Venmo use spikes as PayPal inks Amex in-app deal

PayPal reports it’s adding users to Venmo’s new initiatives quickly, pushing the company’s wish to monetize Venmo to what its CEO calls a “tipping point."

This momentum comes as PayPal enters a partnership with American Express to initiate PayPal and Venmo payments from within the Amex app.

“It’s hard not to be excited when you're talking about some of the growth numbers we're seeing,” said Dan Schulman, CEO of PayPal, which owns Venmo, during Thursday’s PayPal earnings call. “It’s early and there’s been substantial progress. You can see the acceleration that’s happening.”

David Paul Morris/Bloomberg

PayPal’s Venmo social payment app is popular, with about 23 million users, though it faces stiff competition from the bank-led Zelle app and has not been cash flow positive. PayPal has made several moves to boost Venmo’s ability to generate income, such as a partnership with Uber, adding retailers such as Abercrombie and Fitch, and introducing a plastic card.

These moves are sparking fast growth. Venmo’s transfer volume was $1 billion in September. PayPal reported 24 percent of Venmo users have made a monetizable action in September, up from 13 percent in May.

Other elements of PayPal’s Venmo monetization strategy are expanding quickly, Schulman said. Venmo’s Uber collaboration led to a usage increase of 185 percent between August and September. Additionally, the Venmo card's user base grew 320 percent from August to September.

PayPal is also presenting a Venmo button for Venmo customers at check out at PayPal merchants.

“We have a very strong pipeline of large merchants that are lining up to integrate Pay with Venmo buttons,” he said. “We expect to see improvements in outcomes next year and each year after that.”

PayPal, which now has more than 254 million users, has also made progress in partnerships under the PayPal brand.

PayPal on Thursday announced a partnership with Amex for an integrated peer-to-peer payment experience, enabling Amex cardholders to use membership rewards points at PayPal merchants online and send money via Venmo or PayPal from the Amex mobile app.

Over the next several quarters, PayPal will enhance access to Amex payment options in PayPal’s wallet, including deeper integration of Venmo and PayPal products into Amex’s platform, Schulman said, adding PayPal now has extensive partnerships with all of the major card brands in the U.S., following earlier deals with Visa and Mastercard. "These partnerships have redefined the competitive landscape," Schulman said.

Another recent partnership with Walmart will boost PayPal's financial inclusion capabilities, Schulman said. The Walmart partnership, the first time Walmart has supported a third party digital wallet, allows cash-in and cash-out service from Paypal accounts in Walmart stores.

For the quarter ending Sept. 30, PayPal reported earnings of $0.58 per share, higher than the $0.54 per share forecast by analysts at Refinitiy. PayPal’s revenue for the quarter was $3.66 billion, higher than Refinitiy’s forecast of $3.66 billion. PayPal reported net income of $436 million, up 12.8 percent from $380 million the prior year.