This Mobile Payments App Solves The Worst Part Of Group Dinners: Splitting The Check

Like Google, Xerox, and Facebook, mobile payments startup Venmo has already achieved that rare and highly coveted milestone in the product services world: its name has been verbalized.

“Just Venmo me.”

The phrase has become synonymous with “pay me back” or “I got it,” thanks to technology that empowers its young and growing userbase to instantly wire money to their friends’ accounts from their phones. In fact, a recent study on the mobile payments industry put Venmo users at the youngest end of the spectrum, ages 18 to 24, which reflects the founders’ ultimate goal: to make financial transactions social.

It wasn’t until this summer that I’d even heard of Venmo. A friend and I were sitting in a cab outside our shared apartment building and the driver was waiting for payment. I didn’t have any cash on me — I’d given my last crumpled dollars to the lady at coat check — and the fare was just enough that I’d have felt guilty letting my friend pay for us both.

While we live close by, I wasn’t sure when I’d see him again or remember to have enough cash on hand when I did (a common problem for us Millennials — researchers at found that 20% of Millennials have not made a cash purchase over $US5 in the past 30 days).

Normally this predicament involves an awkward dance of credit cards or a quick mental tally of who owes who and how much. One person leaves feeling uncomfortably indebted, and the other mildly annoyed (or even resentful) at having to cover the shared cost.

But this time my friend deftly motioned my card aside, swiped to pay, and as we got out of the cab said, “Just Venmo me.”

Oh, right! I whipped out my phone, pulled up the payment exchange app, and typed in a quick “To Zander, $US8 for Taxi” and hit send. Before he’d even reached his door, he had $US8 in his Venmo account, ready to be cashed out or used for another Venmo payment, and I was headed home debt-free.

Founded by two recent University of Pennsylvania graduates, Venmo launched in March 2012. It was bought only five months later for $26.2 million by Braintree, a payments company that supplies technology to process mobile credit card transactions. Perhaps sensing competition in the mobile payments space, eBay-owned PayPal bought Braintree for $US800 million in 2013. Sources involved in the transaction told TechCrunch that Venmo was “a key part of what attracted PayPal to the company.”

Besides its young userbase, what makes Venmo so attractive is that it intrinsically understands young peoples’ spending habits when they’re out with friends. They share cabs, buy each other drinks, cover tabs when someone’s short, and above all, they go out to dinner in giant groups. With its free peer-to-peer mobile transaction service and use of existing social networks, Venmo could revolutionise the going-out experience by removing the most awkward part of the evening: divvying up the tab.

It’s a situation anyone who’s had dinner with a group can relate to: the moment the bill is presented, the buoyant mood of the evening suddenly dissipates as everyone scrambles to make sure they aren’t saddled with more than their personal share. Those free-flowing bottles of wine now seem like a terrible idea. Someone tries to divide the cost of the communal appetizers based on how much each person consumed. Half the party didn’t bring any cash whatsoever and the restaurant only accepts two cards per bill.

By the time the individual tax and tip have been calculated, one person’s been left with an enormous tab and everyone feels like they overpaid.

Now, imagine this scenario with Venmo: At the end of a delicious meal, the waiter brings over the check and one or two people put down cash or card. The rest of the diners are then “charged” for their individual and communal orders by whoever covered the tab. Since every account is linked to an existing bank account, the other diners can complete the transaction at the table on their phones, and within minutes everyone has paid what they owe.

It’s a simple, tidy solution that does away with the pile of $US20s and loose change heaped on the table. It also introduces a level of accountability for those who didn’t bring the cash to pay right away, because all users can see their friends’ transactions. On your Venmo feed all charges and payments (scrubbed of the dollar amount) are visible to the public, which consists of your Facebook friends who also use the app. Since no one wants to be seen as a freeloader, those who pay upfront can feel more at ease knowing they’ll be paid back.

Most importantly, by reducing some of the intrinsic discomfort associated with asking friends to repay a debt, Venmo has established itself as an app that’s truly designed for young people. Bugging a roommate for her share of the bar tab you covered the other night is awkward — sending her a charge for “Draaaaaannkkkks :) :) :)” is a funny reminder that brings up the positive feelings from the night you had and addresses the situation without making her uncomfortable.

The next time you get a check that needs to be divided eight ways, it may be a better option than long division and empty IOUs.

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