Amazon Drops Venmo Only a Year After Adding It As a Payment Method

Amazon.com will stop accepting Venmo for payments effective Jan. 10, according to news reports and a page on Venmo’s Web site. “Due to recent changes, Venmo can no longer be added as a payment method. Venmo will remain available to users who currently have it enabled in their Amazon wallet until 01/10/24,” the page on Venmo’s site says.

Venmo parent PayPal confirmed the news early Thursday. “Venmo and Amazon have agreed to disable Venmo as an option to pay on Amazon at this time. Customers can continue to add their Venmo debit card or credit card to their Amazon wallet to pay on Amazon. We have a strong relationship with Amazon and look forward to continuing to build on it,” says a PayPal spokesperson, in an email message. She adds she can’t “share” transaction volumes on Amazon for PayPal.

Adds a spokesperson for Amazon: “Customers can still use nearly a dozen other payment options, such as debit cards, credit cards, checking accounts, or installments to pay for their orders.”

The move by Amazon to drop Venmo comes only a year after the massive e-commerce site began taking the popular peer-to-peer payment method. Venmo has been among a short list of alternatives to major-brand cards Amazon will accept, a list that also includes automated clearing house transfers and the Amazon store card.

PayPal’s effort to get Venmo accepted by Amazon extended for months. Former PayPal chief executive Dan Schulman celebrated the deal in November 2021 as a move to broaden Venmo’s revenue base beyond P2P payments by tapping into transaction-fee income for retail sales. But it took a year of technical work and further negotiation from that point for actual acceptance to start.

Observers see the move as a failed experiment, with Amazon having concluded it can meet customers’ expectations without paying fees for another payment method. “If you’ve got a Venmo account, there’s a very good chance you have a [checking account], so you can use ACH,” notes Thad Peterson, strategic advisor at the research firm Datos Insights. Also, “there may not have been enough volume to justify [Venmo] acceptance,” Peterson adds.

The emergence in recent months of more non-card alternatives could also have factored into Amazon’s decision, particularly with the launch in July of the Federal Reserve’s massive FedNow real-time payments network. “It’s got to be a business decision. They want to drive their non-card stuff to another channel,” notes Cliff Gray, a senior associate at TSG, a payments consultancy. Still, Amazon’s move puzzles him and other observers, given Venmo’s wide popularity among users. “It’s counter-intuitive that they’re kicking Venmo to the curb,” Gray notes. “Where do they want that non-card business driven? It’s not Venmo, so what is it?”

Venmo has other business relationships with Amazon, including an arrangement whereby users can send gift cards usable at the retailer’s site. Overall, Venmo racked up $68 billion in volume in the September quarter, up 7% year-over-year, PayPal reported, or 70% of the company’s total P2P payment volume.