PayPal Seizes The Top Spot In BNPL As Q3 Volume Increases 157%
PayPal’s users are still active, although spending has slowed considerably.
In spite of the fact that PayPal, like other companies, is susceptible to economic headwinds and inflation’s influence on consumer spending, its role in supporting the omnichannel experience continues to be a priority, with expanded tap-to-pay capabilities and instalment plans.
During the quarter, the firm handled about $5 billion in volume, up 157% year-over-year, and more than 25 million customers have used its purchase now, pay later services roughly 150 million times since their introduction. More than 280 thousand retailers show the BNPL option on their checkout websites.
“As a result of this robust growth, we believe we have become the largest buy now pay later providers in the world,” Schulman said.
Third-quarter payment volume on PayPal’s systems increased 14% to $337 billion, while transaction volume increased 15% to 5.6 billion. As reported in the company’s investment documents, engagement, or transactions per active account, increased by a record 13% to 50.1. Comparing the third quarter of 2019 to pre-pandemic times, the core daily active accounts on PayPal are around 40 percent greater.
Paypal reported 432 million active accounts, a 4% increase from the previous year, and 35 million active merchant accounts.
In the papers, management observed that customers who use PayPal for one or more recurring purchases are 15 times less likely to churn and conduct on average twice as many transactions.
Venmo TPV climbed by 6% to $64 billion, outpacing the 36% rise saw in the third quarter of 2021. The business reported that there were 90 million active Venmo accounts, 57 million of which were active monthly.
The volume of international trade payments grew by 5% on a currency-neutral basis.
Supporting Apple’s Tap to Pay System:
Schulman said that PayPal is collaborating with Apple to expand its products for PayPal and Venmo for businesses and customers using Apple’s tap-to-pay on iPhones. Customers of merchants in the United States will soon be able to accept contactless debit or credit cards and mobile wallets, such as Apple Pay using an iPhone and the PayPal or Venmo iOS app.
“This will allow PayPal’s merchant base to easily use their iPhone as a mobile point of sale without the need for a dongle or other payment terminals,” said Schulman, who added that “we believe that this, along with our other in-store initiatives, will continue to accelerate our opportunity to seamlessly process payments in the physical world for our merchants.”
Schulman said that the business is now doing beta testing with many eCommerce platforms. Beginning in the first half of 2019, customers will be able to link their PayPal and Venmo credit and debit cards to Apple Wallet and use them online and in-store via this effort.
Separately, the CEO said that the expansion of Venmo Pay on Amazon before to the Christmas shopping season is in full swing.
Holiday Season Highlighted:
The Christmas season appears to be foremost in investors’ and management’s minds; Schulman emphasised a “difficult macro environment” as well as “slowing eCommerce trends and an unpredictable holiday shopping season.”
This has resulted in what he termed a “prudent” sales forecast for the current quarter of 10% growth, which prompted investors to send the stock down 8% after hours. During the question-and-answer session with analysts, management revealed that customers with low and moderate incomes are starting to reduce their discretionary spending.
CFO Gabrielle Rabinovitch told analysts that “we saw U.S. eCommerce growing in the low single digits in Q3 with deceleration into the close of the quarter. This trend persisted in October on our platform…we have not seen the early start to the U.S. online holiday season that we saw in 2021.”
Looking ahead, she said, “we expect inflationary pressures alongside slow and global growth to weigh on discretionary eCommerce spending, which could continue to be pressured in 2023.”
