Venmo Testing Plastic Visa Card

PayPal Holdings (NASDAQ: PYPL) just took a very strange yet logical detour on the road to a digital-cash society. Its’ Venmo peer-to-peer (P2P) payment solution is testing a plastic Visa Debit Card.

Select users are being asked to beta test Venmo Visas, Endgadget reported. The cards allow users to pay with their Venmo accounts by swiping at brick and mortar stores. They also apparently allow persons to withdraw physical cash from their Venmo balances via a PIN code.

The Venmo Visa has been around for a while, it was being tested by Braintree employees as early as June, Recode reported. No word on when or if the Venmo Visa will be made available to all customers appeared in the media accounts I uncovered.

Why the Venmo Visa Makes a Lot of Sense

Surprisingly the Venmo plastic makes a lot of sense for both PayPal and Visa (NYSE: V). It might even generate quite a bit of revenue for both companies.

The most obvious benefit to PayPal is actually making money from Venmo by charging fees to users, businesses, and others. The other big benefit will be to get Millennials to start using Venmo for something besides covering the gang’s bar tab.

Visa can win here because Venmo plastic might actually get Millennials using debit and credit cards. There have been numerous reports suggesting that the under-30 crowd avoids plastic like the plague. Venmo might be the tool to get them to start using it.

A smart move for PayPal here would be to start offering a Venmo MasterCard, a Venmo American Express, and a Venmo Discover card as well. Offering a Venmo with direct links to the bank, credit-card, cryptocurrency, Android Pay, and PayPal balances would be another obvious and logical move.

Venmo Visa Demonstrates that Cash is Still King

Venmo debit cards are a smart move for Millennials because it gives them a way to get cash from their balances. Despite the huge popularity of digital payment alternatives, cash is still king when it comes to a wide variety of transactions.

“Cash continues to be the most frequently used consumer-payment instrument,” The 2015 Diary of Consumer Payment Choice; compiled by the Federal Reserve Bank of San Francisco, concluded. Around 32% of consumer transactions were still made with cash in 2015 according to the Diary.

The Diary also makes a very good case for the Venmo Visa by noting that 48% of consumer-transactions in the U.S. in 2015 were made with credit or debit cards. Therefore, plastic is now the most popular consumer-payment technology in America.

Will Visa Take Venmo Mainstream?

Plastic can help Venmo go mainstream by encouraging all the older people used to paying with a Venmo card to try the application. That way both Millennials and their parents can use Venmo. A Venmo Visa can help Millennials pay dad back the money they owe him.

The next logical step will be a Tez Visa; linked to the new P2P solution that Alphabet (NASDAQ: GOOGL) is rolling out in India. Other inevitable products include an Apple Pay Visa, an Android Pay Visa, an Alipay Visa, and a Walmart Pay Visa. An Alipay Visa would be a smart product to help Chinese travelers pay in North America and Europe.

A likely development will be that Google (NASDAQ: GOOG) rolls out both Tez; and a Tez Visa or MasterCard, in the United States at the same time. Another smart move will be to offer a Visa that can access Android Pay. That would make Alphabet a major player in transactions and is sure to attract the attention of regulators.

One has to wonder if the Venmo Visa is a signal that PayPal is giving up on near-field communications (NFC) technology like that used in Android Pay and Apple Pay. Since many retailers refuse to accept NFC it is a strong bet.

In this June 19, 2015 photo, Alex Culbertson, 26, shows transactions via the Venmo app on his smartphone, Friday, June 19, 2015, in Boston. On a recent trip to Maine with six friends, Culbertson had to split up a weekend tab of gas, hotel rooms, food and drink. One person paid for everything and they split the final result, via Venmo, the PayPal-owned app that lets users pay with a tap and a text-like message.. (AP Photo/Elise Amendola)

Plastic is still king when comes to payments in America and will remain so for a long time to come. Even Venmo-using millennials will have to learn to get used to that fact.