Why was my payment on Venmo unsuccessful

Payment app Venmo: For the finer things in life

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Andrew Kortina and Iqram Magdon-Ismail had long known that they wanted to set up a start-up together. Every weekend, the former fellow students met for brainstorming in Kortina's hometown of New York. Magdon-Ismail made a special trip from Philadelphia for this purpose. Once he forgot his wallet at home. That was the initial spark for Venmo.

Because Magdon-Ismail had neither money nor cards with her, Kortina had to help him out; Magdon-Ismail then paid his debts by check. This is common in the US, but it seemed too awkward for the two friends. "We do everything with our phones," remembers Kortina. So why weren't he and his friends using an app to pay back money they'd borrowed? The two began working on their own payment app: Venmo, composed of the Latin verb "vendere" for sell and "mo", short for mobile.

That was in 2009. Five years later, Venmo has not only become one of the most successful payment apps in the USA, it has even become a concept of its own: "I'll venmo you", promise many, especially young Americans today, when they borrow money from friends: I'll pay it back to you via Venmo.

Growth like on Facebook

Venmo was officially launched in early 2012. Today, the company claims it handles more than $ 1.5 billion annually. The app benefits enormously from the network effect. "Since the mass success of Facebook and Instagram, we have not seen an application that is spreading so rapidly," writes the market research service BI Intelligence.

Mobile payment is one of the most important topics of the digital age. Numerous start-ups such as Square, but also established Internet giants such as Google (Google Wallet), Amazon (Amazon Local Register) and eBay (PayPal) cavort in this business area. Venmo found a niche in the market that others had not previously filled: the app only processes payments between private individuals.

"The relevance and the potential are huge," says Scott Strawn, chief analyst at tech analyst IDC. The competitors have also recognized this: In 2012, Venmo was taken over by the Braintree payment service for around $ 26 million. Then the eBay subsidiary PayPal swallowed Braintree. Venmo is said to have been instrumental in this.

Out and about without cash

The app is particularly popular among the so-called millennials, i.e. the baby boomers between 1980 and 2000. According to the market research institute Nielsen, the generation of today's 18- to 34-year-olds makes up more than half of the users. You grew up with the internet and smartphones; In addition, the young Americans lead a lifestyle that Venmo is made for: They eat in groups, order one round at a time in bars, and share taxis. Payments are often made with just one card. Many do not even carry cash with them.

With Venmo, however, even small amounts can now be transferred with just a few clicks. To do this, the debtor selects the creditor from his Venmo network by email address or telephone number, types in the amount and a reason for the transfer and presses "send". It also works the other way round with the help of a "Request" button. The other side then only has to confirm the transaction. There are no costs as long as the app, which is available on iOS and Android, is connected directly to the bank account or, unlike PayPal or Google Wallet, to the debit card. There is a 2.9 percent fee for credit cards.