Venmo handles tons of money, but it still doesn't make much itself

Venmo, the social payments app run by PayPal, has reportedly never broken even for its parent company. That is despite processing $27 billion in payments during the third quarter (pdf) of 2019, a 64% increase year-over-year. The popular app only managed to turn a fraction of that into revenue.

"We ended Q3 with Venmo just shy of a $400 million annual revenue run rate," PayPal CEO Dan Schulman said during the company's earnings call yesterday (Oct. 23). That means based on Venmo's current usage and margins, the app would theoretically earn PayPal approximately $400 million per year. That's small potatoes compared to PayPal overall, which reported $723 million in net income for the quarter, exceeding analysts' expectations.

Nonetheless, Schulman anticipated a strong future for Venmo, calling it "an incredibly powerful platform for engaging consumers." The app currently processes roughly $300 million in payments each day, PayPal stated. Extended over a full year, that would be more than $100 billion in payments volume.

As PayPal strives to make Venmoprofitable, the company has begun offering instant transfers from Venmo accounts to US bank accounts for a small charge. Launched in August, the feature costs 1% of the transfer amount, with a minimum fee of $0.25 and a maximum fee of $10. Customers can still move their Venmo funds for no charge using the standard bank transfer option (called ACH), which takes 1-3 days.

Earlier this month, PayPal also announced a Venmo credit card, issued by Synchrony Financial. Slated to debut in 2020, the card will allow users to share their payments on their social feed, if they wish. (The Wall Street Journal first reported on Venmo's credit card effort in April.)