US-based Venmo is a surprising thing: a social messaging app based around payments. Actually, says Venmo’s head of product Ben Mills, it’s not surprising at all. It was designed that way.
MEF Minute’s features editor, Tim Green caught up with Mills to discuss how the company has combined payments, messaging and social media to build its billion-dollar business model.
Check out this and many other insights and use-cases in MEF’s free Future of Messaging Guide.
In the US everyone knows about Venmo. In a country that still likes to use cheques, this person-to-person payments app offers a glimpse of the future. Venmo lets people send money to each other instantly.
They typically use it to pay for drinks or dinner or rent. And it’s become a sensation. In 2015, it processed more than $7.5 billion in transactions. In 2016, it was on course for $20 billion. Venmo has even become a verb, a bit like Google. “I’ll Venmo you.”
But what’s less talked about is that Venmo is also a social network. Its users don’t just pay each other small debts, they also use those transactions as the basis for conversations that can be witty, flirty or profane. Who would have thought a payments platform would become a medium for messaging?
The awkward factor
Well, it turns out that Venmo would. The company designed chat into the app from the start. Every exchange – even the private ones – has to include a note.
Ben Mills, head of product at Venmo, explains why: “I think we realised that payment is hard, but so is talking about payment. So we wanted to re-frame it so that it was less awkward. By adding in social features, we could make Venmo became more about what you’re doing than what you’re paying. Ultimately, if you need to pay someone $5, doing it with a note or an emoji makes it less awkward.”
This social-by-design strategy was, of course, wildly successful. Users love the emojis in particular, with – unsurprisingly – the pizza icon being the most-used. Venmo regularly updates the function too. In 2015, it added the option to let people autocomplete with an emoji. For example, when someone types ‘rent’, they can use a pic of a house and a wad of dollars.
Talking with stalking
However, other user habits emerged entirely unplanned. ‘Venmo stalking’ is a case in point. This describes how some users will visit friends’ pages to see and read their transactions. They can find out where they’ve been and who they’ve been there with.
“Obviously, this wasn’t something we created or even saw coming,” says Mills. “But it’s a great example of an emergent behaviour – a bit like the hashtag on Twitter – that comes when you create a community.”
Of course, the strength of Venmo’s social component means that sometimes payment is secondary to the conversation. Mills says it’s common for users to pay small sums as a pretext to a message session. “Actually, lots of payments are short conversations. We see lots of $1 transactions that are just an excuse to say thanks or good job.”
Messaging makes (business) sense
If Venmo saw embedding chat as a way of removing awkwardness from the platform, it also saw a strong business case for it. Mills says: “Payment is difficult, but ultimately it can be commoditised. That’s not the case with social. People go where their friends are, and that makes social media a bigger ecosystem to move into. And once you have a community, you can go in different directions with it.”
Those new directions include merchant payments. The aim is to help merchants go where their customers are – i.e. Venmo. And also to pursue the dream of social commerce. “A user might see on Venmo that a friend bought a Beyonce ticket. That could inspire them to buy one too, and it will be easy to do so,” says Mills.
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