Shut up and Take my Money

A conversation overheard at every bar in America:

Bro #1: “So glad us eight best buds got together for these hot wings and PBR tall boys.”
Bro #7: “Yea bro, we crushed it. I just wish this bill wasn’t so complicated. Math sucks.”
Bro #4’s friend Tim: “Should we split it or what? I’ve got my Dads’ debit card.”
Hero Bro: “No worries bros, I’ve got it. Just Venmo me.”

Nothing is worse after taking in a nice meal and responsibly indulging in some adult beverages with a large group than trying to tally up a bill. Especially if it looks like a receipt from CVS. Usually when the check arrives everyone is fat, happy, boisterous, and utterly oblivious to the task at hand. No good deed goes unpunished and so the poor beleaguered sap that gets stuck with check duties ends up trying to appease the (im)patient wait staff or vying for the attention of friends who would rather have fun.

Although hopefully you have a more diverse group of friends than the frat bros in my story and are no longer relying on your parents for payment, I am willing to bet that Venmo has come to your rescue at some point in time.

Venmo has begun revolutionizing how younger generations handle group payments. According to Statista Venmo handled a net volume of up to $10.4 billion transactions in 2017. Their parent company PayPal, who focuses on e-commerce handled $131.45 Billion, also reported by Statista. Although far less than PayPal, this amount is monstrous when you consider that Venmo is a peer-to-peer app used primarily for users to exchange money at no charge.

Needless to say, it has become incredibly popular, nearly ubiquitous, and still growing. In my world, it has become like Uber in that I don’t want to imagine a world where we revert back to IOUs and taxi cabs. Settling up used to be a drag but this peer-to-peer payment app has made it a pleasure. At least as much of a pleasure as paying up can be.

So if Venmo doesn’t charge, how do they make money?

The short answer is – they don’t. Venmo currently reports zero revenue as a free-to-use app. This is primarily due to the fact that Venmo doesn’t charge for its most heavily used service, which is direct checking or debit transactions. It does, however, charge for all credit transactions to the tune of 3% per transaction. Unfortunately, this has yet to earn Venmo significant revenues.

So why don’t they charge for their most popular service?

In my opinion, the answer to that is perhaps the most interesting aspect of Venmo, albeit one of the most perplexing. I believe Venmo needs more than anything to provide PayPal with personal data for a vast and diverse group of consumers. To this end, Venmo has even gone so far as to pursue the integration of a social media platform. To me this begs the question of who in their right mind would ever say:

“Please for the love of God, give me a place to make my
financial transactions public!”

But that is exactly what they have done. Venmo offers users the option to share their transactions with the world, or just with friends, in a similar fashion to Facebook’s original message board. With the aggressive integration of emoji text suggestions in the transaction box Venmo attempts to make communicating what you are paying for a fun opportunity to share what you are up to. This creates rich data sets linked to financial transactions for Venmo and PayPal. Among other use cases, this could lead to opportunities in the future for Venmo to earn additional ad revenue if they are able to engage socially inclined users for longer periods of time.

venmo transactions

But back to the important stuff. You are still stuck at the table trying to pay up. You are a solid friend and had a killer time so you decide to volunteer to cover it. After some hearty thanks and a harder than necessary slap on the back you remember that Venmo isn’t going to help you figure out the bill any faster, it just gets you paid faster. Now you are looking back and forth to each rambunctious friend dreading the process of figuring out their payment details. Great.

Inevitably you have four archetypes when it comes to check-settling time:

  1. Mr. & Mrs. Moneybags – These types are ready to whip out some cash or throw down a credit card with reckless abandon as long as they don’t have to think for one more second about how this whole payment thing is going to pan out.
  2. The “I had a salad” – Even though they snacked on the appetizers Mr. Moneybags ordered, enjoyed the most expensive cocktail on the menu, and got seared Ahi tuna on their bowl of greens they still need to make sure everyone knows they ordered the least expensive meal and thus should rightfully pay two or three dollars less.
  3. The Dude – This person just couldn’t care less. They’re feeling right and this whole bill thing is getting them down. What goes around, comes around right? Just let them know how it all ends up – they’re good for it. You’ll have to ask them six times before they prove it and pay up, but that’s beside the point.
  4. The Accountant – It seems as though they are going to launch out of their seat if they don’t get to see the bill the moment it arrives. Calculating each drink, tax category, and tip in a flash this type revels in their big moment of showing off their bill-skills with the group. Too bad they only did it for their own stuff.

No matter how savvy you are, splitting the bill is still a headache. Venmo might be great for collecting a payment, but if you decided to fall on your sword and throw your card down that means you are the one stuck figuring out the details or else risk not getting paid back.

So I will leave you all with a tip on a little known bill-splitting silver bullet that integrates with Venmo called Splitwise. Splitwise is an app that allows you to track group payments and quickly split complicated bills.

The sleek UI “does the math for you” as it keeps track of who has overpaid, who has underpaid and what amounts disbursed will even everyone up. This makes it great not only for a night out but for longer engagements like ski weekends too. The apps’ group function handles this very well allowing transactions to be balanced over the long term on a living ledger, even lending itself to tasks like calculating household expenses for roommates without shared bank accounts.

So when it comes time to pay the piper for a great time be thankful for payment pioneers like Venmo and Splitwise. We truly live in a gilded age where the friendly banter over covering a bill that sometimes borders on hostile is a thing of the past. This all well and good for our generation, but don’t forget to fight with your parents and grandparents about the bill – they get a kick out of it.



