PayPal Stock Analysis (PYPL) – Price Does Not Equal Value

PayPal Stock (PYPL) Basic Data, Overview

PayPal has been operating as a digital payments service since 1998, originally under the name Confinity, founded by Max Levchin, Peter Thiel, and Luke Nosek. In 2000, it merged with Elon Musk's online bank, X.com, and adopted the PayPal name in 2001. The company now operates a global payments infrastructure: online money transfers, merchant payment processing, risk management, currency exchange, and buyer protection for hundreds of millions of users.

Elon Musk is not a founder, but he is an important player: he was CEO for a short time after the X.com-Confinity merger, and then in 2002, when he acquired eBay, he became one of the largest individual shareholders, which gave him significant capital. He later used this to launch other businesses, such as SpaceX. PayPal is now an independent, publicly traded company (again since 2015) and employs around 24400 people. Its portfolio includes brands such as Braintree, Venmo, Xoom and Honey, so the company operates a much broader payments ecosystem than what the classic PayPal icon symbolizes.

Market capitalization: 58.3 billion USD
Investor relations: https://investor.pypl.com/
iO Charts share subpage: PYPL

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📒Table of Contents📒

I have created a table of contents to make it easier for you to navigate the longer articles:

• PayPal (PYPL) Specialties
• How does PayPal (PYPL) make money and what market advantages does it have?
• PayPal (PYPL) metrics
• PayPal (PYPL) acquisitions
• PayPal (PYPL) Management
• Competitors: PayPal (PYPL) opponents
• What risks does PayPal (PYPL) run?
• PayPal (PYPL) valuation
• Major news and the last quarter
• Summary

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〽️Market segment analysis〽️

In this section, I examine the dynamics of the market segment, how it operates, who the main players are, and what tailwinds or headwinds the players in the given market have to deal with. I will not analyze companies in depth, but I will touch on the market share of individual companies.

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PayPal Holding Inc. (PYPL) is a financial gatekeeper service, a financial company that is involved in the process of transferring money between buyers and sellers, but perhaps it is closer to the buyer, because who doesn't know their PayPal branded checkout service? I've been using it for about 15 years, and the essence of it is that you make online payments through the PayPal interface. To understand exactly what PayPal (PYPL) does, you need to know how the financial services system works and how the buyer's money gets to the seller's bank account. To do this, we need to go a little deeper, but there is a great flowchart that you can see in the image below and Mastercard (MA) shows its operation.

What do we see in the figure above? There is:

• 🛒 the buyer, who wants to buy a product or service,
• 🏬 the seller, who has the product or service,
• 💳 the payment processing service provider, like Paypal (PYPL), Adyen (ADYEN), Stripe and many others,
• 🏦 the seller's and buyer's bank, who keeps records of account balances,
• 💠 the card issuers, such as Mastercard (MA) or VISA (V),
• 🧩 the other actors, like the POS terminal provider (e.g. Teya), or a company can fulfill multiple roles, for example PayPal (PYPL) not only provides payment processor but also other services.

Card issuers are a good example of this, as no matter what bank or financial service provider you are a customer of, you will have a MasterCard or Visa – or perhaps an American Express – card. Take out your wallets and take a look: Wise and Revolut use Visa bank cards, many banks use MasterCard cards and the underlying financial and settlement infrastructure, meaning that card issuers are almost inevitable players in the market, at least in America and Europe. But not in China, for example, because the infrastructure of Alipay (Alibaba) and WeChat Pay (Tencent) there does not even use bank cards, instead QR code payments are available. Crypto transactions also pose a threat to them, see later. Most of these companies have wide economic interests.

The next big player is the bank or financial service provider. The difference between a bank and a financial service provider is that the former also has a lending arm, meaning it can lend money in exchange for interest, at least to put it very simply. Of course, banks also provide other services, and many also have brokerage and insurance arms. The 4 largest banks in America are Bank of America, JPMorgan Chase & Co., Citigroup, and Wells Fargo & Company. A good example of a financial service provider is Wise (LSE:WSE), which only deals with money transfers, so they are not considered banks. I wrote about their services here: Wise: everything you need to know about it in 2025! It's not easy to "get rid" of banks, but it's not impossible either. I think everyone has switched banks, changed accounts, and so on, at some point in their lives. But the American Top 4 are often attributed with a wide economic moat, while fintech companies often only have narrow economic moats.

