\/venmo-the-leader-in-peer-to-peer-payments\/","og_site_name":"Digital Innovation and Transformation","og_image":[{"width":786,"height":149,"url":"https:\/\/d3.harvard.edu\/platform-digit\/wp-content\/uploads\/sites\/2\/2018\/03\/logoblue-1.png","type":"image\/png"}],"twitter_card":"summary_large_image","twitter_misc":{"Est. reading time":"3 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/d3.harvard.edu\/platform-digit\/submission\/venmo-the-leader-in-peer-to-peer-payments\/","url":"https:\/\/d3.harvard.edu\/platform-digit\/submission\/venmo-the-leader-in-peer-to-peer-payments\/","name":"Venmo: The Leader (?) in Peer to Peer Payments - Digital Innovation and Transformation","isPartOf":{"@id":"https:\/\/d3.harvard.edu\/platform-digit\/#website"},"primaryImageOfPage":{"@id":"https:\/\/d3.harvard.edu\/platform-digit\/submission\/venmo-the-leader-in-peer-to-peer-payments\/#primaryimage"},"image":{"@id":"https:\/\/d3.harvard.edu\/platform-digit\/submission\/venmo-the-leader-in-peer-to-peer-payments\/#primaryimage"},"thumbnailUrl":"https:\/\/d3.harvard.edu\/platform-digit\/wp-content\/uploads\/sites\/2\/2018\/03\/logoblue-1.png","datePublished":"2018-03-06T04:45:02+00:00","breadcrumb":{"@id":"https:\/\/d3.harvard.edu\/platform-digit\/submission\/venmo-the-leader-in-peer-to-peer-payments\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/d3.harvard.edu\/platform-digit\/submission\/venmo-the-leader-in-peer-to-peer-payments\/"]}]},{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/d3.harvard.edu\/platform-digit\/submission\/venmo-the-leader-in-peer-to-peer-payments\/#primaryimage","url":"https:\/\/d3.harvard.edu\/platform-digit\/wp-content\/uploads\/sites\/2\/2018\/03\/logoblue-1.png","contentUrl":"https:\/\/d3.harvard.edu\/platform-digit\/wp-content\/uploads\/sites\/2\/2018\/03\/logoblue-1.png","width":786,"height":149},{"@type":"BreadcrumbList","@id":"https:\/\/d3.harvard.edu\/platform-digit\/submission\/venmo-the-leader-in-peer-to-peer-payments\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/d3.harvard.edu\/platform-digit\/"},{"@type":"ListItem","position":2,"name":"Submissions","item":"https:\/\/d3.harvard.edu\/platform-digit\/submission\/"},{"@type":"ListItem","position":3,"name":"Venmo: The Leader (?) in Peer to Peer Payments"}]},{"@type":"WebSite","@id":"https:\/\/d3.harvard.edu\/platform-digit\/#website","url":"https:\/\/d3.harvard.edu\/platform-digit\/","name":"Digital Innovation and Transformation","description":"MBA Student Perspectives","potentialAction":[{"@type":"性视界Action","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/d3.harvard.edu\/platform-digit\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"}]}},"_links":{"self":[{"href":"https:\/\/d3.harvard.edu\/platform-digit\/wp-json\/wp\/v2\/hck-submission\/7085","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/d3.harvard.edu\/platform-digit\/wp-json\/wp\/v2\/hck-submission"}],"about":[{"href":"https:\/\/d3.harvard.edu\/platform-digit\/wp-json\/wp\/v2\/types\/hck-submission"}],"author":[{"embeddable":true,"href":"https:\/\/d3.harvard.edu\/platform-digit\/wp-json\/wp\/v2\/users\/1784"}],"replies":[{"embeddable":true,"href":"https:\/\/d3.harvard.edu\/platform-digit\/wp-json\/wp\/v2\/comments?post=7085"}],"version-history":[{"count":0,"href":"https:\/\/d3.harvard.edu\/platform-digit\/wp-json\/wp\/v2\/hck-submission\/7085\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/d3.harvard.edu\/platform-digit\/wp-json\/wp\/v2\/media\/7086"}],"wp:attachment":[{"href":"https:\/\/d3.harvard.edu\/platform-digit\/wp-json\/wp\/v2\/media?parent=7085"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/d3.harvard.edu\/platform-digit\/wp-json\/wp\/v2\/categories?post=7085"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}