PayPal’s Venmo introduced a Cash a Check feature, which allows select customers to cash checks from within the Venmo app. Additionally, for a limited time, it’s waiving check-cashing fees for customers who received coronavirus stimulus funds via paper check.
- PayPal’s Venmo just launched a check-cashing feature, which select customers can use to cash their stimulus checks for free for a limited time.
- This highlights PayPal’s ongoing push to facilitate stimulus payment distribution.
- Insider Intelligence publishes hundreds of insights, charts, and forecasts on the Payments & Commerce industry with the Payments & Commerce Briefing. You can learn more about subscribing here.
This follows PayPal’s move in late December to allow PayPal and Venmo customers to automatically receive their second stimulus payment—which is currently being distributed—via the Direct Deposit feature if they used it the first time around and still qualify for it.
Venmo’s new offering represents PayPal’s ongoing push to give customers access to their stimulus funds—here’s why that matters:
- Venmo’s total payment volume (TPV) and user base skyrocketed in Q2 when it first distributed stimulus payments. The peer-to-peer (P2P) payments firm’s TPV grew 52% year over year (YoY) in Q2 2020. Further, US app downloads for Venmo grew 16.5% YoY from April to May, likely driven by customers joining the platform to get their stimulus payment faster. This time around, Venmo’s new check-cashing feature might appeal to customers who are receiving their stimulus payments via paper check since the functionality would allow them to more easily gain access to their funds. And, because customers would have the option to spend their stimulus money using Venmo, the firm might see another boost in TPV.
- Facilitating stimulus payment distribution might help Venmo better contend with P2P payments competitor Cash App. Square’s Cash App also helped distribute the first round of stimulus payments, and Cash App customers with an account and routing number on file with the IRS can now also receive their second stimulus payment using the platform. Earlier in the pandemic, the offering proved successful for Cash App considering that US app downloads between April and May grew 20.1% YoY. For comparison, in raw numbers, Cash App saw 4 million new app downloads while Venmo received 2.5 million app downloads within the same period. Venmo’s new check-cashing feature could help it expand its reach, especially since Cash App isn’t currently offering this functionality. And Venmo’s temporary waiving of check-cashing fees could provide further incentive for consumers to join the platform.
Beyond the stimulus payments rollout, Venmo’s new offering could be a valuable tool for the un- and underbanked population. Approximately 22% of the US population in 2019 was un- or underbanked, according to data from the Federal Reserve.
Venmo’s check-cashing feature could appeal to this segment of the US population since it eliminates the need to go to a physical check-cashing location. Long term, this tool could help Venmo grow its user base—which is slated to reach 54.4 million in 2021, according to eMarketer forecasts from Insider Intelligence—since it grants the firm access to a wider subset of customers who might lean on the offering for their check-cashing needs going forward. PayPal can also push its other services to these consumers to expand its overall usage.
Want to read more stories like this one? Here’s how you can gain access:
- Join other Insider Intelligence clients who receive this Briefing, along with other Payments & Commerce forecasts, briefings, charts, and research reports to their inboxes each day. >> Become a Client
- Explore related topics more in depth. >> Browse Our Coverage
Current subscribers can access the entire Insider Intelligence content archive here.