Venmo

Until now, Venmo's devoted users have only been allowed to use the app to pay people they know — and not to buy stuff, particularly from people they don't know.

That will change dramatically starting on Tuesday, when PayPal, the company that owns Venmo, will begin opening up the app to the more than 2 million US retailers that already accept PayPal for online payments. This will mean that Venmo devotees can use the app to shop at a wide variety of online stores, like Foot Locker and Forever 21.

Over the coming week, Venmo users will get a notification within the app notifying them that they can shop using Venmo, while merchants will be able to turn on Venmo payments.

The expansion firmly marks Venmo's transition from a peer-to-peer payment service to something that can compete with its older brother PayPal — and start generating revenue for their parent company.

"Venmo users want to use Venmo to pay for everything," PayPal's Chief Operating Officer Bill Ready told BuzzFeed News.

And so do PayPal shareholders. "The monetization opportunity for Venmo is a very real one," said John Rainey, the chief financial officer of PayPal, at a conference in September. "Venmo is something that — to say that it's the crown jewel of PayPal, I don't think is an overstatement."

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Since PayPal spun off from eBay in 2015, its stock price has climbed over 90%, with the market valuing at almost $81 billion, putting it just shy of American Express. Venmo processes "well in excess of $20 billion" annually, Rainey said. Between April 1 and June 30, about $8 billion of payments flowed through Venmo, more than doubling from the year before.

And some of those payments will finally be turned into revenue for PayPal. Anytime a user buys something with Venmo, it will charge a fee to the merchant for each transaction. What Venmo is offering the merchants in exchange isn't just a large pool of young potential customers, but also a way to reach them, by getting into the app that's intimately tied up with their financial lives.

"From the consumer's perspective, the beauty of Venmo for us is that there's an intrinsic social aspect, beyond just being a payment," Jed Kleckner, the chief executive officer of Delivery.com and an early user of Venmo for payments, told BuzzFeed News. "People who don’t know about Delivery.com know their friends are using Delivery.com, it has a halo effect."

While Ready, the PayPal chief operating officer, was adamant that Venmo wouldn't use its social feed as a place to sell ads, but he did see it as a way for businesses to get their brands in front of consumers' eyeballs. "One of the highest fidelity signals that a shopper or consumer gets is what a friend buys," he said.

Venmo will also allow users to split their payments of what they buy online. This type of behavior is close to the core of Venmo's reason to exist — it canonically makes it easier to split a large restaurant bill. With merchant payments, users will be able to see the payment at the top of their feed and request portions of it from their contacts.

"The purchase will be sitting there, and you can share it, split it, or dismiss this — It’s right there waiting for you," Ready said.

While Venmo's latest expansion only takes it as far as PayPal has tread in e-commerce in the US, Ready says that Venmo's eventual goal is to "let Venmo users buy anything they want."

PayPal has been making strides to be more broadly accepted inside brick-and-mortar stores, which could perhaps set the groundwork for Venmo being used for real-life checkout as well.

Ready said that commerce is at the heart of PayPal's plan to turn Venmo into a more mature and sophisticated payment option. "The plan with Venmo was always that we would monetize through merchant payments," he said.

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