The Venmo Credit Card, which was revealed on Monday morning, relies on Visa’s (V) - Get Report payment network, has no annual fees and can be managed via the Venmo app. Among its key selling points: A dynamic rewards system in which users get 3% cash back (automatically deposited to a Venmo account) on purchases made within their top spending category, 2% back on purchases made in the second-highest category and 1% back on all other purchases.
The card will also feature a custom QR code that can be scanned to let users send money to and split purchases with friends, and an RFID chip that enables tap-to-pay functionality. Users can opt to receive real-time notifications when their card is charged or rewards are deposited.
The Venmo Credit Card launch follows the 2018 launch of the Venmo Debit Card, which relies on Mastercard’s (MA) - Get Report network. That card lets users make purchases using funds deposited to their Venmo accounts, as well as make no-fee withdrawals via select ATMs.
With Venmo possessing more than 52 million active accounts as of the end of 2019, social sharing features are a key selling point for both of Venmo’s cards in a pretty crowded branded payment card landscape. Along with giving users the ability to split payments with other Venmo account holders, the cards let users share transaction activity to their Venmo feeds if they wish.
Square has also launched a debit card that’s linked to its P2P wallet app. The Cash Card, which launched in 2017, uses Visa’s network and (through a feature called Cash Boost) provides discounts at select merchants. A $2 fee is charged for ATM withdrawals, but Square reimburses those fees to customers who get one $300 or greater paycheck deposited to their Cash App account every 30 days.
Square reported having more than 30 million Cash App users as of June, a 6 million-user increase from the end of 2019. Though lacking Venmo’s social feed, the Cash App offers similar P2P and direct deposit features, and has also reeled in new users through its support for Bitcoin transactions and commission-free stock trades.
Nonetheless, Venmo -- a platform whose popularity with younger consumers makes it PayPal’s version of Instagram in some ways -- is still growing at a pretty brisk pace as well. The platform’s total payment volume (TPV) rose 52% annually in Q2 to $37 billion. That represented a slight acceleration from Q1’s 48% growth, as COVID-19 drove an uptick in digital payments transactions.
Along with payment cards, PayPal has sought to monetize Venmo through its support for merchant payments on websites and mobile apps. Thanks to PayPal’s cross-selling efforts, Venmo payment buttons have become a common sight on website and apps that also support PayPal transactions.
In addition, Venmo charges fees for certain account transactions, such as instant cash withdrawals and P2P payments made using a credit card account. And in recent months, PayPal has been looking to drive the use of both PayPal and Venmo accounts for physical retail transactions, via QR codes. In July, the company announced that CVS (CVS) - Get Report will support QR code-based PayPal and Venmo payments at 8,200 U.S. stores by year’s end.