Venmo, the digital payments company, is reportedly considering launching credit cards as a way to profit from its large customer base.
According to a report in The Wall Street Journal citing people familiar with the matter, executives at the company have been having talks with banks since the end of 2018 about issuing a Venmo-branded credit card. Venmo, which is owned by PayPal, is reportedly settling on Synchrony Financial to issue the Venmo credit card. The aim is to announce the launch of the credit card in 2019, reported The Wall Street Journal. The paper noted that details of the credit card, including rewards and other features, are still in the developing phase.
With digital payments starting to be adopted by consumers in the U.S., Venmo is one of the FinTechs that have been able to garner widespread adoption. According to The Wall Street Journal, more than 27 million people are projected to make a Venmo payment this year. For its fourth quarter, Venmo posted an 80 percent increase in transaction volume, reaching $19 billion. Competitor Zelle had payment volume of $35 billion in the fourth quarter. “You’ve got Venmo continuing, quarter after quarter after quarter, to have incredibly strong net new actives,” said PayPal CEO Dan Schulman during the company’s Q4 post-earnings conference call in February. The value “of Venmo and the network effects on core PayPal are clearly coming into play.”
Venmo isn’t the only one that is eyeing the credit card market. Last month Apple made news when it announced the Apple Card, a credit card coming to the market in the summer. Users apply for the credit card via the wallet on their iPhone and if approved can access the credit line almost immediately. Users get two times rewards on purchases made with Apple Wallet and one times rewards on purchases made with the physical card. There are no late fees, international fees or penalties. Apple also said it would offer some of the lowest interest rates in the industry.