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MarketScreener Homepage  >  Equities  >  Nasdaq  >  PayPal Holdings, Inc.    PYPL


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Venmo's New Credit Card Puts QR Codes Front and Center

10/07/2020 | 06:15am EST

By Katie Deighton

Venmo, the payments app owned by PayPal Holdings Inc., has introduced its first physical credit card, stamped with a prominent QR code on the front.

Venmo is gradually rolling out the ability to apply for the card, which is issued by Synchrony Financial, to its app users in the U.S. starting this week, the company said.

Cardholders can choose from five color schemes -- from "Nightlife black" to "Cotton Candy pink" -- and must scan the card's unique QR code with the Venmo app to activate it.

The main purpose of the code on the card is to bring the digital experience of splitting checks and purchases via Venmo -- a big part of Venmo's pitch to new users -- into the physical world, said Darrell Esch, senior vice president and general manager of Venmo.

"When you're out for dinner and everyone throws their card into the folio, the waiter has to split the check between four or five cards," Mr. Esch said. "Whereas here, I can throw my card into the center, and everybody else can quickly scan my code, link to my Venmo and push the funds to settle."

That can minimize the amount of touching while out dining, a potentially appealing feature during the coronavirus pandemic, but Venmo designed the QR code feature well before Covid-19 upended life, Mr. Esch said.

The move comes as parent company PayPal pushes touchless payments in its enterprise division. In a company first, the financial firm in July said PayPal and Venmo QR code technology would be installed across more than 8,000 CVS stores, allowing shoppers to pay for goods by scanning their smartphones at the register.

PayPal Chief Executive Daniel Schulman said in the same month that QR code technology would accelerate Venmo's effort to turn a profit. Still, Venmo has long looked to physical cards as a way to diversify its revenue stream away from low-stakes digital transactions among friends. Executives at the firm began meeting with banks to discuss a credit card in 2018, the same year the company introduced a debit card -- a simple Mastercard Inc. design without a QR code print.

While the credit card's code design is a neat addition, Venmo's attempts to jazz up the in-app experience will be more critical to the product's success, said Ana Milicevic, co-founder and principal of digital consulting firm Sparrow Advisers, who wasn't involved with the project.

"Venmo's not the first entrant targeting mobile-first consumers and won't be the last, so the user experience here is critical," she said. "But if they nail that they stand a good chance to be the default finance app for many mobile-first consumers."

"Knowing how expensive it is to acquire customers in financial services, and how Venmo can continue to layer on other services on top of the card, this bodes well long-term for retention and customer lifetime value expansion," Ms. Milicevic said.

Venmo offers credit card holders an "intelligent reward system," whereby they will earn 3% cash back on purchases made in their top spending category, 2% cash back on their second highest and 1% back on all other transactions. Rewards can be earned across eight categories, and a user's top categories can switch from month to month.

Other credit card providers are making efforts to adapt their rewards programs as the pandemic halts spending in categories like travel. But Venmo's ability to adjust each user's cashback categories every month is somewhat unique, said Sara Rathner, a credit card expert at NerdWallet.

"It makes it easier for a customer to become what I call a 'lazy optimizer': Instead of having to decide which card to use in a restaurant, or which card to book a plane ticket with, they could really put everything on the same card," she said. "For somebody who really just wants one really easy to use card that will reward them when they shop, this could be it."

A moving pie-chart display in the Venmo app lets users track which categories will earn them the most cash back, said Dennis Bauer, senior vice president and general manager at Synchrony, which issues the credit card.

"It's a fun, lively experience," he said. "The way you watch your spending trends move up and down from category to category, and the way in which information is revealed really makes you want to check the app more frequently."

That attempt to deliver digital dopamine hits, coupled with a rewards system that encourages spending on categories including dining-and-nightlife and health-and-beauty, will make it easier for millennials and Generation Z to spend money during an economic downturn, said Wendy Johansson, global vice president of experience at digital agency Publicis Sapient.

"Which is smart, but it's ethically dubious for Venmo to be offering a credit card to younger generations at this time," Ms. Johansson said, referencing statistics that showed elevated youth unemployment this summer. "Venmo should employ their user experience design expertise for good," building more financial education into the mobile app so users can better understand the impact of their spending patterns.

Mr. Bauer said financial education is part of the experience, citing the ability to view spending patterns by category.

"More transparency gives customers more opportunities to manage their finances," he said.

Write to Katie Deighton at katie.deighton@wsj.com

(END) Dow Jones Newswires

10-07-20 0614ET

Stocks mentioned in the article
ChangeLast1st jan.
MASTERCARD INCORPORATED 2.80% 332.04 Delayed Quote.8.18%
NORTONLIFELOCK INC. 0.11% 18.29 Delayed Quote.-28.41%
PAYPAL HOLDINGS, INC. 4.23% 200.82 Delayed Quote.85.65%
PUBLICIS GROUPE SA 2.31% 39.06 Real-time Quote.-5.75%
SYNCHRONY FINANCIAL 4.01% 30.63 Delayed Quote.-14.94%
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Financials (USD)
Sales 2020 21 420 M - -
Net income 2020 3 396 M - -
Net cash 2020 8 887 M - -
P/E ratio 2020 69,7x
Yield 2020 -
Capitalization 235 B 235 B -
EV / Sales 2020 10,6x
EV / Sales 2021 8,78x
Nbr of Employees 23 200
Free-Float 90,7%
Duration : Period :
PayPal Holdings, Inc. Technical Analysis Chart | PYPL | US70450Y1038 | MarketScreener
Technical analysis trends PAYPAL HOLDINGS, INC.
Short TermMid-TermLong Term
Income Statement Evolution
Mean consensus BUY
Number of Analysts 43
Average target price 221,17 $
Last Close Price 200,82 $
Spread / Highest target 34,4%
Spread / Average Target 10,1%
Spread / Lowest Target -38,3%
EPS Revisions
Daniel H. Schulman President, Chief Executive Officer & Director
John J. Donahoe Chairman
John D. Rainey Chief Financial Officer
Sripada Shivananda Chief Technology Officer & Senior Vice President
John H. Kunze SVP-Global Consumer Product & Technology
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