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.
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:
- 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.
- 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.
- 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.
- 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.