Mobile payments have struggled to get off the ground, but new insights suggest that the meteoric rise of PayPal-owned Venmo could be the breakthrough they've been waiting for.
The key is that people don't use Venmo to pay at stores, it's strictly for peer-to-peer payments. Friends going out to dinner in a group or buying drinks can make quick payments back and forth to even the tab, and that social aspect of the app has spurred its rapid growth.
To put things in perspective, take the success of Starbucks' mobile app. For most retailers, the coffee chain has been the lighthouse for wayfaring payment apps as one of the few chains to successfully get customers paying with their phones. According to Business Insider's BI Intelligence, Venmo has managed to equal Starbucks' mobile transaction volume in just six quarters.
That success is built on the fact that Venmo manages to solve a problem shoppers didn't realize they had: easily settling messy group tabs. Most mobile payments efforts, on the other hand, have been frantically trying to fix a process that isn't actually broken (paying with cash or card isn't that inconvenient).
It certainly doesn't hurt that Venmo has a viral element that retailer-specific payment apps can't really replicate. As more shoppers use the app, they will encourage their friends to adopt it to make their life simpler or to avoid looking like a freeloader when a simple payment option is available.
There are lessons to be learned for retailers, not least of which is ease of use. Entering a debit or credit card number is the most time-consuming part of the setup process, after which users just need to type the first few letters of a friend's name, enter a payment amount and verify their PIN or password.
And when it comes to mobile payment adoption, a rising tide lifts all ships. Venmo's users are decidedly young, mostly in the 18 to 24 range, and increasingly comfortable with moving money around on mobile. Much like Coin's attempt at making mobile wallets accessible, getting more shoppers into the habit of using their phone to make any kind of payment should make the step to retail payments that much easier.
-See this Business Insider story
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