  1. murphycobc · ·

    I mean,Venmo has completely changed how my friends operate. But I also imagine it has increased the love service professionals feel about me. Just last weekend we had dinner for 9. One birthday girl aside, we handed her four cards, and then pairs split the bill over Venmo. Poof. Prior to that the option was drive your waitstaff crazy or risk never seeing that 50% of the bill, or more.

    I think it will be interesting to see any shifts in Venmo – if it tries to shift to revenue generation ever – or if it branches out from it’s current value proposition. Certainly Bank of America is pushing back with 100 commercial for Zelle, so its certainly moving from their blue ocean position, to red.

    And great tip on Splitwise…I tend to be a “divide by how many people are here I do’nt care that you just ate a salad”….but maybe that’s just me :)

  2. oliverhowe14 · ·

    Venmo saves the day 90% of the time that I go out with friends. Before it, either we got lucky and ruined the waitress’ life by splitting the check by item for 6 people, or we got unlucky and people had to write down who owed what. And inevitably there was that one person that only had a $20, and demanded exact change on what they were paying for. Being mostly CSOM students now, we usually just keep the check and figure out everything on Excel, but for my A&S friends Splitwise sounds ideal.

  3. mariaknoerr · ·

    Venmo has definitely made it easier to dine out with large groups of friends. Going out in college before Venmo, and Uber by the way, was much more “figure it out.” When we walked into a restaurant you could see the waiter’s face deflate predicting the long, complicated check process about an hour away. From my experience, Venmo has definitely brought equal if not greater benefits to servers. The recent challenge my group of friends face splitting bills today is who gets to be the one to throw down their card for the whole bill. Not to show off that they can swing it, but to earn more of those coveted credit card points! If you’re going to get the cash to cover the charge sent directly to your bank account from your 9 friends via Venmo, why wouldn’t anyone jump at the chance to score free rewards?

  4. phanauer1 · ·

    I couldn’t agree more with this post; Venmo has made my friends and I’s lives so much easier and has allowed us to breath easier knowing that we usually don’t have to wait a month to be paid back. My freshman year Venmo was just starting to gain popularity and I always had a ~$30 running tab that my roommate owed me. Because Venmo is now more engrained in our daily use, this is no longer a thing I have to deal with (same roommate). Another phenomenon that I’ve noticed for myself is the feeling of “fake money” – the fact that Venmo holds money sent to you and detracts from that rather than going straight in and out of your bank account makes me think less about sending it. Considering that there’s no card put down and it doesn’t show up in my bank statement unless you transfer in makes me relax about spending that money which is very much a good thing and bad thing simultaneously.

  5. nescrivag · ·

    Great post about Venmo! It is an app I definitely use on a weekly basis and it has definitely made our lives easier. It used to be so complicated to split bills at restaurants and it is definitely more of a hassle for the waiters who have large parties ask for a split bill. One other feature of Venmo that I like a lot of the ability to charge people. Usually when we owe people cash it is very easy to forget about it but with Venmo, you can charge someone an amount of money (including an explanation of what it’s for) and they can pay you back. If they don’t complete, you can even remind them once about the payment.
    On a different note, I had no idea that Splitwise existed so thanks for the tip! I will try it out next time we start fighting over a bill.

  6. addisonBC2018 · ·

    One part of this post I particularly enjoyed was when you mentioned how Venmo has integrated a social media app. I recently found out about a website that tracks all of the public posts on Venmo that include emojis alluding to drugs, illegal activity, etc. and post them to their website as a ledger. I think these sort of things have a bigger consequence than some kids realize when they joke around and put inappropriate emojis. I also think the idea of our financial transactions becoming a social media is actually incredibly dangerous, and could have severe consequences in the long run.

  7. tuckercharette · ·

    I really liked this post Kyle. To be honest I had to read the article because of the Futurama reference because that’s a personal favorite but nevertheless a good read. Figuring out the bill actually isn’t much of an issue in my friend group because we take a picture of the receipt and a simple Google Sheets document does most of the work.

    However, I thought it was interesting that when I looked at your Splitwise link, the website preaches ease of use because of these “bigger” payments which you make more infrequently to one another. I actually really prefer smaller transactions because then you are consistently all square with your friends. Therefore, I actually like the smaller transactions that can be sent using Venmo rather than letting it build up on Splitwise. Furthermore, I think people who have less cash actually prefer to do smaller transactions because otherwise the bigger balances really add up and being able to pay them can become arduous. Let me know your thoughts on Splitwise vs Venmo for different age groups!

  8. Solid points Kyle. Venmo should be mandated before anyone goes out to dinner together:) I had an unfortunate incident where I decided to take the bill and have people “venmo” me and then I found out many didn’t have venmo. Rare events now. You can pay by email or facebook or million other ways too. It’s great that these services are available now.

  9. RayCaglianone · ·

    I read an article recently that said that Venmo is implementing an option for an instant transfer to your bank for 25 cents, definitely an interesting an option considering the current lack of monetization that you mentioned within the debit transactions. I know that personally that alluring “free” status of Venmo is part of what makes it so great, so I’m curious if most customers will take that added bit of convenience in exchange for a minuscule charge. Certainly with the amount of bank transfers that they handle, they could make a fair bit of revenue.

  10. realjakejordon · ·

    Great post, Kyle. Somewhat embarrassingly the part about Venmo as a social media platform struck a chord with me. I specifically remember a time where I had scrolled through al of my social media and without thinking just opened up venmo and started scrolling the feed. Maybe its that blue app design that looks a bit like twitter and facebook. Anyway, I realized about a minute or two into scrolling that I needed to put my phone down and that I might have an addiction to social media. Venmo is awesome, and despite it being a complete waste of time in that sense, like @addisonbc2018 mentioned, its interesting how much data you can gather just from the emojis people are posting on the public feed.

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