Venmo sees sports as its ticket to the digital ID game

Stadiums, arenas and theaters are natural fits for innovations such as social P2P, mobile commerce and transferrable authentication. This, in turn, makes such venues a magnet for the payments industry’s most recognizable brands.

Just as Visa has long used the Olympics as a playground to test and promote wearable payments and sound and sensory technology, and Square landed a key gig at the rock festival Coachella, PayPal hopes live music, sports and entertainment can boost its Venmo app and encourage the use of digital ID, two of its most important strategies.

PayPal’s deal with AXS gives it a seat at hundreds of professional sports and entertainment events as the official digital payment provider for the Los Angeles ticketing and marketing company.

Andrew Harrer/Bloomberg

AXS’ clients include Austin City Limits, the Las Vegas Golden Knights—an NHL team that made the Stanley Cup Finals in its first year — the Houston Livestock Show, the Los Angeles Clippers, MLS franchise Real Salt Lake and dozens of others.

These clients appear to have little in common, but all involve ticketing, content, marketing and the necessities that can play well with Venmo.

“A user isn’t buying one ticket, he or she is buying three or four, and it’s it’s all at once,” said Robert Clarkson, vice president and general manager for PayPal in North America. He added that it's easier for a social P2P app to execute a transaction in which one person is buying for a group.

Venmo’s app relies on the information that accompanies the payment. A person who’s sending money or receiving generally describes the transaction that takes place within a social group.

That’s helped Venmo build a recognizable brand, famous enough to fuel some very odd use cases, but has also left PayPal looking to embed the app deeper into the retail ecosystem. A sports and entertainment agreement combines Venmo’s original mission with its diversification strategy as a bill-splitter that’s also integrated with retail sales, corporate marketing and larger purchases, given AXS’ mix of marketing content, concessions, apparel and ticketing.

“The ‘alpha buyer’ makes the splurge and the others jump in to offset that cost right away,” Clarkson said. The entire social group is then into the AXS system, he added.

This puts PayPal much more squarely in the acceptance brand space, said Thad Peterson, a senior analyst at Aite Group.

“The ability to use PayPal to both buy and sell tickets through AXS increases the value of the brand with AXS customers,” said Peterson. “Further, Venmo is a millennial offering, and adding the capability to purchase or sell tickets through Venmo reinforces Venmo as a C2B versus P2P alternative with that critical demographic. Given millennial participation in concerts and other events, payment by Venmo could increase sales for AXS.”

The integration between PayPal and AXS can be enhanced by AXS’ mobile ID technology, a system that’s designed to replace bar code entry and emailed tickets for venue entry. In the AXS case, the mobile ID is also tied to an account, supporting resale, transaction tracking, data analysis and recurring purchases.

PayPal hopes that as an AXS embed, its “one touch” feature will support user opt-in features that encourage repeat entertainment and sports-related purchases through a PayPal account. That serves one of the goals of interoperable authentication—the ID vetting works across relationships and is seamless.

As an account, the ticket is in theory more than a ticket — it is instead a portal to security, data management and CRM for PayPal, AXS, the sports teams and myriad sponsors and partners that choose to participate.

While companies are rapidly replacing usernames and passwords with a more flexible digital forms of identity, much work remains to make these digital, user-controlled IDs flexible enough to work across relationships.

Partnerships are emerging to build increasingly larger networks for interoperable digital identity, such as the PayPal/AXS deal, and other recent developments such as CULedger’s strategy to bring other parties into its portable ID project, blockchain technology company Nuggets adding its ID technology to existing payment networks, and Mastercard’s cooperative identity deal with Microsoft.

“With this partnership, the initial touchpoint is paying or the tickets, but then looking at that as a journey and customer experience,” said Ashish Kapur, senior vice president of marketing and digital media at AXS.