Shares of Paypal PYPL surged more than 3.3% on Thursday after the company announced an expanded partnership with Uber. Uber riders could already use their Paypal balance to pay for trips, but now that ability will also include Paypal-owned mobile payment app Venmo.
Early Thursday, it was announced that Uber will soon have a “Pay with Venmo” option, letting Uber riders use Venmo to pay for their fares in the main Uber app and for food in the Uber Eats app.
For Uber, the addition will make it even simpler for people to pay, especially when they want to split fares. In the past, there was a $0.25 charge if riders wanted to split with friends, while that service will now be free with Venmo.
On the other side of the deal, the move continues PayPal’s mission to make the Pay with Venmo option available for as many services as possible.
“Adding Venmo as a way to pay within Uber and Uber Eats furthers our mission to provide a seamless way to pay for the services that matter most to our customers,” Bill Ready, the chief operating officer at Paypal, said in a statement.
The company also previously introduced the option with food delivery service Grubhub GRUB.
This partnership, along with other more recent moves by Paypal, is necessary for the company to win the intense battle over payment services. The Cash App, competitor Square’s SQ mobile payment app counterpart, is already estimated to pass Venmo in downloads soon, while bank-backed Zelle is also challenging Venmo.
Apple AAPL is another key player in the payments industry, and the number of active Apple Pay users doubled in 2017 to 127 million globally, according to Loup Ventures. Furthermore, Uber has let riders use Apple Pay for payment since 2016.
Venmo partnering with Uber will attract new customers to the platform and give the app more exposure, which should only help Paypal. However, competition from other companies in the market continues to intensify as the world becomes more and more cashless.
Paypal has performed relatively well so far this year, with the share prices growing 20% since the start of 2018, but that growth will become increasingly more difficult to sustain in the future due to being in such a crowded industry.
Paypal’s upcoming Q2 Earnings Report will be a vital indicator of the success of its existing deals and if the company can win moving forward in the payment service market. Make sure to check back here for more on Paypal’s earnings outlook and the rest of the payment service industy!
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