PayPal’s Buy Now, Pay Later Volumes Surge 256%

It’s no easy task to craft a payments ecosystem.

Yes, PayPal noted that giving guidance is tough in the current environment — and yes, the macro headwinds are present and are impacting results.

But in the bid to integrate payments across a variety of use cases, to leverage the platform across borders and payments types, PayPal continues to gain ground, particularly in what CEO Dan Schulman said is the bid “to have our digital wallets at the center of our consumers’ daily lives.”

To that end, the redesigned PayPal wallet is now installed by more than 50% of the company’s base — and digital wallets are tied to a 25% transaction “lift” compared to other users.

Active accounts grew 9% to 429 million, and the number of transactions grew 18% to 5.2 billion, despite a 54% decline in eBay transactions. Meanwhile, transactions per active account grew by 11% to 47 transactions.

See also: PayPal, Venmo to Change Instant Transfer Fees

Supplemental materials from the company noted that peer-to-peer (P2P) volume, which includes PayPal, Venmo and Xoom, increased 6% to $89 billion and represented 28% of total payments volume.

Cross border trade remained consistent as a percentage of sales, at 14%, the same as the fourth quarter of 2021. Excluding eBay, FX neutral cross border trade was up 4%, on top of 41% growth seen in 2021.

The growth came even as management said on the quarterly results call that, per the CEO, “An uncertain macroeconomic environment with resulting shifts in consumer behavior … has made visibility more challenging.”

U.S. revenues grew 20% and international revenue decreased 5%, while eBay international revenue grew 5%, which was on top of 47% growth in the first quarter, he said. The company added 2.4 million net new active accounts in the quarter. Later in the call, management stated that in terms of stickiness, 30% of the customer base drives 80% of the volume.

As for the details on buy now, pay later (BNPL), the company said that it logged $3.6 billion in volume in the first quarter, with 18 million customer accounts choosing this funding option since launch. Additionally, 70% of those users engage with BNPL through the company’s digital wallet.

Related: In Bid to Raise the Checkout Bar, PayPal Urges Industry to Boost Authorizations

Braintree, he added, saw volumes gain 61% year over year, aided by demand for payment processing for customers such as Airbnb.

Venmo’s growth, according to commentary on the call, comes on top of 63% growth a year ago. Venmo now has more than 85 million accounts in the United States, the company said, and Venmo should see 50% in revenue growth this year.

In addition, Schulman said “our integration plans with Amazon are progressing with the back half of the year as our current launch timeframe across both PayPal and Venmo.”

As noted on the call, as the macro environment has deteriorated Russia, Ukraine and China are contributing to increased global uncertainty and incremental inflationary and supply chain pressures, and management said trying to estimate normalized consumer eCommerce spending as we come out of the pandemic is “exceedingly complex.”

As a result, the company lowered its 2022 guidance and said it would reevaluate its medium term outlook. But, as Schulman said on the call, “The secular tailwinds from the digitization of payments and eCommerce growth are persistent.”