Venmo, the peer-to-peer payments app startup that moved from Philadelphia to New York over the summer, just made two big back-to-back announcements.
The first is the resolution of a long-running challenge for Venmo. In the past, it was too complicated and time-consuming to get Venmo to interface properly with the banks, so the company gritted its teeth and offered to cover credit card fees for its users. Relying on credit cards was the only way the startup could offer fast and simple money transfers while the team worked slowly and painfully to introduce proper bank transfers, which was “just not an easy thing to do technically,” cofounder Andrew Kortina told Betabeat. The strategy was serviceable, but unsustainable.
Now new customers must now make payments from their bank accounts in order to use Venmo for free. Existing customers have until May 1 to switch. Customers can still use a credit card to make payments but Venmo will charge a 3 percent fee.
The second big announcement came yesterday: Venmo, which has been invite-only for more than a year, is opening up to the public. “We want to make it really fun and easy for people to pay with their friends,” Mr. Kortina said, although in the future the company may start serving merchants.
The Venmo team is up to 23 “young, passionate people,” as Mr. Kortina said, in an office in Chelsea and is processing $10 million in transactions a month. (Investor Ben Lerer predicted the startup will handle $250 million next year.) “It’s not really stuff that would be captured somewhere else,” he said. “Like if someone’s friend had a bachelor party and they couldn’t go, they could Venmo $20 to get drinks on them because they couldn’t be there. People are using this to share the experience they have when they go out with friends.”
In the long run, Mr. Kortina said, Venmo’s competitors are Visa and American Express. “We see ourselves as a way to pay for something… we think that by making our product social and fun we’re going to build something that people will choose to use over Visa and Amex.”
Venmo lets users tweet their payments; see Betabeat’s (now broken) “Cutesy Venmo Receipts Are Now a Thing.”
— crispylettuce (@crispylettuce) March 19, 2012