Mind On My Money, Money On My Mind

Rilla Peng
Aug 22, 2017 · 5 min read

Reflection point: Success of Venmo’s product design from the eyes of a millennial

No more IOUs. No more awkward fumbling of cash at the dinner table. The various peer-to-peer (P2P) payment needs — from returning ice cream money to a friend to sending rent to the landlord — fueled the birth of Venmo. Especially popular for the millennial generation, the app transacted over $16 billion in total payments. That’s a lot of Venmo.

I was curious, so I counted: Last week, I used the app 10 times to either receive or share payments. Last month, I had 31 transactions. Yet again, a lot of Venmo. This amount of use puts into perspective how reliant I am on this digital wallet.

As a millennial, I am shocked by how quickly I became habituated to the app and how ubiquitous it is amongst my peers. Since downloading Venmo two years ago in 2015, the product became so quickly and seamlessly integrated into my lifestyle that I’ve come to categorize my P2P payment eras as Before Venmo and After Venmo (BV and AV). It’s silly, I know, but when I ruminated earlier about how I used to keep post-it notes by my work desk to remind myself how much to pay back who, I realized that if Venmo were to be taken away, I’d throw a fit. And I wouldn’t be alone in this reaction.

As a graphic designer and aspiring UX designer, I’ve been exploring the broader world of product development through the lens of technical feasibility and economic viability. Joshua Porter writes a fantastic article on the 18 principles of product design. As I cross-compare his points to Venmo’s popularity, I realize that the swift and positive habituation millennials (and non-millennials, too, of course) have towards the app is really no surprise at all. Behind this innovation comes iterations and iterations of detailed decisions to make Venmo more than just a product but a unique and rewarding experience.

A useful innovation that solves a single, existing problem

At the end of the day, everything boils down to one question, “Is it useful?” Usefulness stems from the product’s value in users’ lives, and in this case, Venmo’s value is primarily functional. You open the app, find a friend, and send or request a payment. Easy. Venmo solved an existing problem better than it was originally being solved, and they did so with clean UI, clear copywriting, and professional branding. Like that, the tussle of P2P payments was eliminated.

But Venmo is more than just its functional value. PayPal CEO Dan Schulman connects millennial fondness for the app to its social media-like quality. According to Schulman, over 90% of all Venmo transactions are open to a user’s friend network, and over 90% have left some sort of emoji or written comment on those transactions.

“What Venmo has done and the thing that makes Venmo unique is it’s not a payment transaction, it’s kind of an experience,” Schulman said.

Users were opening the app multiple times each week just to check in on what their friends were doing. This social aspect attracted the younger generations and drove their user engagement, turning the service into a habit.

Vigilant of artifacts, vigilant of competitors

I mentioned my post-it habit earlier when it came to keeping track of who I owed money to. I doubt I was alone. These kinds of artifacts — real world objects people use to accomplish a task or fulfill a need — are key clues to understanding whether a problem is worth investing in. They also pose insight as to what new features to create.

Venmo has but a handful of core features, primarily revolving around searching people, inviting friends, transferring money to the bank, and making / receiving payments. It also has — and this one is one of my favorites — a “notifications” section that keeps track of any payment requests a user needs to fulfill. Suddenly, the app becomes not only a tool for me to make payments but also a reminder for payments I’ve forgotten. The convenience brings relief, and the consistent quality of that relief helps me nurture trust.

As Porter says,

“Every feature you add is friction in the interface and an added burden, however small, on your users.”

In 2017, Venmo added a few new elements: QR “scan code” for easy friend-finding, “purchases” on other apps and select PayPal merchants, and an “instant transfers” service. The latter was especially important. To stay competitive with Square Cash, Zelle, and iMessage’s P2P payment support, Venmo needed to address the desirability of “immediacy.” In response, it offered a charge of 25 cents for every instant transfer (useful for any large transfer). Though transfer times still take anywhere from a few minutes to half an hour depending on the bank, it was a smart move on Venmo’s part to continue positioning itself as a relevant, quick, and useful product.

Word of mouth continues to remain one of the most powerful forms of marketing, and regardless of my bias as a millennial, Venmo is a solid example of a product market fit. While the product is far from perfect (fraudulent activity and buyer / seller protections remain a concern), the app continues to meet users’ needs and serve them appropriately. As a result, its users continuously promote its value and evangelize to their networks to give the app a go.

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