PayPal-owned peer-to-peer (P2P) app Venmo is officially launching a physical debit card, which will allow users to spend their balances in-store rather than transferring funds to their attached accounts.
The card is distributed by major prepaid card issuer Bancorp and runs on the MasterCard network, despite beta tests conducted with Visa over the past year, according to Business Insider.
It’s currently in a limited release phase; starting as invitation-only for select Venmo users with a waitlist that anyone can join, according to Venmo. And it complements Pay with Venmo, a feature that enables merchants to accept Venmo as a payment option but doesn’t involve a physical card.
The Venmo card functions like a normal debit card
It runs on the MasterCard network and offers ATM access and overdraft protection. The card can be used anywhere that accepts MasterCard, and it enables up to $400 in daily ATM withdrawals, though transactions at non-Money-Pass ATMs come with at least $2.50 in withdrawal fees.
In addition, the service offers a reload function, which, when enabled, takes money from a user’s linked checking account in $10 increments if their Venmo balance drops too low to cover a purchase, though customers could be subject to fees or other consequences from their bank if they overdraft that account, according to Mike Vaughan, COO of Venmo.
Transaction history can be tracked in-app
Card purchases show up in a user’s Venmo transaction history, and the card can be canceled from within the app, according to Vaughan.
These features make the card similar in many ways to a traditional bank debit card, but the ability to directly track spending in-app will likely make the card appealing to younger consumers and millennials, which are Venmo’s primary user base, who prefer digital banking tools, according to Business Insider.
And the card’s simple design — it comes in six different colors — could also help attract users because millennials care about how their cards look.
The full rollout of this card could benefit Venmo in several areas.
Venmo more competitive?
Square Cash, Square’s P2P payment platform, offers its own physical debit card in partnership with Visa, called the Square Cash Card. And Apple Pay Cash, Apple’s P2P service, offers a virtual debit card linked to a user’s account.
Venmo’s offering could help it keep pace with its peers in the financial space, while also helping onboard a new demographic; millenials.
The Middle East had the lowest proportion of account holders, with only 14% on average, according to Business insider UK.
This card may appeal to that demographic since it brings the benefits of a traditional debit card without the bank access, and it could ultimately boost adoption of an engagement with Venmo, helping the service further increase its volume and accelerate growth.
It could put Venmo closer to monetization
P2P services are hard to monetize because they aren’t free for the firms that provide them, but are often free, or largely free, for customers, putting providers at a loss. But PayPal has been working to monetize Venmo: Earlier this year, it gave over 2 million retailers in the US the ability to accept Venmo payments, for example.
This card takes the monetization effort one step further, opening up spending opportunities beyond PayPal’s merchants into MasterCard’s massive network. Through this card, PayPal could collect fees from merchants on a per-transaction basis, which could essentially give it an added revenue channel for Venmo.