The big idea: Turn Venmo into a system for social enforcement

A big idea to turn Venmo from a payments company into a privately-run government

I hate splitting the bill with Venmo.

If I’m the one putting down my credit card, it’s weird to immediately send a Venmo request. It’s even weirder to wait a day or two before sending it out — or worse, only remembering weeks later, when it feels ridiculous to ask. I even hate it from the other side; I am sure that I’ve shirked on multiple dinners after nobody sent a request.

Whether or not Venmo snafus are intentional, the social contract breaks when brunch debt goes unpaid. Can we repair it using incentives?

Introducing: Venmo Norms, a collection of features to ensure a fair split of the bill.

An escalating path to reciprocity

The Venmo Norms system starts as an extension to Venmo’s existing tools that provide a record of payments on credit cards and an easy way to split them. With this baseline functionality, it’s time to build Venmo’s product roadmap through 2026.¹

The first step is machine learning models that proactively identify purchases that are likely to prompt Venmo requests. Think restaurants with $50+ bills, multi-passenger travel, and expensive entertainment options. With better insight into which bills are intended for splitting, Venmo can ramp up push notifications that prompt the buyer to send out their reimbursement requests.

But not everybody will pay on time. The solution: a default two-day payback window for Venmos, adjustable by users. Escalating warnings hit the requestees to press the pay button; if they don’t after two days, the public debt leaderboards come into play. With one press, any Venmo user can view which of your friends are in Venmo debt, how much, and how long they’ve avoided paying.

In addition to publicly shaming slow-to-pay friends, the leaderboards serve as the foundation for the Venmo Credit Score, a measure of your reliability in paying back Venmo requests. This credit score is persistent across all of your Venmo interactions, making your friends think twice about putting their card down for you.

But social shaming doesn’t compensate you for the implied financial value of floating these debts. Why should Venmo debtors get your cost of capital for free?

Properly pricing your friend’s pasta, 2 drinks, and 1/3 of the appetizer

When your friend forgets to pays their share of dinner, you’re essentially giving them a short term, unsecured payday loan. Per the CFPB, the interest rates on these loans can reach an outrageous 15% to 30% per month — over 400% per year annualized.²

I’m not saying that Venmo needs to match the most predatory lenders out there. But the new Venmo Short Term Financing team will have to charge significant interest for unsecured dinners and coffee (both from a financing perspective and a behavioral nudge). Why would anyone agree to this? Well, social pressure is powerful; it’s going to be awkward to see your friends when you’re accruing 300% APR from the croissant you haven’t paid for.

For someone late on their Venmo repayments, the usurious interest charges will start to add up and build pressure to finally pay. Some frequent Venmo debtors may opt into Venmo Collateral: a system to put up a car, iPhone, or Robinhood login as collateral in exchange for a lower interest rate on unpaid Venmo debt.

As these fines accrue, you and Venmo may want to mitigate the risk of refusal to pay. Venmo insurance lets you pay a small fee to insure against friends who just never pay up. Not only will it cover the money owed to you for their share of the walking tour, it can also pay for the legal fees and repo men to liquidate your friend’s margin account for their share of tapas night — plus interest.

There are other options for those who don’t opt for insurance. Venmo can facilitate a secondary junk bond market for high-risk promissory Venmo notes under Venmo Subprime. Investors can buy thousands of unpaid espresso martini debt notes at $0.40 on the dollar. There may be arbitrage opportunities for hedge funds, identifying easy-to-persuade debtors who will pay up after a small reminder. Venmo debts are primed to be a hot new asset class, financing a new generation of entrepreneurial financiers.

Keeping your friends from hating you

There is at least one flaw in this plan: I would feel pretty bad charging my friend $1,200 dollars for their $500 share of our car rental, even if it took them three months to pay it. Imagine you see them and they still haven’t paid; do you acknowledge it? Do you ignore each other? The goal is to restore social norms, not trap your friends in a Venmo debt spiral.

In the ancient world, the idea of Jubilee acted as a society-wide reset of debt relations. Slaves and indentured servants were freed, property was returned to original owners, and noncommercial debts were declared void. This served an important social function of avoiding social unrest from mass-debt that accrues over time.

Like the original Jubilee, Venmo’s Friendship Jubilee feature allows users to declare a general amnesty on unpaid Venmos. Users can forgive the interest on unpaid debt, giving their friends a chance to do the right thing. Venmo can even promote it at certain times of the year (January 1st?), providing some public goodwill to negate all of the repossessed Camrys.

Of course, a Jubilee has downstream consequences. It may become a social norm to forgive the debts of true friends, or to make agreements with debtors to forgive interest costs in exchange for an immediate payment of the principal. That’s not a bad thing — Venmo Norms succeeds when it secures the last share of the money you’re owed.

Why stop at dinner?

With this infrastructure in place, Venmo can execute a strategic pivot to become the arbiter of all human interaction. The core product is Venmo Social Contracts, allowing users to set social rules with their friends and family. Maybe you want to set up a $5 per minute fine for your friend that’s always running behind. Or charge $30 for each unanswered text. Or make friends that show up with the flu cover your urgent care copay. All powered by Venmo and added automatically to their tally. Compounding contracts will, through revealed preferences, help us truly learn which social norms are important to people.

And by aggregating behavioral contracts, Venmo can introduce Venmo Society, the marketplace for sets of standardized social norms. Collections of agreements — “I won’t stop in the middle of the sidewalk while everyone is walking” alongside “I will respond to texts within 2 hours” and “I will not respond 👍to a question” — will become freely opt-in-able, with escalating fines for noncompliance.

Decentralized governance, enforced with financial penalties, enables the Venmo-powered Neo-Feudal state. Society will splinter into subgroups with agreed upon Venmo Society enrollment: no-leash dog anarchists, brunch Stalinists, and the very quiet union of introverts.

You may be asking: why would anybody opt into this? Social pressure is a driver, but probably isn’t enough in itself to sign yourself up for a self-regulated police state. The real driver is alignment of incentives: groups of people that want to live with these rules will be able to socially exclude those who refuse to sign up. It’s a strong signaling tool to force conformity, all available through the powerful Venmo API.

From here, the next steps are obvious: there needs to be a physical space to go with the social codes. Large enough Venmo Societies can leverage Venmo’s financing tools to launch Venmo Cities, new towns entirely consisting of those subscribing to their sets of rules. Of course, any new city needs a Venmo Government to establish a representative government to solicit feedback on the Venmo social rules, using the system set up by the Venmo Constitution product.

A world with clear social guidelines, brought to you by Venmo.

Official idea rating

4/5. It’s not a new observation that social norms and sense of community have splintered in the 21st century. What makes this damaging isn’t just a lack of a shared language: it’s the lack of legibility. When you can’t tell what people expect, it’s easy for resentment to emerge — especially when money is involved.

There probably is real value in making social norms explicit, agreed upon, and enforced. Ideally we can just learn to share our genuine preferences, but if it doesn’t happen then Venmo’s product org might soon be ready to step in. Hopefully they’ll be good stewards of the social order.

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1. If you work at Venmo and are reading this, feel free to use these ideas to secure your promotion to VP of Product

2. Total payments for payday loans can be even higher when accounting for fees that lenders tend to tack on