| CHART: Expanded use cases could help Venmo maintain its mobile P2P edge Jaime Toplin | July 29, 2016 Want to receive more charts, research, reports, and data from BI Intelligence? Learn More Now » 
Venmo, the PayPal-owned peer-to-peer (P2P) payments app, continues to grow at a steady pace, according to data from PayPal's Q2 2016 earnings presentation. As it continues to scale, Venmo could work to introduce new uses cases to increase engagement and capitalize on that stable growth. - Volume is still hitting records. Venmo processed $3.9 billion in total payment volume (TPV) in Q2 2016, up 22% sequentially and 141% year-over-year (YoY).
- But decelerating growth could indicate the platform is maturing. It's remarkable that Venmo continues to post triple-digit growth. But these quarterly gains are lower than they used to be — Q2 marks the seventh straight quarter of YoY growth deceleration. However, YoY growth is beginning to stabilize, likely due to a combination of new acquisitions and increased engagement among existing customers.
- As growth steadies, it will be critical for Venmo to find ways to extract new value from its customers. Historically, P2P has been an easy service for firms to use as an acquisition channel, but a tough service to monetize. As a result, it's important for Venmo to find ways to engage and profit from these customers moving forward.
Venmo could improve engagement or find ways to monetize clients by improving its service through added use cases or increased convenience. - Pay with Venmo: PayPal extended the pilot program for Pay With Venmo, a mobile checkout program that allows users to make purchases via their Venmo account, to a larger number of users in Q2. The firm also added new merchants, including Parking Panda, Boxed, and Poshmark, in Q2 2016. PayPal plans to expand Pay with Venmo to all users by the end of the year. If Venmo users, who tend to be engaged with the platform, begin using the service to make in-app purchases, PayPal will be able to better monetize Venmo while attracting new users that might be seeking an in-app payment solution to complement their P2P transaction habits.
- Real time: As part of PayPal's recently announced deal with Visa, customers will be able to use their Visa bank card to transfer money in real time between their bank account and the Venmo app. This adds an additional layer of convenience to the service and could appeal to users who need to immediately use funds that they've been transferred.
Differentiation will remain critical as competition in the digital P2P space heats up this year. Multiple US banks, including Bank of America, JPMorgan Chase, and Wells Fargo, have come together to launch clearXchange, a real-time digital P2P service that will be available to 60% of US bank account holders by the end of the year. That could pose formidable competition to Venmo because users tend to be more trusting of mobile services from their banks than from a tech company: ING found that 75% of consumers most trust a mobile wallet from their bank, which could carry over into other offerings. By adding real-time transfer, a service that clearXchange will offer, and in-app payment functionality, which goes beyond clearXchange's services, Venmo could more easily maintain its edge. You can gain access to everything BI Intelligence produces - ALL of our extensive research reports, newsletters, and data - when you claim your BI Intelligence ALL‑ACCESS pass. With this level of membership, you will gain immediate access to…
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