PayPal Announces Record Mobile Payment Growth
In keeping with the trend towards mobile shopping, PayPal has announced considerable growth of its mobile payments app, Venmo. In a recent sales call, PayPal stated that Venmo – the mobile payment app owned by PayPal – had produced a record breaking performance in the first quarter of 2017.
During this period, the value of the payments processed exceeded $6 billion, indicating rapid growth for Venmo. In the past year, the app has doubled the amount of payments it processes, and if its past performance is anything to go by, Venmo looks set to remain one of the leaders in the mobile app payment field.
PayPal’s Mobile Payments Surge
The latest figures show a continuation of PayPal’s mobile payment growth. At a recent earnings call, which was held in January 2017, PayPal’s CEO Dan Schulman announced a 55 percent increase in mobile payments volume throughout 2016.
It was also revealed that Venmo was experiencing year on year growth, with payment volume increasing 126 percent on the previous year’s figures. Schulman added that mobile payments were becoming “an increasingly important competitive differentiator for PayPal.”
Why Paypal Wants a Share of the Mobile Market
PayPal says mobile transactions accounted for 32 percent of the payments it processed during 2016, and the mobile market is a sector the company appears to be pursuing quite heavily.
In addition to Venmo, PayPal has announced plans to team up with Google’s Android Pay. The partnership is mutually beneficial to both companies, expanding PayPal’s reach, while hopefully making Android more appealing to potential users. The partnership allows Android Pay users to make payments from their PayPal accounts online, and instore, provided the merchant accepts Discover contactless payments.
There are obvious reasons why PayPal has been pursuing the mobile market. It is estimated mobile payments will be worth more than $410 billion by 2020 and recent research by Javelin Strategy concluded:
“If you’re following the money, as they say, mobile commerce is the place to look right now, and it’s why we’re seeing the major wallet providers shift their focus to enabling online and in-app payments as much as growing proximity payments at the point of sale.”
For a long time, Venmo had been tipped as the next big thing in mobile payments, and following the release of the latest figures, its apparent these predictions are being realized; the Venmo app has experienced swift success despite being relatively new to the market.
Although it was already making the headlines on tech websites a few years ago, Venmo wasn’t widely heard of, but in 2016 it had already achieved approaching $3.2 billion in payment volume by the first quarter.
Last year, there was further progress for Venmo when it was announced Venmo payments would be available to online merchants, and Gametime and Munchery were among the first of the merchants to get on board.
During its beta phase, Venmo developer APIs had also been made available, however, the company has placed a hold on accepting any more beta users because the company turned its attention to launching its pay with Venmo service in the United States.
Popularity of P2P Payments
In the most recent earnings call, PayPal’s CEO also noted the demand for peer 2 peer (P2P) payments, which grew by 57 percent during 2016. However, with so many start-ups in the P2P sector and the increase in popularity, PayPal is going to face some fierce competition from its rivals.
Well established companies and start-ups alike such as Tapp, who managed to raise $9 million to target the Southeast Asia, Messenger, Google Wallet, Square Cash and Pop Money have shown a keen interest in gaining a percentage of market share, and many more innovations are expected to come to market in the future.
And by 2020, the value of peer 2 peer payments in the United States is predicted to be worth more than $200 billion, with mobile P2P services currently showing the greatest growth.
It’s fair to say that Venmo’s success so far appears to be making some of its rivals nervous and its growth has spurred its competitors into action.
As reported in the Chicago Tribune Times, some of the United States biggest financial institutions, such as Wells Fargo, Citigroup and the Bank of America are all coming together to launch Zelle, which works in a similar way to Venmo.
Zelle has got off to a strong start, announcing 170 million P2P transactions throughout 2016 and group president of payments, Lou Anne Alexander, has announced that the company is:
“…on a mission to replace cash and checks with a faster, safer, and easier way to pay.”
In the future, Venmo is also likely to face competition from Google. PayPal’s shares were hit initially when Google announced in 2017 that it was going to launch a new service that would allow consumers to request and send payments via email attachment, but the shares recovered soon afterwards.
In addition, Apple, who have led the way in terms of mobile payments, are also said to be considering the launch of a service similar to Venmo. According to reports, Apple is in talks with the payments industry and its new service could be launched later in 2017, however, the plans aren’t definite yet and Apple has yet to confirm this.
Venmo’s recent success rate has been phenomenal, and with a surge in interest in peer to peer payments, the PayPal owned company seems to have come along at the right time.
The launch of Venmo has contributed to PayPal’s increase in profits and it has helped PayPal to gain a considerable share of the mobile payments market. Venmo appears to be exceeding all expectations thus far, and the consumers desire for convenience and easier ways to pay should continue to contribute to its growth in the future.
However, Venmo isn’t without its rivals and only time will tell if its growth rate continues in the face of stiffer competition.