PayPal has announced that it will be rolling out a Venmo credit card in the second half of 2020. This will be the tech giant’s attempt to expand Venmo’s services beyond the peer-to-peer payment platform that it is popularly known today.
The Venmo credit card will launch in partnership with Synchrony Financial. The company will serve as the issuer of the co-branded card.
Venmo started with peer-to-peer payments. It gained popularity due to its incorporation of social media features such as comments on a user’s transaction. There is also a “like” feature which is similar to the ones you can find on Facebook and the likes.
As of April 2019, PayPal revealed that Venmo has managed to acquire 40 million users. It also reported a 73% year-over-year growth.
The co-branded credit card will be another addition to the FinTech’s services. In 2018, a Venmo debit card was also launched and started offering a “Pay with Venmo” option for online transactions.
With their partnership, PayPal and Synchrony are expecting consumers to see the value and difference in their offerings, most especially with the back-end user interface feature that Venmo offers.
Those who will be using the credit cards will be able to make use of the different features of their card within the app. According to Synchrony Chief Executive Margaret Keane, cardholders will have a “native in-app experience.”
PayPal has yet to reveal the distinct and special features that the Venmo credit card and the app. Based on the press release by PayPal, users can expect to receive real-time alerts. As Venmo users are said to be more active and engaged while using the app, PayPal hopes to take advantage of this, as they plan to roll the card out next year.
With the announcement of its plans, Venmo is now among financial tech companies that are offering credit cards to its users to increase profits and to strengthen customer engagement. PayPal is not a banking institution, it has to work with an FDIC-insured company such as Synchrony.
According to Darrell Esch, senior vice president of credit at PayPal, several interested parties were competing to partner with them. The partnership with Venmo will extend the 15-year-old deal between PayPal and Synchrony.
With the deal, Venmo will join companies like Lowe’s, J.C. Penney, Banana Republic, Amazon, and others that have partnered with Synchrony for its co-branded credit cards.
In 2018, Synchrony’s partnerships for credit card co-branding made up to 75% of its total interest and fees on loan. That is equivalent to about $13.1 billion.
“This is going to a big partnership for us – we know that Venmo is a growing customer base. This sets us up as a company that can demonstrate digital savviness and innovation and at the same time, leverage things we’ve done in the past, like managing the relationship with a partnership and building out great analytic,” said Synchrony CEO Margaret Keane.