For shoppers, paying for the items they want is at best a necessary evil and at worst a complicated chore (especially online). This innate dislike of the transactional phase is one of the reasons payment companies are so eager to invade other parts of the shopping journey. McKinsey calls this embedded finance – when a financial product or solution is placed in a non-financial environment, such as on a social media platform or in a store (private-label credit cards are an old-school example).
Embedded finance has become big business: McKinsey estimates that the sector is reaching 20 billion dollars sales in the US alone in 2021 and has the potential to do so double in the next three to five Years.
With such numbers in play, it’s no surprise that the competition in the space is fierce, and Retail is a key battleground. And with 50% of global spending in the US is online, digital payment solutions such as Venmo and PayPal (which Venmo has owned since 2013) are well positioned to capitalize on the opportunity.
As other payment solutions are differentiated by multi-retailer rewards programs, browser extensions and even creator marketplaces, Venmo is betting that what made it successful in the first place will also help it rise to the top of the embedded payments community.
Denise Leonhard, VP and General Manager of Venmo, spoke with us Points of contact in retail on what sets Venmo apart from its competitors (including PayPal) in this hotly contested space, and how the platform’s native social sharing capabilities give it an edge.
Retail TouchPoints (RTP): The world of payments is actually a pretty exciting place right now — Tell us how Venmo benefits from all this momentum.
Denise Leonard: Retailers now have to use all of these different channels, a lot more than they used to, and it’s not just about the products themselves – Consumers are also looking for that seamless payment experience with the brands they trust. So Venmo stepped in and provided two distinct products to help retailers both small and large do this.
For the enterprise solutions, we have Pay with Venmo Checkout, which is the built-in checkout button you see when you’re at large companies like Venmo dig lifts and lyfts of the world.
Then on the smaller side – for solopreneurs, occasional sellers, and sideline users – we have Venmo business profiles. This allows people to accept payment for goods and services, and then too grow and market their business on the Venmo platform. Artists selling crafts at a fair, barbers serving unique haircuts, or the florist down the street use these business profiles to interact on the Venmo platform and talk about all the great stuff they sell. We started just over a year ago and have already done so 1.5 million small businesses with profiles.
It’s just so seamless and easy to accept Venmo People use it and actually spend more. We see buyers actually are 90% They’re more likely to complete a purchase with Venmo over traditional payment methods, and we’ve also seen Venmo users shop with us 2X more often than the average buyer and 19% more likely to make repeat purchases.
For example, presseda fast food restaurant that offers juices saw a 57% Higher average membership order value through Venmo than traditional credit cards. Our merchants see higher conversion rates and as a result We’re seeing tremendous volume growth at Venmo — 250% year after year.
RTP: How does this all fit into the larger PayPal ecosystem, especially when the two brands have similar offerings – do you ever find yourself competing with yourself?
Leonard: The interesting thing about PayPal and Venmo is that our customer base doesn’t overlap one-to-one. We actually have tens of millions of people who only have Venmo accounts. The Pay with Venmo checkout button enables millions of people who don’t have a PayPal account to seamlessly check out with Venmo instead.
PayPal also has its own solutions for small businesses [those business profiles] I mentioned that you sit exclusively on the Venmo platform. Because of the way Venmo profiles exist alongside the social feed, these are unique [attributes] which companies can use to market within Venmo, which you can’t necessarily do with PayPal.
RTP: What consumer payment trends are you currently following to stay ahead of Venmo?
Leonard: (with a laugh) Sometimes I feel ancient because I was before PayPal American Express, so I’ve spent over a decade thinking about it. What I find most interesting right now is this social element that’s happening with payments – in places like Instagram and tick tock, being able to purchase the recommended products seamlessly and having these payment solutions feel truly integrated. In these areas you get recommendations before and even after the purchase, so I find it really interesting to see how it all stacks up.
There’s always an opportunity to make payments as seamless and easy as possible, and to make them feel like part of the overall experience. Whether it’s on social platforms or at traditional retailers, there are still opportunities.
What I also find interesting are the verticals that really take off within Venmo. Where we see a lot of traction is in places like Grocery Delivery Service, i.e. Grubhub, Uber Eats and DoorDash. We also see a lot of movement in to travel — Uber, Lyfts, Booking.com, which is a new retailer for us — and so on entertainment, i.e. Ticketmaster, AMC, FanDuel, DraftKings. And then the last one Fashionso for example Poshmark, Abercrombie & Fitch, stitch fix.
All of these retailers trying to go after Millennials and Gen Z really do see an opportunity to tap into the Venmo consumer base to really capture it. There’s also a social sharing element for all of these categories, which is synonymous with Venmo. If you’re thinking about buying food with your roommates or sharing an Uber, Sharing and the social aspect also become part of the transaction.
RTP: Venmo’s roots are in peer-to-peer payments, and that’s still a big part of the business. How do you balance the needs of these two very different customer groups as you move more into the corporate space and serve brands and companies?
Leonard: Whenever we go out and speak to our Venmo user base, consumer love for Venmo shines through in all of the surveys. They talk about how easy and fun it is to use and want more ways to use Venmo, so this one [business] Solutions are an extension of that.
For example, I have a farmers market down the street that I go to every week. I know the first names of the sellers, they’re almost friends now. In many cases, these small businesses become an extension of your friends and family, they are the next layer of your local community, so a very natural extension [for Venmo]. I mean, do you remember how difficult it was to get money for the babysitter?
And then, on the checkout side, our consumers wanted to be able to use Venmo in more places, use their credit and check out seamlessly in other places, so that was a natural extension for us too.
RTP: We know there are huge benefits in terms of conversions and customer satisfaction when retailers offer these more convenient payment solutions, but there is a tipping point where too many options overload this transactional moment. With so much competition out there at the enterprise level, how does Venmo feel about big retailers?
Leonard: There are three things. One of them is that the Venmo community is now closing in 90 million Consumers in the US – One in three Americans has a Venmo account. We’re really a part of consumers’ everyday lives, so there’s a massive built-in audience. Second, we also see that buyers again 90% are more likely to complete a purchase with Venmo than with traditional payment methods. People really convert at checkout because it’s seamless and easy. The third is all the great interaction that happens within the Venmo app, where you can see your purchases and share them if you want.
RTP: What is Venmo’s ultimate goal in the trading landscape, especially with so much disruption happening right now?
Leonard: Our ultimate goal is to offer people a really simple and easy way to pay not just their friends and family, but their local businesses and the brands they love. Basically, it gives consumers more ways to use Venmo.
And not just online. We have both static and built-in QRC (QR code) functionality for traders. The static is as simple as posters you put up in a store or market stall, or even wear around your neck as you walk around selling, and it’s just a static QR that formalizes your business profile. And then we have an integrated QRC solution that you can see in places like CVwhere you can shop via PayPal or Venmo via an integrated QR code.