PayPal Sees Jump in Transactions Per Account as Fastlane Checkout Boosts Conversions

PayPal building

PayPal’s transactions per active account grew by double digits in the latest quarter, and debit spending boosted results, while easier, faster checkout boosted conversions.

Total payment volumes were up 14% to $403.9 billion in the quarter, the company said in its most recent earnings supplementals, released Tuesday (April 30).

Active accounts were up 0.4%, adding 2 million accounts sequentially, driven by lower churn, the company said, to 427 million. Monthly active accounts were 2% higher at 220 million. And the number of transactions per active account stood at 60, increasing by 13% year over year.

PayPal branded checkout was 27% of total payments volume, and grew by 7%.

PSP volumes, which includes unbranded credit and debit card processing on the PayPal platform grew by 26% year on year and represented 26% of company-wide volumes.

Fastlane Shows Promise

During the conference call with analysts, CEO Alex Chriss said that among the company’s initiatives, and with an eye on large enterprises, “we continue to focus on accelerating growth in Branded Checkout and driving the profitability of our business. We are executing to get upgrades to our core branded checkout experiences to the market.” He said Fastlane is seeing “good progress in early testing” with a focused group of merchants — and that Fastlane users convert at about 80%, with a low-double-digit percentage point lift in guest checkout conversion from participating merchants.

“The results so far are encouraging as incremental conversion improves our merchants’ growth and profits,” said Chriss.

He noted on the call, too, that the firm’s PayPal Complete payments platform has been “gaining momentum over the past couple of quarters” and is now in 34 countries.

“As of the end of the first quarter, approximately 7% of our SMB volume is already on PayPal Complete payments,” said the CEO.

With a nod toward consumer-facing initiatives, Chriss said that the testing of PayPal’s rewards focused lifecycle marketing program, tested with 20% of PayPal app users, has driven a 7% increase in weekly app logins and a 4% increase in transaction margins per user.

He noted that debit cards also offer a tailwind to growth, as “a customer who adopts the PayPal debit card is more engaged, generating a 2x lift to transaction activity and a nearly 20% increase to average revenue per account compared to users who primarily use checkout,” said Chriss. Roughly 4% of active PayPal consumer accounts in the U.S. wield debit cards, said Chriss.

“In the first quarter, we saw a 21% year over year increase in consumers using our Venmo debit card,” said Chriss, who added that these are among the most engaged consumers, where activity here drives 6x the incremental revenue of a “P2P only” customer.

Asked on the call about the recent rulings in Europe that would mandate Apple open up its NFC hardware on handsets, Chriss said that “we will be playing in an omnichannel, environment. That where there are locations where NFC opens up … [and] obviously becomes a very, easy opportunity for us to provide a wallet in an Android or iPhone, operating system, and we will be ready.”

CFO Jamie Miller said on the call that the company’s “credit business performed relatively in line with our expectations with revenue lower because … we are carrying lower merchant receivables after tightening originations last year.” The company has guided to about 7% revenue growth for the current quarter, on an FX neutral basis.

Investors sent the shares higher by about 3% at the start of trading on Tuesday.