While Amazon did not provide the actual reason for not supporting Venmo as a payment option, the notable rise of web3 payment platforms could be a major factor.
In October last year, Amazon.com Inc (NASDAQ: AMZN) announced that it would begin to offer Venmo, a product of PayPal Holdings Inc (NASDAQ: PYPL), as a new payment option to boost its orders on the mobile app and Amazon.com site during the festival season. Initially, Amazon announced only its US-based customers would shop with the Venmo payment option. A year later, Amazon notified its users on Wednesday that it had dropped Venmo as a payment option, and the company will no longer let users pay using the PayPal-backed payment method beginning January 10, 2024. Following the announcement, PYPL stock closed Thursday trading at $58.48, down 1.76 percent from the day’s opening value.
Notably, PayPal has been bleeding for the past two years, whereby its stock has dropped approximately 18 percent year-to-date. As of this report, PaPal had a total market valuation of about $64.18 billion. Meanwhile, Amazon did not provide a specific reason for shutting Venmo out of its business, thus leading to speculation of possible differences in internal policies and the changing landscape. Moreover, an Amazon spokesperson highlighted that there are a dozen more payment options for shoppers on their platform.
“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,” Venmo noted.
Amazon has continued to perform well since the Covid lockdown boom, whereby its stock market has risen about 74 percent YTD to a total valuation of around $1.49 trillion.
PayPal Forced Out of Business by Web3 Industry
For many years since its inception, PayPal has dominated global cross-border payments with its ruthless policies. PayPal and its payment products have been tormenting users with high fees and slow processing speed, whereby a single payment can take up to 180 days to be processed. As a result, more users have left the platform for other better alternatives, which include web3 payment platforms. Moreover, PayPal has been attempting to pivot toward blockchain technology through its latest stablecoins launch dubbed PayPal USD (PYUSD). Additionally, the company is in the process of conducting a $6 billion stock buyback to shield it from increased sell pressure.
The rise of web3 payments around the world has significantly threatened traditional businesses that are not ready to morph with the new technology. Moreover, blockchain technology offers a secure, near-instant, and cheap means to transfer funds around the world without any reliance on third parties.
Companies like Ripple Labs, Stellar Organization, and Coinbase Global Inc (NASDAQ: COIN) are on the cusp of dominating global cross-border payments amid the mainstream adoption of digital assets.