The third is payment processing service providers, also known as payment processors, who can be active in B2B and B2C segments, a good example of the former is the Dutch Adyen or Stripe, and the latter is PayPal, although Braintree is their B2B leg. Of course, like all service providers, this is not just a gatekeeper service, but there are those who provide all kinds of API integrations, POS terminals, as you will see later. Some payment processing services are only rarely encountered by users – B2B sector -, In contrast, PayPal's B2C services are known and used by almost everyone when shopping online.

The size of the financial market is quite difficult to estimate, and it is simply too broad a concept. The total global money supply is approximately 122,000 billion USD, but this includes the entire banking system, all invested capital, i.e. in addition to banking assets, the stock/bond market, the foreign exchange market, insurance, investment funds, etc. If we narrow it down to the payment processing service market, we can read about 1200 trillion USD., but here other submarkets were also included in the study. The most acceptable data for me was provided by Grand View Research, according to their data, it was 47.61 billion USD in 2022, while in 2023 it was 54.2 billion USD, which could grow to ~140 billion USD by 2030, with an annual CAGR of 14,5%. Other interesting facts:

• 🇺🇸 The US market is the largest, with 34% of its
• 🚀 the fastest growing market is Asia
• 💳 44% of payment solutions were credit card payments
• 🍽️✈️ 39% of salaries were generated by the hospitality industry and tourism

Interestingly, the following payment processor companies are included in Grand View Research's analysis: Adyen, Alipay, Amazon Payments, Authorize.net, PayPal, PayU, SecurePay, Stripe, Apple Inc (Apple Pay), Alphabet (Google Pay). One thing is clear from the list: Competition in the market is brutal, and players are trying to avoid competitors and divert traffic to themselves. A few examples that everyone has probably encountered:

• 🟦 AliPay: Previously, you could only pay with Ali Pay on Aliexpress, but a few years ago PayPal was available again.
• 🤖 Google Pay: Android payment option, can also be connected to NFC watches and the like
• 🍎 Apple Pay: Apple's own solution, the same as Alphabet's Google Pay
• 📦 Amazon Payments: like the previous two, only Amazon's solution to the same

As you can see, the big tech companies have all developed payment processing services for their own platform businesses, so you might be wondering why they don't completely crowd out other companies. It's probably because users want other solutions, but things can change quickly in this industry.

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🙋‍♂️PayPal (PYPL) Specialties🙋‍♂️

In this section, I examine what specialties the analyzed company has, what its position is in the market, and whether it does anything differently than its competitors. If so, what and how, and what impact does this have on their operations.

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PayPal Holding Inc. (PYPL) is best known for its unique customer logout solution, which I came across on eBay's (EBAY) online platform in 2008. Paypal (PYPL) and eBay are related to each other because the latter acquired the former in 2002, because users were already using it most often for checkout, i.e. for payment and exiting the site. PayPal was eBay's official payment method from 2002 to 2015, but in 2015 eBay spun off the payment solution and it became an independent stock exchange company under the ticker PYPL. After the separation, there was an exclusive contract between them for years, but this gradually ended, and eBay eventually switched to other payment service providers, primarily Adyen. The piquancy of the matter is that since then it has grown in many ways from PayPal's former parent company.

Another interesting fact related to PayPal (PYPL) is related to Elon Musk, whose name is now more often associated with Tesla (TSLA) or SpaceX, but before he started producing electric cars, his name was mostly known for the payment service provider. PayPal wasn't founded by Elon Musk in 1998, Instead, he founded a software company called ZIP2, which he sold in 1999, and then founded an online payments company called X.com. This merged with Confinity in 2000, and in 2001 they took the name PayPal (PYPL), and were subsequently acquired by eBay in 2002, right after PayPal's IPO. This was a big number at the time because it was the first IPO in the market in 18 months, because what was going on during that time? The dotcom bubble. Musk eventually left the company and started SpaceX. But who was the founder of the company then? Pieter Thiel, Max Levchin, and Luke Nosek, under the name Fieldlink, which later became Confinity, and then PayPal (PYPL) when X.com merged, so it's not a simple story. Elon Musk became CEO when X.com merged, but Thiel ultimately prevailed.

