The app has made changes to its API in the past year, alongside informative articles on how to keep payments private, but for many the allure of Venmo is the social network. Venmo has been the subject of several cyberattacks, as hackers use the social platform to scrape data on millions of transactions. Venmo could also use data shared to build an analytics platform for merchants. It has been suggested some type of advertising platform, targeting users based on purchases or friend activity. It’s not clear how PayPal plans to turn this social spying into income.

PayPal CEO Dan Schulman described this as the “secret sauce” in a 2015 interview. Users are able to spy on their friends, to see who they’re sending money to or what they’re spending it on. PayPal sees Venmo’s social network as the potential revenue generator for the next decade. Venmo also charges a one percent fee for users who want to withdraw money instantly to their linked card, usual withdrawals take one to two days. Venmo generates revenue through a 2.9 percent transaction fee for businesses. This made it a major hit for people that don’t carry cash, like students and teens, which led to it entering the lexicon of technology brands that are also verbs. Venmo removed all transaction costs, allowing friends to send money online for free.

PayPal revolutionized the way people pay businesses online, but it never developed a system for paying friends easily. This was back when PayPal was a growing subsidiary in the eBay behemoth, which it split from in 2015. A few months after it officially launched, online payments provider Braintree acquired it for $26.2 million.Ī year later, PayPal agreed to an $800 million purchase of Braintree, which included Venmo. It took almost three years for Venmo to launch publicly, although iPhone and Android users could join through the app by September 2011.

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