Expansion of the Digital Wallet: Overview
Dan Schulman, the outgoing CEO of PayPal, commented on the development of digital wallets and said that their market share has been growing gradually. The business is particularly having success with BNPL (buy now, pay later) offerings, which have significantly increased checkout times and overall TPV (total payments volume).
BNPL Services are Growing
In the three years since its introduction, PayPal has given 200 million loans to more than 30 million customers and increased the number of BNPLs on its list to 300,000 businesses. The company’s BNPL contribution to its TPV increased by $20 billion in the previous year, or 160% year over year. The volume of transactions has increased by more than 200%.
P2P Volume and International Trade
However, P2P transactions, which include PayPal, Venmo, and Zoom, saw a 2% fall in volume to $91 billion. However, Venmo TPV increased by 3% to $62.5 billion. Cross-border commerce, which made up 13% of total product value (TPV) and totaled $45 billion, stayed constant from the 14% reported the year before.
Enhanced Usage and Checkout Experience
A 13% rise to 51.4 transactions per active account was seen. PayPal is spending a lot of money updating its checkout process, including moving toward passwordless and one-click, native in-app experiences, in order to maintain its market share growth and defense. According to reports, the new checkout connections increased conversions by 3% to 10%. The CEO also indicated that the unbranded total addressable market for PayPal Complete Payments might increase by up to $750 billion.
Forecast for 2023
Schulman expressed his belief that global eCommerce growth will experience a modest YoY uptick and that discretionary spending will continue to be under pressure. According to interim CFO Gabrielle Rabinovitch, loss performance has improved over the fourth quarter of the previous year, and transaction revenue increased 5% to $6.7 billion, mostly due to Braintree and Venmo. In spite of this, the CFO said that the business does not foresee an increase in the total number of active accounts in 2023.
According to Schulman, who reflected on current trends, PayPal is seeing a broad acceleration in January and February, with monthly active users staying steady, very happy, and actively using the platform.