However, in 2002, Musk was PayPal's largest shareholder with 11,72%, so he was able to exit eBay with ~$175 million. In 2017, he bought back X.com from PayPal for sentimental reasons, and then changed Twitter's name to X in 2023, using the domain. PayPal founder Peter Thiel is no less a figure, having founded the Clarium Capital fund after the 2002 sale, then in 2003 he started a company called Palantir Technologies, which went public in 2020 PLTR with ticker. Peter Thiel was also an outside investor in Facebook, He sold his original $500,000 stake for $1 billion in 2012, which at the time represented 10,2% of the company. This activity was followed by participation in other venture capital funds, but he was also a partner in Y Combinator, the world's largest startup incubator. I have written a lot about startups, you can find them here: Creating a startup portfolio simply and clearly in 2025 I.

There is a pejorative term, the PayPal mafia, which refers to the young tech geniuses of PayPal. This group is not a criminal organization, but a legendary network of tech alumni. The name came from the fact that these people later stuck together, supported each other's businesses, often investing in each other's companies, like a "tech-based family". Some of the most famous figures:

• 🚀 Elon Musk: X.com → PayPal → Tesla, SpaceX, Neuralink, Twitter/X
• 💡 Peter Thiel: PayPal co-founder → Palantir, Founders Fund, Facebook shareholder
• 🔗 Reid Hoffman: PayPal COO → LinkedIn founder
• 🧠 Max Levchin: PayPal CTO → Affirm, Slide
• 📈 David Sacks: COO → Yammer, Craft Ventures
• 🎥 Steve Chen, Chad Hurley, Jawed Karim: PayPal → YouTube founders (acquired by Alphabet)
• ⭐ Jeremy Stoppelman, Russel Simmons: → Yelp founders

They are all connected to PayPal in some way, and together they have built companies worth over $100 billion. You can hear more of their story in the Acquired podcast below.

But let's go back to the history of PayPal (PYPL), as between 2005 and 2014, countless acquisitions followed one another, the company merged with VeriSign (VRSN) payment solution, partnered with MasterCard (MA), and acquired Fraud Sciences and Bill Me Later. By 2010, they had 100 million users in 190 markets and 25 different currencies. By 2012, the volume of payments processed had increased to $145 billion, 40% of which came from eBay. 2013: IronPearl, Venmo, and BrainTree acquisitions followed. Finally, in 2014, under pressure from famous investor Carl Icahn, eBay announced that it would spin off PayPal (PYPL) from the parent company in 2015. Dan Schulman became the CEO, but will remain eBay's exclusive payment processor until 2020. Of course, the service has been available in the online store since then, but they have since signed a contract with Adyen, among others, to process payments.

Due to the COVID lockdowns and stimulus in 2020, Paypal began to soar again, but the momentum was broken in 2022 and the company's stock price began to plummet, which has continued ever since. The reason: PayPal's then-manager, Dan Schulman, wanted to create a super app like Tencent's WeChat that would provide a solution to all financial problems. Crypto, online payments, BNLP, which is a buy now, pay later service, lending, and so on. It didn't work out, which is why the company's share price has been suffering for 3 years. In 2023, Dan Schulman and almost the entire management left and was replaced by Alex Chris.

📰What is PayPal (PYPL) known for?

I think everyone knows PayPal for two things, both of which are services that have been used for a long time:

• (I.e.branded checkout service: a special payment option that redirects purchase activity through the PayPal system, so users can pay extra securely through the PayPal system. Interestingly, BrainTree is the unbranded checkout leg, i.e. the white-lable infrastructure behind the PayPal brand.
• 👛PayPal wallet: PayPal is able to store bank card data, convert between currencies (this is what they make a living off of), issue invoices, in other words, pretty much what all of its competitors have been able to do for about 20 years.

