Venmo Prepares to Launch Co-Branded Credit Card in 2019

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Venmo — the popular digital wallet app — is gearing up to make a move to your actual wallet with a new co-branded credit card in 2019 according to the Wall Street Journal.

Their parent company, PayPal Holdings Inc., paired up with Synchrony Financial way back in 2004 when they launched their Cash Back Mastercard. Since 2018, the companies have been working together on a joint-venture to help boost Venmo’s earnings and revenue. This may explain why they believe now is the time to launch an old-fashioned credit card.

Venmo Seeks to Monetize Large User Base

For years, Venmo has sought ways to increase profits from its huge (but not very lucrative) user base. Users have the ability to send and receive payments with family and friends, and as long as the funds go through their digital wallet accounts there are no fees. Venmo absorbs the cost of these small transactions while charging percentage fees for transferring funds to users bank accounts.

Instead of adding or increasing fees however, PayPal is turning to a more traditional means of turning a profit: credit cards.

Not only will Venmo be able to collect interest on users’ revolving balances, they’ll be able to tap into the even more valuable merchant fees, paid by the businesses who accept the new Venmo card. These processing and transaction fees are the backbone of the credit card industry and PayPal is banking on this being a significant boost to Venmo’s bottom-line.

Competition for the Venmo Credit Card

Venmo is just the latest in a series of tech companies to consider making the leap into the credit card business in an effort to increase their earnings and expand their reach with customers. Apple has partnered with Goldman Sachs, Amazon has partnered with American Express, and even Uber began offering a co-branded credit card in 2017 — all in order to capture more of your spending within their ecosystems.

In order to make a splash in the credit card market, Venmo is going to have to offer potential cardmembers some compelling reasons to get the card and to use it regularly. Options include cash back, rewards points, and promotional financing offers (like inexpensive balance transfers, or low promotional rate periods). You can compare current credit card offers here.

With all of the user data they have collected, Venmo should be uniquely positioned to make enticing, targeted offers based on your spending habits. After all, users often tag their Venmo payments with the exact purpose of the funds (even if it’s in emoji form).

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