Amazon Will Start Accepting Venmo Payments

Key takeaways

• Amazon and Venmo announced a partnership to offer Venmo as a payment option for Amazon purchases
• The new feature saw a limited launch this week and will be available to all U.S. users by Black Friday (November 25)
• With a user base near 90 million, the move could further boost Venmo’s consumer usage and future partnership potential
• Following the announcement, Venmo owner PayPal jumped over 7%, while Amazon nicked up 0.65%

On Tuesday, Amazon and Venmo owner PayPal announced the initial rollout of a new Amazon-Venmo payment partnership. By Black Friday, all U.S.-based Amazon customers will be able to use Venmo at checkout – just in time for the holiday season.

Following the announcement, shares of Venmo owner PayPal surged 7% to close out Tuesday at $89.24. Amazon inched 0.65% higher to finish the day at $120.60.

Rolling out the Amazon-Venmo partnership

According to Amazon’s press release, early rollout for Venmo checkout began Tuesday, October 25. That gives Amazon around a month to work out any bugs before the full rollout occurs prior to Black Friday on November 25.

Said Max Bard, vice president of Amazon Worldwide Payments: “We want to offer customers payment options that are convenient, easy to use and secure—and there’s no better time for that than the busy holiday season. Whether it’s paying with cash, buying now and paying later, or now paying via Venmo, our goal is to meet the needs and preferences of every Amazon customer.”

Doug Bland, the senior vice president and general manager, head of consumer at PayPal, added that Venmo’s community values “the safety, security, ease and familiarity” that Venmo brings to digital checkouts. By partnering with Amazon, Venmo “continues our ongoing commitment to offer the community more ways to spend, send, receive and manage their money.”

The partnership represents Amazon’s growing willingness to onboard third-party payment systems to entice customer spending. Last year, the retail giant partnered with Affirm to offer buy-now, pay-later plans to select purchases. The joint venture marked Amazon’s initial departure from more traditional payment methods.

How to pay with Venmo on Amazon

Currently, Amazon accepts traditional payment methods like debit and credit cards and store cards. The shopping behemoth also takes slightly more unusual methods (for an online retailer, anyway) like HSA and FSA accounts, as well as EBT cards.

But the Amazon-Venmo partnership provides buyers with even more choices, not to mention the ease of a primarily digital experience. The companies have also confirmed that each transaction will be protected by both Amazon’s technology as well as Venmo Purchase Protection.

Better yet, details from a PayPal press release show that using Venmo on Amazon will be easy from the consumer’s perspective. To start:

• During checkout, choose “Select a payment method”
• Tap “Add a Venmo Account”
• From there, you’ll be directed to the Venmo app to authorize Amazon charges
• Next, an Amazon confirmation screen will pop up with the option to set Venmo as your default Amazon payment method
• If you want to change your preferences later, you can do so under “Settings > Connected Businesses” in the Venmo app

Unfortunately, the duo has confirmed that, while Venmo lets users dabble in crypto, Amazon will not be accepting crypto to pay for purchases.

A partnership a year in the making

The Amazon-Venmo partnership was first announced in November 2021 when PayPal revealed an upcoming business venture with Amazon due in 2022.

Prior to the partnership, Venmo was already booming, boasting around 75 million active (and younger) customers. For Amazon, the added value of onboarding Venmo as a third-party payment app was immediately apparent.

PayPal CFOCFO
John Rainer noted that the other side of the coin looked similarly shiny.

In the company’s Q3 earnings call, he noted that partnering a PayPal darling with Amazon was about more than a financially favorable arrangement. For PayPal, the real value lies in “ubiquity of acceptance,” with Amazon well-positioned to “move the needle more on total payment volume than on revenue.”

Even without Amazon, Venmo has done well. In the last year, Venmo’s usership has grown to around 90 million. The app allows users to make payments, invest in crypto, and of course, shop online, providing tons of value to users – particularly younger, technologically savvy spenders.

And, as the first third-party payments service network integrated with Amazon, the partnership reflects potentially surprising confidence from Amazon in the younger company’s security protocols and growth prospects.

A mutually beneficial relationship – in Amazon’s favor

The Amazon-Venmo partnership isn’t a total shock. (Aside from the fact that it was announced a year in advance.)

From Venmo’s perspective, the Amazon partnership offers profits and prestige. Though the company has already partnered with firms like UberUBER
and Lyft, Amazon lands among its largest (if not the largest) business to work with Venmo.

But the deal may prove even more beneficial for Amazon.

With nearly 90 million active users and household name recognition, Venmo remains a popular payment method for the under-40 crowd. From Amazon’s point of view, the partnership provides a chance to tap a customer base that may shy away from conventional payment methods.

That’s welcome news for a company facing surprisingly sluggish sales numbers following its second Prime Day of the year. After all, the more payment methods Amazon partners with, the more customers it can catch in its ever-growing net.

What the Amazon-Venmo partnership means for investors

Both PayPal – Venmo’s holding company – and Amazon are outsized firms with large, potentially overlapping customer bases. And though Venmo is still in its growth stage, 90 million customers is nothing to sneeze at.

Still, Morgan Stanley analysts contend that the Amazon-Venmo partnership is more an “important catalyst” that will likely have an “immaterial impact on financials” for PayPal.

Instead, the move will likely help establish Venmo’s functionality and safety profile as a legitimate digital payment option for other vendors, allowing the company to expand its use cases. The move could also “increase habituation” for Venmo consumers to get used to using Venmo for a broader swath of digital purchases, “allowing for better monetization” with partners down the line.”

As an investor, that means the digital duo is likely to have an outsize impact on your portfolio. Simply put, both Amazon and PayPal are too large and ubiquitous for Venmo’s good fortunes to materially impact their stock prices long-term.

That said, the move could kick off later ventures – perhaps even between Amazon and PayPal themselves – that could position the giants for further growth.

But that doesn’t mean you can’t still find tech-based opportunities to profit from now and later. In fact, Q.ai is full of them, from our Tech Rally Kit designed to capture upsides when tech stocks roar, to the Clean Tech Kit that aims to capitalize on a greener future.

If you’re looking to invest in the future of technology, rather than yesterday’s news, Q.ai makes it easier than one-two-Venmo.

Download Q.ai today for access to AI-powered investment strategies. When you deposit $100, we’ll add an additional $50 to your account.