Paypal Holdings Inc (NASDAQ:PYPL) Is Winning Person-to-Person Payments War

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Paypal Holdings Inc (NASDAQ:PYPL) Is Winning Person-to-Person Payments War

In a bid to challenge Paypal Holdings Inc (NASDAQ:PYPL) in the person-to-person payments market, Alphabet Inc (NASDAQ:GOOGL) subsidiary Google recently launched a Gmail-based payment service. The new service allows Gmail users in the United Sates to send money to friends or family by using the Google Wallet. Social networking giant Facebook Inc (NASDAQ:FB) also added a personal payment feature to its Messenger app. However, according to a Mizuho Securities analyst, these services do not pose an immediate threat to PayPal’s Venmo, according to a report from Investors’ Business Daily.

PayPal’s Venmo

Venmo is a mobile payment service owned and operated by Paypal Holdings Inc (NASDAQ:PYPL). It is a “digital wallet” that lets users transfer money to each other using a mobile phone app or web interface.

Venmo became the part of PayPal in 2013 when the online payments giant acquired mobile payment service Braintree in 2013.

Venmo is becoming very popular among young adults. Its user base doubled in 2016 to nearly 9 million, according to a report from CNET.

During the fourth quarter of 2016, Venmo processed $5.6 billion of total payment volume, up 126%, PayPal said in an earnings release.

Analyst Views

According to Mizuho Securities analyst Neil Doshi, Google’s Gmail payments feature would not impact Venmo or Square Cash, a person-to-person payments service owned by California-based Square Inc (NYSE:SQ).

“Venmo likely has a lock on millennials, and Square Cash is now being integrated into Square point-of-sale systems as an alternative method of making and accepting payments,” Doshi said.

“Long-term, we wouldn’t count Alphabet out. The company has massive scale across Gmail and Android, and we could see Alphabet integrating Wallet across other core Google products and services,” the analyst added.

Square and Venmo

Square Inc (NYSE:SQ) provides credit card processing, mobile payments, and point-of-sale solutions. It allows sellers to grow their businesses using the company’s software with hardware applications.

Founded in 2009 by Jack Dorsey and Jim McKelvey, Square has been trading as a public company on the New York Stock Exchange since November 2015.

For the fourth quarter of 2016, the company reported gross payment volume of $13.7 billion, up 34% year-over-year. Its total revenue was $452 million, up 21% year-over-year. The company booked a loss of $15 million, versus a loss of $48 million in the fourth quarter of 2015.

Square Cash is a strong competitor of Venmo. But Venmo is apparently growing at a fast speed under the umbrella of PayPal.

The Venmo app is available for both Apple and Android devices. You can send payment to family and friends instantly using a bank account or debit card. Venmo, however, does not permit businesses to send and receive money. It cannot be used for buying and selling of goods.