PayPal Looks to Stock Trading, Savings in Push Past Checkout

PayPal Holdings Inc. is weighing a foray into stock trading and high-yield savings accounts as the firm pushes beyond its iconic checkout button.

The payments giant expects the number of active users on its sprawling platform to climb to 750 million by the end of 2025 -- roughly double the current level -- as it expands into new areas of financial services, Chief Executive Officer Dan Schulman said Thursday at the company’s investor day. With its latest plans, PayPal aims to become the world’s next financial super-app, akin to Chinese firms Alipay and WeChat Pay.

“There’s few companies in the world that can even aspire to this vision,” Schulman said. “It requires capabilities that cross industries, from financial services to payments to shopping to technology.”

PayPal is coming off a record year, when spending on its platform soared 31% as consumers turned to online shopping in droves after the pandemic shuttered stores around the globe. The firm added 72.7 million users during the year as revenue climbed to $21.5 billion.

The performance came even as PayPal’s main business of speeding up the online checkout process has seen intense competition from the likes of Apple Inc. as well as payment giants Visa Inc. and Mastercard Inc. Still, it’s an area PayPal dominates: The firm’s button has been added to nearly three-quarters of the leading U.S. retail sites, according to a survey last year by Pymnts.com.

One Stop

Now PayPal has set its sights on turning itself into a one-stop shop for consumers and merchants alike to conduct their finances. The firm said new products could include stock trading and high-yield savings accounts as well as bill-payment capabilities and check-cashing services.

The firm’s new digital wallet will be divided into a financial services tab, a payments tab and a shopping tab, Schulman said in an interview following the investor-day event. PayPal hopes to debut the new features within the next two years.

“We are doing a lot organically because our platform and our product capabilities are as robust as they’ve ever been,” Schulman said in the interview. “But we’ll also look to partner with people,” he said, adding that “we’re also looking at the potential of acquisitions where that might make sense.”

The company is leaning into the success it’s already seen from adding the ability for users to buy, sell and hold cryptocurrencies in digital wallets in recent months. Half of all customers who took advantage of the feature now log into the app every day -- meaning PayPal has become a destination for those customers, rather than a place they turn to on an as-needed basis.

Driving Revenue

“This is precisely the type of engagement that we want to see as we add these additional financial services,” Chief Financial Officer John Rainey said.

That’s because that sort of activity, in turn, drives revenue. Schulman said the firm now expects the average amount of revenue it collects from each user to grow substantially over the next five years.

PayPal is now on track to more than double revenue to $50 billion in 2025 as payments volume on its platforms triples to $2.8 trillion. The firm also expects to generate $40 billion in free cash flow over the next five years.

PayPal’s shares rose 0.5% to $284.62 at 3:28 p.m. in New York, after climbing as much as 6.7% in earlier trading. The stock has increased 673% since it was spun off from EBay Inc. in 2015, compared with the 89% advance of the S&P 500 Index.

PayPal has warned that some of the new initiatives caused an uptick in spending on technology and development. Such costs already rose 27% to $2.64 billion last year. Still, the firm has said it expects profits to climb 17% on an adjusted basis this year.

“We really hit our stride in 2020,” Schulman said. “And I’m so excited about what we plan to deliver and what we are going to deliver in this year and in the years to come.”

©2021 Bloomberg L.P.

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