Even though I’m currently on summer break between my sophomore and junior years of college, I’ve stayed closely connected to my friends. I can see what they are up to by texting, calling, and checking in on social media. They show me where they are, who they’re with, and what they’re doing via a variety of online applications.
We use platforms such as Instagram, Snapchat, TikTok, and Twitter, but one personal finance service has also become a form of digital socializing.
Among my friends, the most popular mobile payment service is Venmo. Founded in 2009 and acquired by PayPal in 2012, it has been a part of the fintech industry for over a decade. Currently only available in the United States, it serves as a way for people to split costs without dealing with cash by connecting users’ debit cards to their Venmo account and easily making payments to other Venmo users.
The Social Media-fication Of Venmo
However, Venmo’s brand messaging not only positions it as a financial transaction option, but a social app, as well. “With Venmo, settling up feels like catching up”, the company’s website reads. “Send and receive money with Venmo friends and express yourself in each payment note”.
The social nature of the service is also evident in the app’s design, which allows users to personalize their profile, add friends, and send personalized messages along with their payments. The app also has a feed, much like Twitter, where users can see who their friends are paying, along with any the message they send with that payment. Users can even “like” and comment on their friends payments.
Even though the app includes the option to make payments private, my friends and I are constantly making public payments and checking out each others’ activity on the app, just as we follow each other on other social outlets. Subsequently, as my personal finance has become interconnected with my social identity, the money I share and receive in my Venmo account has become very different from the cash that I keep in my credit union account.
Although those two accounts are connected and I can easily transfer money from one to the other, I rarely do. Money in my Venmo is just passed back and forth between the same group of friends; one day I pay for their coffee, and the next they pay for a movie ticket. My friends and I sometimes joke that it feels like another form of currency because it never leaves the app and enters our accounts.
Because technology is so closely associated with socializing for many members of Gen Z, it will be interesting to see how these kinds of transactions shape the way we view personal finance in the future. Will we be more likely to borrow or lend because of all the money sitting on digital platforms? How will our spending habits change as Venmo makes it easier to do more than just P2P payments within the app?
Millions of consumers use Venmo, but many credit unions also offer their own P2P payment services, often through their mobile banking apps. While not all credit unions have the resources to offer those services, those that can may want to take a page from Venmo and attempt to replicate some of its capabilities. Since many members of my generation let their money sit in Venmo rather than moving it back into their daily banking account, credit unions and other financial institutions are losing the opportunity to understand those spending patterns and banking behaviors. Just like cash, once it’s out of the account, the credit union loses any understanding of how that money is used. Capitalizing on that knowledge could lead to a deeper knowledge of how Gen Z interacts with money.