PayPal Transactions Per Active User Grow to 54.7

PayPal’s second quarter results show a boost in transactions per active account, and eCommerce growth increasing at encouraging rates.

To that end, the company’s results show that total payment volumes (TPV) surged 11% to $377 billion in the most recent quarter.

And investor materials showed that branded checkout TPV was up mid-single digits in the quarter.

The number of transaction grew by 10% to 6.1 billion, with activity marked across 400 million active consumer accounts, up 0.4% year over year, and 35 million active merchant accounts.

Venmo Transactions Grow

Total TPV for P2P transactions was up 2% to $95 billion, and was 25% of total TPV for the quarter.

Venmo transactions surged 8% to $67 billion.

Cross-border TPV was $47 billion in the quarter, up 3%.

Transactions per active account gained 12%, to 54.7.

Dan Schulman, CEO said “eCommerce growth appears to have stabilized in the mid-single digits substantially above our estimates.” He noted, too, that branded checkout growth — where 43 of the top 100 merchants have moved to that checkout — has accelerated to more than 8% as of July, “our highest monthly growth rate.”

Buy now, pay later (BNPL) has been rolled out to 60 million of the company’s customers, according to management commentary on the call, and it is seeing a 25% to 30% increase in first-time users.

As inflation cools, he said, discretionary spend should improve and will underpin further spending on eCommerce.

Artificial intelligence (AI) is being used in the company’s software development process, and Schulman noted that the company continues to ramp up its “test velocity” with more than 300 experiments launched across various product experiences in the first half of the year.

“We are already experimenting internally with an AI-driven PayPal assistant,” Schulman said.

CFO Gabrielle Rabinovitch said during the call that revenue increased 8% on a currency neutral basis to $7.3 billion and added that U.S. revenue grew 9%, as international revenue increased 5% on a currency neutral basis. Credit losses were $112 million or 0.03% as a rate of TPV.

There was a provisions build of $146 million, partially offset by a $33 million reserve release from the reclassification of the company’s European buy now, pay later portfolio to held for sale designation. The build stems from expected losses in the company’s PayPal business loans portfolio, as well as growth in its U.S. pay later portfolio.

“Like the broader industry, we’re seeing a normalization of our credit portfolio to pre-COVID delinquency levels across our consumer and PayPal working capital portfolio,” the CFO said.

During the question-and-answer session, Schulman said eCommerce spend is tied to a shift from travel and services into spending on goods and at retailers, including in cross-border settings.

“It’s consumers buying from merchants that they don’t really know, but they trust PayPal to make sure that the payment will be protected for them,” he said.

Later in the call he said that PayPal is seeing traction in its value-added services, noting, “We just started doing orchestration in six additional LatAm countries. … We’re seeing 1.90% authorization rate improvement” for those merchants.