In a bid to attract millennials and Gen Z, eBay is adding Venmo – digital transactions

eBay Inc. is recruiting Venmo as a payment option, the major e-commerce marketplace announced early Thursday. The decision, made about a week after eBay announced it would no longer accept American Express cards as of Aug. 17, is part of a strategy to add alternative payment options that will appeal to younger customers shopping online, the company says in a blog post .

Adding Venmo, the company’s mobile payment service PayPal Holdings Inc., is expected to appeal to millennials and Generation Z, two demographic groups for whom Venmo is a popular payment method. Payments experts say these two groups are also considered the next growth market in commerce. According to data, about 28% of Venmo users are millennials and Gen Zers eBay. Additionally, over 60% of eBay’s turnover comes from mobile devices.

“Ability to pay Venmo at checkout is a continuation of our mission to provide our customers with even more choice while reaching a younger demographic thanks to the widespread adoption of Venmo among Gen Z and Millennials,” eBay said in a blog post. “Venmo’s mobile platform is ideal for digitally savvy customers who are looking for a simple and quick checkout process.”

Online shoppers who connect their eBay and Venmo accounts can make purchases without having to manually enter credentials, eBay says. Venmo users will have the option to make purchases using their Venmo balance or connection debit card, credit card or bank account. They can also choose to share payment information on Venmo, a social networking site where users can write notes detailing the purpose of each payment.

For their part, sellers don’t have to make any changes to their eBay account to offer Venmo as a payment method to buyers, eBay adds.

“Venmo remains a key priority for PayPal and we are focused on continuing to enhance its value proposition for both consumers and merchants this year and beyond,” a Venmo spokesperson said in an email.

While the addition of Venmo gives eBay sellers a popular and cheaper payment option, the move is not seen as an attempt to recoup potential lost sales when eBay stops accepting AmEx cards – say payment experts.

“I’m not sure there’s a correlation between not accepting AmEx and starting to accept Venmo,” Thad Peterson, strategic advisor at Datos Insights, says by email. “As of January 2024, Venmo had 74 million users, representing approximately half of Amex’s global user base.”

Peterson adds that Venmo is a digital offering, which makes it better conducive to low-friction online transactions than the AmEx card. “Venmo is also a mass-market offering compared to the more upscale Amex card,” Peterson says. “Venmo encourages its consumers to take advantage of business opportunities, which clearly reinforces this.”

Another factor that likely played a role in eBay’s decision to add Venmo is payment speed, says Cliff Gray, principal at Gray Consulting Ventures LLC. “Faster payments make a difference for small and micro-businesses selling high-value products because they get paid straight away, which has a positive impact on their cash flow,” says Gray.

As for Venmo, the deal is likely to have a big impact on sales volume, as payments experts say eBay is the second most visited e-commerce marketplace, behind Amazon.com.

“It makes me wonder what the next market will be to add Venmo,” Gray says.