Amazon is planning to end support for
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"It's not a good look for PayPal and Venmo," said Daniel Keyes, a senior analyst at Javelin Strategy & Research. "The idea of Amazon was an exciting place for Venmo to tap into new payments."
As early as PayPal's third-quarter earnings call in November 2021 — shortly after the Amazon Venmo partnership had been announced —
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"Later this year, we will add the ability for a Venmo user to pay a PayPal user and vice versa, bringing more utility to both customer bases … our Amazon and Starbucks experiences continue to grow nicely, and we recently launched PayPal and Venmo with McDonald's and just signed a deal with Microsoft to launch both Pay with Venmo and buy now/pay later for Microsoft's Xbox store," Schulman said at the time.
There was not a lot of detail about why the relationship, which launched in October 2022, will end in January, 15 months after launch. The Venmo announcement was made on a part of its site that included questions about Amazon payments such as information about multiple transactions for a single purchase, or what to do when unauthorized purchases show up on a Venmo account. But there was no indication that service issues caused the cancellation.
In an email, PayPal's public relations office said: "Venmo and Amazon have agreed to disable Venmo as an option to pay on Amazon at this time. Customers can continue to add their Venmo debit card or credit card to their Amazon wallet to pay on Amazon. We have a strong relationship with Amazon and look forward to continuing to build on it."
Amazon's PR office referred questions to the company's prepared statement: "Starting January 10, 2024, Venmo will no longer be accepted on Amazon.com or the Amazon mobile app. Customers can still use nearly a dozen other payment options, such as debit cards, credit cards, checking accounts, or installments to pay for their orders."
Though much of the news coverage of this breakup emphasizes the downside for PayPal, it's possible that the Amazon relationship simply wasn't a priority to PayPal's new management.
Alex Chriss, PayPal's current CEO, said in a recent
"Venmo has not caught on significantly for consumer payments," Keyes said. "This is another sign of that. There's time to turn it around. But having this announcement so quickly is not ideal for PayPal and Venmo."
The navigation to pay on Amazon with Venmo took more steps than other Amazon third-party payment providers such as Affirm, according to Richard Crone, a payments consultant. Amazon One and Amazon One-Click are competing options to PayPal and Venmo acceptance, positioning Venmo as competition, Crone said.
"Amazon made Venmo a funding option under Amazon One Click," Crone said. "To turn on Venmo you had to open your digital wallet, Amazon One payments and change the One Click funding source to PayPal. There were hurdles."
But there may still be a way for PayPal and Amazon to benefit each other in the future. The Venmo discontinuation appears amicable, according to Crone, who noted that the payment option will be available through the holidays. And Amazon, PayPal and Venmo picked up valuable insights into social payments and transaction options geared toward younger consumers.
"This was Amazon's dipping its toe into social commerce," Crone said, referring to Venmo's social element that allows users to attach messages to their payments. "Even if this is a bump in the road for PayPal, this model can be repositioned into something new, if not at Amazon, at another partner."