A branded checkout is nothing more than a check-out interface when you pay in an online webshop. In this case, the money does not settle directly with the seller, but PayPal acts as an intermediary between the two parties, so the payment passes through their system. PayPal asks you for the amount, and then, if certain conditions are met, it passes it on to the webshop, i.e. the seller. Why is this worth it to the buyer? Because you get PayPal's buyer protection, i.e.:

• 🛡️If the product does not arrive or is very different from the description, PayPal can refund your money.
• 📦Protection works when the transaction is completed and typically involves physical goods.

What it does not protect against:

• 🔕If you made a mistake with the payment or did not follow the refund rules, then PayPal is not a panacea.

So PayPal branded checkout is designed to prevent sellers from being scammed or disappearing, because they usually only receive their money if the buyer reports that the product has arrived in good condition and is not damaged. After a certain period of time - usually 180 days - the money is automatically transferred. You can read more about this here.. The above checkout solution has been used by users on all Chinese websites for about 20 years due to customer protection, in fact, almost only this. A few examples: Aliexpress, Banggood, Geekbuying, Gshopper, Ranvee, Gearbest, Tomtop, but the since-defunct TinyDeal also used PayPal's solution.

Who pays for PayPal (PYPL) checkout? It is always the seller, so there is no additional cost to the buyer compared to using another checkout service. In other words, there is no reason for the buyer not to use PayPal (PYPL) checkout, while the seller has a high chance of reaching many more buyers, as they offer extra security. One of the largest Chinese products analysis and testing companies in Hungary RendeljKínait A site called has been offering the solution for years, you can read how it works exactly at the link.

Nothing shows how brutally strong PayPal (PYPL) is in this segment better than the fact that you can even use PayPal's checkout service on Aliexpress, despite Alibaba's (BABA) own financial system, Alipay, dominating for years. However, due to user demand, PP was brought back to the platform a few years ago. Since I am a big believer in validating products and services related to company analytics, I encourage you to try PayPal's (PYPL) logout service if you haven't already.

However, in 2008, when I first used it, the service was pretty much the same as it is today. This is what people often say about it being a mature service, in other words old-school, or worse, outdated. However, they still reach 438 million active accounts/users and 36 million online merchants, which is quite a lot, so they have the critical mass..

Its more modern version is PayPal Fastlane, introduced in 2024, which is a checkout service where users don't have to register, they can pay without it. This is actually a very good thing in practice, because many people hate filling out guest checkout interfaces, including me. Fastlane is designed to solve this problem, and is used by 50% more people than traditional checkout. However, the rollout is still ongoing, with only about 30% of US users using it, with 80% of users promised by 2027.

👛Paypal digital wallet

As for the PayPal wallet, I admit I've never really used it. One of the reasons is that I think it's a rather outdated interface, as everyone in the B2C segment offers such services these days. In the PayPal (PYPL) wallet:

• 💳 you can pick up your bank cards,
• 💱 you can exchange currency (don't do it, it's terribly expensive, PayPal takes a 3-4% fee),
• 🧾 you can generate invoices,
• 🏦 you can link your bank accounts,
• 💸 you can move, request, send money,

so it typically offers things that almost every fintech app does these days. I think a Wise or a Revolut offers much more and much simpler. Since PayPal (PYPL) started its wallet service long before smartphones existed, the whole interface feels kind of outdated. They have a phone app for Android and iOSbut you get practically the same thing you get on desktop, I wouldn't even call it interesting. My experience is that relatively few people use it, and even they only do it because certain things can only be set here. However, in the USA and Western Europe, you can also link a debit card to your digital wallet.

Another interesting initiative is PayPal World, which connects 5 digital wallets, which means the cooperation of PayPal, Venmo, Mercado Pago, Tenpay Global (Tencent owned, Chinese market) and UPI (Indian market). This way, instead of 400 million, PayPal (PYPL) can reach 2 billion users. Currently, the thing is in the test phase (Q3 2025).

🧠Paypal Venmo and Braintree

Venmo is an American-focused, mobile peer-to-peer payment app that is primarily used by individuals to send money to each other. Its core is not classic payment processing, but fast, informal money transfers: between friends, family members, and smaller communities. Venmo is also a bit of a social finance app, as transactions are accompanied by comments and emojis, which builds a strong network effect. For PayPal, it is a strategic entry point into the world of young, mobile-first users – because the original checkout service was aimed at the X/Y generation – and which can later be monetized with a card and premium features. Venmo was actually part of Braintree, acquired by PayPal (PYPL) in 2013, so it is not the result of internal development. What makes Venmo really interesting is that Amazon has been introducing it as a payment option on its platforms since 2022. However, it is not available in all app versions and regions, and only works with US Venmo accounts. This year, Vemno accounts surpassed 100 million, which means something.

