PayPal (PYPL  ) acquired Venmo in 2014 as part of its $800 million acquisition of Braintree, a payment processing startup. It is now planning to introduce a debit card for users of its Venmo payment app. The card will be issued by Bancorp Bank (USB  ) and will allow up to $400 in daily withdrawals. This past October, Venmo's app added the ability to pay several online retailers but is now allowing users to pay in stores using the balance that they have on their app instead of transferring those funds to their bank account.

The card features a vertical design and comes in several colors: yellow, pink, blue, green, black, and white. It also contains a chip for security and an icon that indicates support for contactless payments. Payments made through the debit card will appear in a transaction history that can be split with other Venmo users. Users will not have to pay to sign up to get a card. The card will also be accepted at ATMs and there will be no fee for using it within the MoneyPass network. However, if one wants to use it for transactions on other networks, there is s $2.50 fee per each transaction.

PayPal is hoping that this new initiative will give it a competitive edge over rivals in the digital payment landscape which is increasingly becoming more and more competitive. In Q1 of this year, Venmo processed $12 billion in payments, which pales in comparison to over the $25 billion that was moved on Zelle's network over the same time period. Zelle is an app that enables users to send money to other people via their smartphones. Another competitor, Cash App, run by Square Inc. (SQ  ), already offers its users the opportunity to use their balance through a debit card.

This is definitely a good investment on PayPal's part, as the launch comes at a time when the company is facing increasing competition. However, according to PayPal COO Bill Ready, "even when others enter the space, it's much harder to play in a way where you're offering those levels of protections and guarantees" that PayPal does.