The biggest buzz for PayPal and its latest quarterly results released on Monday (Nov. 8) is a new partnership with Amazon that will allow U.S. shoppers to use Venmo at checkout starting in 2022.
As would be expected as PayPal posted its latest Q3 results, eCommerce remains a key driver of top and bottom lines and double-digit volume momentum. And in its commentary: no acquisition of Pinterest, but a key tailwind in place with Buy Now, Pay Later offerings.
Read also: PayPal Not Buying Pinterest ‘At This Time’
The PayPal deal with Amazon is one that CEO Dan Schulman said would, as eBay is increasingly fading as a contributor to payments volume and revenues, allow the company to work with a variety of marketplaces.
“Amazon is the latest example of what teaming up with an extremely significant player” in eCommerce looks like for PayPal, Schulman said on the call. Management said on the conference call that the volume tied to eBay was down by about 45% in the most recent period.
And in terms of revenue contribution, eBay represented less than 4% of PayPal’s $6.2 billion in the consolidated top line, where that contribution had been 13% a year ago.
He said that the companies are still “working through” the launch timeframe — though it is scheduled to debut in 2022 — and said that “it is the beginning of a journey of our two companies teaming together.”
Venmo at checkout represents a significant opportunity, given Amazon’s market share in the U.S. During the period, Venmo volume was up 36% to $60 billion. Part of that was driven by crypto-related activity.
“This is evolutionary — quarter by quarter by quarter,” said Schulman, as the company adds a range of new features to its app, such as investing and stock trading.
Drilling down into the most recent results, posted on Nov. 8, the company said that total payments volume was 26% higher year on year to $310 billion. Supplemental materials and additional commentary on the call showed that transactions without eBay were 34% higher than a year ago.
The company said that it added 13.3 million net new active accounts during the quarter, and the total at the end of the period stood at 416 million.
Chief Financial Officer John Rainey said that there had been a profound shift in eCommerce that has helped to displace cash. He noted that it took 20 years for PayPal to reach $600 billion in annual payment volumes and only two years to double that to $1.2 trillion. Cross-border trade, the company said, was 15% of TPV in the quarter, growing 17% on an FX-neutral basis.
Buy Now, Pay Later
In terms of buy now, pay later (BNPL) activity, the company said that through the trailing 12 months that ended in September, transaction volume was $9.5 billion; as many as 9.5 million consumers elected to use BNPL at checkout, while 950,000 merchants feature the option. The company will be expanding BNPL to Spain and Italy in the current quarter.
PayPal also said it is now the most accepted digital wallet, with more than 75% of the 1,500 largest global merchants accepting PayPal at checkout.
During the question and answer regarding the “appetite” to do a larger deal that might be in place, Schulman said that “we’re focused on becoming an essential everyday app for consumers.” And though not mentioning Pinterest by name, he said that larger deals have a higher hurdle rate, said Schulman. “And I am not saying that we would never, ever do that,” but a large deal remains less likely.
“We do not have to do something large — or small, for that matter,” to meet medium-term targets, said Schulman.