Branded, Faster Checkout Options Gain Momentum as PayPal, Shopify Report Earnings

If there’s a common theme emerging among eCommerce platforms this earnings season, it’s that the last moments of a transaction are continually being refined and streamlined.

PayPal reported earnings Tuesday (July 30), Amazon did so Thursday (Aug. 1), and Shopify will report this week.

Checkout exists as what can be termed the “last few feet” of eCommerce, where the ease of clicking to pay and finish a transaction is make-or-break. For platforms, reducing the pain points of checkout and speeding the process offers new revenue potential from merchants, as checkout becomes a competitive advantage for these firms.

There’s an opportunity here. The PYMNTS Intelligence report “The Online Features Driving Consumers to Shop With Brands, Retailers or Marketplaces” showed that 50% of consumers consider the ease of a merchant’s checkout process when choosing where to shop. Ninety-one percent of consumers said a satisfying checkout experience has a substantive impact on their willingness to shop with a merchant again.

PayPal Weighs in on Fastlane

PayPal’s second-quarter 2024 earnings results showed momentum in branded checkout and a roadmap for its Fastlane checkout, which is in the process of being rolled out more fully this month. Fastlane exists as a one-click guest checkout option for users to save their (pre-filled) details without setting up separate accounts with their merchants of choice.

During a conference call with analysts last week, PayPal CEO Alex Chriss said the firm operates with “both sides of the network, [with] consumers and merchant at scale globally and with the infrastructure to support it.” Fastlane is being made generally available to merchants in the United States, including merchants on Braintree and across PayPal Complete Payments (PPCP), its small business suite. (Company materials noted that PPCP’s payment volume is up 40% through the first half of the year).

Data showed that among early adopters, returning Fastlane users convert at nearly 80% versus the industry average guest checkout conversion closer to 50% — and where the eCommerce opportunity stands at $6 trillion, Chriss said on the call.

For the merchants, said Chriss, “small businesses are fighting for every customer. They need to be able to find customers, they need to be able to engage with customers, convert them, and then reengage with them.”

Branded checkout was among the contributors to growing transactions per account (excluding PSPs) by about 6% to roughly 61 in the second quarter. Branded checkout represented 27% of total payments volume.

“The early feedback we’ve heard from our merchants and sales team gives us increasing confidence that Fastlane will accelerate PayPal’s ability to capture the roughly 60% share of eCommerce purchases made without a branded market,” Chriss said during the call. “As a reminder, a large part of that 60% is still manual card entry, has low conversion today and is generally a poor experience for consumers and merchants.”

“The total addressable market is the entire guest checkout experience across the board,” he said later during the call.

Shopify Is on Tap

Shopify will weigh in with its own results Wednesday (Aug. 7), but there is some prologue in recent results. Shopify has momentum in its own auto-fill checkout service, as growth has been north of 50% through the past several quarters. Will these trends hold up?

During the company’s first-quarter earnings call, CEO Harley Finkelstein noted that Shop Pay growth was 56%, processing $14 billion in gross merchandise volume (up from $9 billion in the previous year), accounting for 39% of gross payments volume. There are now 150 million buyers, 150 million that have opted into Shop Pay.

As evidence of further initiatives in checkout, Shopify announced in June that it acquired Checkout Blocks, a company offering a no-code solution that lets Shopify merchants customize their checkout. Shopify Plus merchants can add new fields to collect additional data or show new information to their customers, control how delivery and payment options are displayed, and design fully branded checkouts.

Beyond PayPal and Shopify, Amazon deserves some mention here, too, amid its ongoing expansion of Buy with Prime. As part of a series of initiatives stretching back to last year, Amazon and Shopify announced a partnership that allows Shopify merchants in the U.S. to use Amazon’s logistics network through Buy with Prime (which also allows merchants to feature a branded checkout button on their sites).

Amazon said last year that merchants using Buy with Prime see their shopper conversion increase by 25%.