Mark (Millennial):  I cannot remember a time in my adult life when Venmo did not play a significant role. I picked it up in college – a move prompted by a slew of friends who had heard about it from their friends, who in turn had heard about it from their friends. While word of mouth brought me on board, it was the step closer to a totally cashless wallet that kept me around. If you need to reimburse someone, gone are the days of hunting for an ATM, all while keeping track of who owes what to whom.

Restaurant doesn’t want to split a check?  Not a problem – one person can cover the full bill and Venmo (notice it’s now a verb) everyone for their portion of the meal. Shop doesn’t accept credit cards? No sweat – I’ll borrow cash from a friend and pay them back instantaneously. Fast forward to now and Venmo occupies a key slot in my virtual wallet.

Beyond enabling my social life, Venmo made it easier to share meals with my colleagues as well. Much as Venmo use spread quickly among my friends in college, it has now spread to nearly everyone in the office, including my colleague Jen.

Jen (Gen-X’er):  Millennials may be the early adopters of Venmo, but they’re not the only demographic to use this payment-sharing app to settle a dinner tab. It took a fair amount of persuasion by Mark and the other twenty-somethings in the office to get me to download Venmo.  My reluctance came down to three simple things:

  1. I’m cheap and assumed that Venmo would charge something similar to the 2.9% fee PayPal imposed on all credit card transactions. While many may have been reassured by PayPal’s 2013 acquisition of Venmo, it had the opposite effect on me – I assumed that the acquisition would bring along a lot of corporate baggage.
  2. I worry about security and heard that hackers breached some Venmo user accounts in 2015, changing passwords and depleting funds.
  3. I’m lazy, stuck in a comfortable technology routine by inertia and a desire to not clutter my phone with another rarely used app.

Turns out that my fear of missing out on an office lunch outing was a powerful motivator, so I took the time to do some research. From this due diligence I was able to assuage all my points of reluctance – it is possible to use Venmo for free by linking it to a bank account instead of a credit card and it utilizes bank-level security and data encryption to protect against unauthorized transactions. The easy Venmo user experience made me a convert, and now I’m the one touting Venmo’s benefits to get my Gen X friends to download the app so that we can more easily share expenses.

Key Venmo Benefits

Mark (Millennial): While Jen and I may have adopted Venmo for different reasons, we agree on its key benefits:

  1. Cash replacement – Whether it’s among friends or between myself and one of the growing number of retailers now accepting Venmo’s peer-to-peer payments, Venmo has enabled me to almost permanently leave my ATM card at home.
  2. Convenience – No longer does a Venmo user have to keep track of an IOU until the next time he or she makes it to the bank or an ATM. Now that can be resolved in under a minute with a couple of taps in the app. While there are similar in-app person-to-person (P2P) money transfer options offered by major banks, Venmo has the added benefit of not requiring a shared bank between sender and recipient
  3. Free – Lack of fees has become table stakes in the P2P payments world. If there were fees associated with using Venmo, hunting down a fee-free ATM might still be the most appealing option.

Diverging User Experience

While the benefits may align for both of us, our uses and user experience are very different.

Jen (Gen-X’er): From the social monitoring feature of Venmo, I can see that Mark and I use Venmo for the same basic needs that were quantified in a 2016 study by LendEDU – food, household expenses, and fun. Given my older demographics, I’m more likely to be funding expenses for my kids (the oldest two are in college) while Mark is reimbursing or getting reimbursed by friends and roommates. I also depend on Venmo now to pay for services, which can include payments to tutors, music instructors, house cleaning and yard services. As my kids have not (yet!) blocked me from seeing their Venmo activity, I can’t stop myself from checking to see who they’re hanging out with and what they’re spending money on (????+ ????+????). Arguably, I’ve leapfrogged Mark in my reliance and overall spend on Venmo – and wouldn’t hesitate to use my Venmo balance for in-app purchases or purchases from traditional retailers.

The Marketing Bottom Line

Mark (Millennial): While Millennials like myself are more likely to be the early adopters of an app like Venmo, that doesn’t mean we’re destined to become its power-users. This speaks to a number of important considerations when developing a brand whose appeal and growth initially rely on Millennials.

  1. Understand value on a segmented basis – your early adopters are not necessarily going to grow into power users, especially given that Millennials are less likely to be brand loyal. They also are more likely to have lower transaction values and potential for less frequent use. While a FinTech start-up like Venmo may inherently appeal to young users, the value of courting an older user base cannot be overstated.
  2. Differentiate messaging – A one-size-fits-all messaging strategy will win you a one-size user base. Messaging that is optimized to be relevant and attention-catching across audiences that addresses a wide range of obstacles and benefits is crucial to attaining a diverse set of users. Venmo has taken a round-about approach, but has accomplished this with messaging about security, wider acceptance of P2P payments at retailers, and prompting existing users with the question, “Are your parents on Venmo?  Tell us more…”
  3. Innovate features and functionality – In an evolving market, expanded offerings are necessary to differentiate in an increasingly crowded field. Venmo has exhibited this capability through things like acceptance at retail (explicitly prohibited by Venmo until 2015) and the introduction of the Venmo card.

With competition coming from Square Cash, Apply Pay Cash, and Zelle, expanding their user base through differentiated messaging and share of wallet through product innovation are crucial to ensuring Venmo’s longevity. If Venmo continues to evolve on its current trajectory, I, along with Jen’s kids, will someday find ourselves using Venmo to disburse allowances to our own future kids.