Payments giant PayPal saw record usage of its fast growing digital payment app, Venmo, in January. On Tuesday, PayPal announced that consumers used Venmo to transfer $1 billion in January, which is two and a half times the volume from January 2015, and ten times the volume from January 2014.
Venmo, which is popular with the millennial generation, lets people link their debit and credit card accounts online and digitally transfer money to anyone. People often use the service to settle up after a night out on the town with friends or when splitting the cost of a gift, replacing payments made through check or cash. PayPal acquired Venmo through its $800 million acquisition of payments processing startup Braintree in 2013.
Transferring money through Venmo is free in the U.S. if the person who is paying draws the money from a bank account. If drawing from a credit card, that person is charged 2.9% of the amount transferred.
Venmo has seen its usage and volume multiply in the past year. In the fourth quarter of 2015, Venmo handled $2.5 billion in payment volume, up 174% from the same quarter in 2014. PayPal CEO Dan Schulman has said that the average Venmo user sends money through the app several times weekly.
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PayPal is now setting its sights in making money from this massive volume. In February, PayPal revealed that merchants like food delivery service Munchery and event tickets seller Gametime will soon be able to accept payments using Venmo. Venmo charges merchants a standard 2.9% of the transaction amount plus 30 cents per transaction.
There’s also a good amount of competition for Venmo, including services from Square, Facebook, and reportedly, soon from Apple. However, that doesn't seem to be stopping Venmo.