Braintree, on the other hand, is a backend, developer- and enterprise-focused payment processing platform that puts complete technical control in the hands of companies. It handles card payments, mobile payments (Apple Pay, Google Pay), subscriptions, and marketplaces through APIs, typically without PayPal branding. It is used by high-volume digital services like Uber and Airbnb. Braintree is PayPal's infrastructure layer: a stable, scalable payments engine that complete business models are built on, but it doesn't rely on B2C trust like the original, mature services.

🍏PayPal Apple collaboration

Around 2020, PayPal and Apple reached an agreement, but it wasn't one big, all-encompassing agreement, but rather several layered collaborations, the essence of which is that the two giants would rather coexist with each other than fight head-on.Apple didn't want to build a PayPal-level payment infrastructure, but I can easily imagine that it will one day, and PayPal won't be able to bypass Apple's ecosystem. The agreements address this interdependence, which in practice means that:

• ✅PayPal as a payment service is behind Apple Pay (USA, partly EU). PayPal (and Venmo) can be connected to Apple Pay, meaning that Apple Pay can also have a PayPal balance behind it, not just a bank card. Apple UX, Apple control, but the money flows through the PayPal system.
• ✅PayPal and Venmo are accepted in the Apple ecosystem. Apple is not banning PayPal:
  • ✔️For payments outside the App Store,
  • ✔️at web checkout (Safari),
  • ✔️in the physical world with Apple Pay + PayPal funding.
• ✅iOS access and technical peace. PayPal gets the iOS-level access (tokenization, biometrics, in-app UX) without which it would be uncompetitive on mobile. In return, it does not attack Apple Pay as a system.

📌In practice: Apple has not tried to completely displace PayPal, as it has marginalized some of its other competitors, but that does not make it a strategic alliance, but rather a controlled coexistence. I think Apple is the much stronger party in this relationship because it owns the platform, and PayPal is integrated into it. This cohabitation is familiar from elsewhere, for example, Booking and Airbnb have both built their own businesses on Google's platform, even though Google could divert traffic away from it and create its own booking system. But it's not in its interest, because users still generate search and advertising revenue for it, so it coexists with the other two companies.

📊PayPal data collection

I think a very important competitive advantage of PayPal is that when consumers log out, key data is transferred to the company:

• 🛍️ what did the consumer buy,
• 💰 how much did you buy,
• 🔁 how often the consumer buys,
• 🧩 What other affiliate products can you offer him?

It follows from the above that if PayPal (PYPL) can somehow monetize this data, then it can be used to build an advertising service. The Intrinsic Value website presents the possibilities for this very well. This can work before the sale, at checkout by offering other products in the cart, or even after the purchase. What I find shocking is that 40% of Paypal users open an account after making a purchase, so you can also insert a sales foot here, in the form of advertising, and PayPal and the Venmo app know this, at least in the US. There is, among other things, a Buy with PayPal button in a lot of integrated services to fulfill exactly this function. The question is how much this will be monetized in the long term, but it looks promising.

And that's exactly what PayPal came up with, the Ads Manager, which makes it easy for businesses to launch advertising campaigns to reach their customers. The test will start in the US in 2026, followed by its two most popular EU markets, Germany and the UK.

🌐Open AI and PayPal Collaboration

The other thing I'm not expecting much from yet is PayPal's Open AI integration, agentic AI. Anyone who uses ChatGPT will have noticed that when searching for products, a menu appears on the page where ChatGPT offers alternatives. The PayPal branded checkout is integrated into this bar and runs the payment itself as a financial transaction. So, ChatGPT answers the questions, searches for and offers alternatives, and then PayPal processes the payment.

I would be very surprised if other AI providers don't do the same, and Microsoft owns a significant portion of Open AI, so I'm very curious to see if this monetization leg is REALLY going to be worth much, then PayPal will be left with this meaty pot. We'll see, we'll have to watch the next few quarters to see what comes out of it.

