Venmo Quarterly Growth Slows Down, as the Base Grows

Venmo, the popular peer-to-peer payment app, processed more than $900 Mn in transactions during the fourth quarter of 2014. However, Venmo showed a slower quarter-over-quarter growth. While the company witnessed a growth rate of 50% between Q2 and Q3 of 2014, the growth rate between Q3 and Q4 was 29% only. As reported by BI Intelligence, there are a few possible explanations for this stagnation towards the end of the year. One could be decreased ad spend while another could be the holiday season which led to a lower number of peer-to-peer transactions.

Venmo has gained significant popularity over the past year. By simply loading the app onto a smartphone, a user can connect to bank and credit-card accounts and link up with friends to send money on the go. It makes scenarios such as splitting restaurant checks and paying rent quite seamless. The rising use of peer-to-peer applications is improving the prospects for apps like Venmo. The growth of Venmo can also be attributed to PayPal, which owns Venmo.

The following illustration shows the mobile transaction volume trend in Venmo along with quarter wise growth rates. By the end of 2013, when the volume base was still below $400 Mn, Venmo enjoyed increasing quarter-over-quarter growth rates. But in 2014, when the volume base went beyond $500 Mn, the quarter-over-quarter growth rates have been showing a downward trend.

It’s not just about the comparison between the two recent quarters as highlighted. Venmo is now poised to reach the billion dollar mark and we have to consider the overall scenario. It’s not clear that as the transaction base grows, the quarterly growth rate will continue to show a rising trend. Consider the case of Starbucks mobile payments as highlighted in the illustration below. Until the end of 2013, Starbucks did enjoy rising quarter-over-quarter growth rates. However, towards the end of 2014, the quarter-over-quarter growth rates have decreased substantially as the Starbucks mobile transaction volume crossed the $500 Mn mark.