Venmo Payouts extends mobile payments to merchants

A new mobile payments service is catering to business-to-business transactions rather than consumer-driven purchases.

Venmo Payouts has been launched by Chicago-based Braintree Payment Solutions. It extends mobile growth to merchants who can pay their service providers from smartphones and tablets as many consumers are doing with debit, credit and prepaid ACH cards. Braintree, which began in 2007 by handling payments for small online businesses, bought the social payments firm last year to use its technology for a range of services.

The new program will use the same platform that put the Venmo on the map for its unique peer-to-peer business model in which people could transfer small amounts of money to friends in their social network.

The system is also cost effective. Each payout costs only 25 cents, and Venmo doesn't charge fees or require contracts from account holders. The program's rollout is being offered initially to Braintree's 4,000 clients.

The payout initiative isn't the first since Braintree acquired the startup for more than $26 million, ZDNet reported. In January, Venmo Touch began offering a simpler sign-on for users of mobile payments at point-of-sale locations.

From paper to digital

According to Mobile Payments Today, B-to-B payments are still mostly carried out with paper checks and purchase orders. Venmo Payouts will automate payments to send money to independent contractors such as delivery and cleaning services and for online ordering.

A Venmo spokesman told the website that the services sector is growing significantly with companies using apps to set up a wide range of activities from transportation to having errands run by third-party providers. A Braintree company blog calls the new service the next development in the payment cycle within an ecommerce landscape that is changing rapidly.

By bringing merchants into the digital fold with transactions on their mobile devices, a vendor will receive a message by email or on a mobile device that they've been paid from the merchant's account. The payment can be made either as a deposit into a Venmo account or a cash-out that will be deposited in the account of the vendor's choice.

There are benefits all around. For Venmo, the new service may generate more users for their social payments accounts. Merchants will be using a digital system that's viewed as more secure than a paper trail that includes sensitive financial information. Vendors can also expect to be paid more quickly.