PayPal outpaces Venmo

Hundreds of US retail banks to take plunge into Bitcoin trading: Banking tech provider FIS and crypto custodian NYDIG are teaming up with smaller incumbents to offer Bitcoin trading—enabling established banks to compete with challengers like Revolut and Venmo.

US consumers want Venmo to offer rewards

Google Pay’s upgrade comes as another major brand, Venmo, fleshes out its banking services. Venmo parent company PayPal said in its Q4 2020 earnings that the mobile payments app will get a slew of upgrades, including support for buying and selling cryptocurrencies, a savings feature, and budgeting tools, per TechCrunch.

Venmo will let users participate if they have a minimum balance of $1 and will offer support for four cryptocurrencies: Bitcoin, Bitcoin Cash, Ethereum, and Litecoin. Venmo is positioning crypto trading to be a social activity—users can share transaction updates with friends via the Venmo feed. They will be able to trade by using funds stored with Venmo or by using their linked bank accounts.

Amid a much-needed monetization push, Venmo has augmented its core offering with a robust ecosystem that embraces Pay With Venmo, rewards, credit and debit cards, and crypto integration, with more, including buy now, pay later (BNPL), on the horizon.

The company’s emerging banking play is similar to measures taken by US-based Venmo, which has evolved beyond P2P mobile payments into products such as cryptocurrency trading, mobile check cashing, and a credit card. Revolut is also straddling the fintech and neobank areas, with a lineup that includes investing, checking and savings accounts, and insurance.

Venmo. Unlike Zelle, Venmo’s platform is better suited for social payments and skews toward a younger audience, particularly millennials. As such, it leans more into peer-to-merchant transactions. This year, there will be 77.8 million Venmo users in the US, making up nearly 30% of the population.

C2C payments have quickly digitized, thanks to the rise of platforms like PayPal’s Venmo and remittance firms including Remitly. Those platforms, as well as actual remittance services, are improving by incorporating faster payments. The US mobile peer-to-peer (P2P) payments market will reach $538.73 billion in 2021, according to our estimates.

And though the Synchrony-Venmo model can’t compete with ultra-premium cards or T&E cobrands, these providers could adapt the experience by adding flexibility among different travel categories or specific brand partners. Customer choice. Issuers have historically offered predefined rewards categories that serve as the determinant of primary card status.

Apple launched a credit card in August 2019, and despite shunning the label, Venmo is looking increasingly like a neobank. Meanwhile, Google’s “Plex” bank accounts (digital user experiences built on top of accounts provided by incumbent partner banks) are slated for a full rollout this year.

PayPal is also expanding into the crypto space with new Venmo capabilities to meet growing crypto demand. Venmo announced users can buy and sell crypto directly within its app. Consumers can buy as little as $1 worth of Bitcoin and other cryptos using funds from the app or a linked bank account or debit card. This launch comes after PayPal debuted its own crypto service in the US in November 2020.

The two deals represent a major proliferation of crypto as an optional feature for banks to offer their customers and, in turn, follow offerings from challenger players such as Revolut and Venmo. The interest in crypto trading among banking tech vendors stands in contrast to relative quiet from big banks.

The company has inked new deals with Walgreens, Verizon, and PayPal’s Venmo, connecting it to major companies that could quickly drive new payments volume.