PayPal announced in its Q3 earnings report a partnership with Amazon that would add its Venmo mobile payment app to the approved payment methods on the ecommerce marketplace starting next year.
This integration will let shoppers pay through Venmo on both the Amazon.com website and the Amazon app using either their Venmo balance or a linked bank account.
Venmo is considered one of the de facto peer-to-peer banking apps by mobile users in the US. Its integration into Amazon adds a bit of flexibility for customers and potentially merchants insofar as their transactions with Amazon are concerened.
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Venmo is a Widely-Used Banking and Mobile Wallet App
As of writing, Amazon supports purchases made by credit, debit, gift cards, and most recently, a Buy Now Pay Later option through its partnership with Affirm.
There are currently over 80 million Venmo users in the US, which could translate to more shoppers and more demand that Amazon merchants can serve.
PayPal says it is continually looking to expand the ways that Venmo can be used by customers and merchants on Amazon, citing the increased online shopping activity during the pandemic as a driving force behind the initiative.
The PayPal-eBay Relationship Is No Longer as Profitable
One of the key reasons for PayPal’s recent engagement with Amazon is that its partnership with eBay is no longer as lucrative as before. This marks a significant shift in the ecommerce space and particularly between two former rivals. With Venmo integration, Amazon could get another leg up over eBay and other competing online marketplaces.
Way back in 2002, eBay bought PayPal, and the latter became eBay’s main payments partner. Both companies have since split in 2015, and eBay has increasingly been a lesser contributor to PayPal’s payment volumes.
PayPal CEO Dan Schulman said that this initiative comes as a result of no longer being constrained by its partnership with eBay. PayPal’s Q3 earnings report reveals that the volume tied to eBay was down 45%, prompting the company to look for partnerships with a variety of other marketplaces—Amazon being the largest among them.
Earlier this year, eBay made its existing direct debit scheme mandatory, which means sellers on the online auction site can no longer use PayPal and will instead have to give eBay direct debit access to their bank accounts. This naturally raised some eyebrows, with concerns over refunds potentially being taken directly out of sellers’ bank accounts and eBay being known to side with buyers sometimes at the expense of sellers.
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This Deal Will Enable Venmo Payments, But Not PayPal
Oddly enough, this partnership will only enable Venmo payments, and PayPal will remain to be excluded from Amazon’s list of approved payment methods.
That means the Venmo integration will only benefit mobile shoppers within the US, since the app is only available in the US as of writing. On the other hand, PayPal mediates international transactions, and it is available in most countries with online money transfers enabled.
Amazon Could Enable Crypto Payments in the Future
Venmo offers cryptocurrency wallet functionalities, which could enable users to pay using crypto when the feature rolls out in 2022. This would all be speculation at this point, as Amazon and PayPal are yet to reveal full details of how Venmo would integrate into the Amazon ecosystem.
That being said, Amazon itself has expressed interest in the crypto space, as a recent job posting has Amazon eyeing a Head of Digital Currency and Blockchain. The job is posted under the company’s Payment Acceptance and Experience department, so it’s less likely that we’re going to see some sort of Bezos-coin, and more likely that shoppers and merchants will be able to transact using crypto in the near future.