🪙PayPal stable coin: PYUSD

Crypto fans will probably be happy to learn that PayPal has also had a stable coin since 2023. For those who may not know what this is: This is a cryptocurrency running on the Ethereum chain, pegged to the USD, and issued not by PayPal, but by Paxos. It is backed by 100% collateralized money, cash, short-term US government securities – i.e. T-Bills – and other cash equivalents, in theory, but I would be more cautious with this after the Tether scandal.

The essence of PYUSD is that PayPal/Venmo users can move PYUSD coins between their own accounts via the blockchain, meaning it doesn't require traditional financial infrastructure, which is why it's much cheaper. This is not for crypto speculation, but a settlement infrastructure, so the following fees can be avoided:

• 🏦 interbank settlement
• 💱 Currency exchange cost
• ⚡ transfer time can be reduced (essentially instant)

This means more control and cost savings for PayPal in the long run, plus it's not just for the crypto community, it's for everyone. The average user doesn't really know what's going on behind the scenes, they're just pushing a button. I see one problem with it: it only works within Venmo's system, and we don't know exactly how many people use it regularly, just the total number of users.

🧩Paypal Pay Later: buy now, pay later (BNPL)

BNPL (Buy Now, Pay Later) by PayPal is a consumer financing option that allows buyers to:

• 🪙pay in short installments, typically divided into 4 parts,
• 🏧delay payment for a specific period of time (e.g. 6–12 weeks),
• 💸Spread the cost with no interest or low interest.

In fact, it is a consumer credit that which often entices customers with zero interest and brings their consumption forward to the present. This is an integrated service in the PayPal ecosystem: it appears within the PayPal checkout, not as a separate platform. Why did I bring this up, since it's the same thing elsewhere? Because on 12/16/2025, it was announced that PayPal was founding a bank!

🏦PayPal Bank

There is still relatively little to know about PayPal Bank, but in short: On December 16, 2025, the company announced that it was establishing a bank primarily to lend to small businesses, due to the lax regulatory environment for fintech and crypto companies in the USA. This application was filed in the state of Utah with the Federal Deposit Insurance Corporation (FDIC), which concerns the establishment of a so-called industrial lending institution (ILC). If PayPal receives the license, it will be able to provide lending services to American small businesses, which means it will be increasingly independent of banks, which constitute a significant part of its costs, since they have to pay a lot of fees to them.

You can read my discussion below about the take-rate, which in the case of PayPal is ~1,7%, but many competitors report values ​​around 3%, which also includes the fees that PayPal passes on to other service providers. Although PayPal already had a debit card in the USA and Western Europe, issued by MasterCard, and also provided cashback services, it did not have a lending base. However, this requires a banking license, otherwise PayPal cannot charge interest on the deposited amount.

I have several thoughts on the above:

• 🏦This may be a forced move, because Ripple and Circle (both of which operate in stablecoins and crypto) have also applied for banking licenses, and since PayPal also has similar ambitions, it doesn't want to be left behind.
• 🪪A banking license is both an advantage and a disadvantage. On the one hand, PayPal accounts will have investor protection, lending and other related services, much like Revolut. However, a bank is a very different category of company than the current company, with different risks.
• 💰It will be able to collect more money from the same process that PayPal is doing now. It will not have to pass on its profits to other banks, and if BNPL wants to strengthen its foothold, PayPal itself can be a lender.

Since the regulatory procedure itself is a long and drawn-out process, I am taking a neutral view of this issue for now, we will see where they go and whether anything will come of it at all. However, for example, Wise has exactly this problem: they are just a P2P service provider, they cannot lend out their own or their client assets, as I wrote in my analysis of Wise's service: Wise: everything you need to know about it in 2025!

❗After the above, I can say that PayPal has a lot of low hanging fruit up its sleeve. BNLP, PYUSD, P2P service, PayPal Ads Manager and I could list more and they all point in the same direction, towards better monetization. Anyone interested in PayPal's entire financial ecosystem can read here: FintechWrapUp.

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💰How does PayPal (PYPL) make money and what market advantages does it have?💰

In this section, we examine what exactly the company does to generate revenue, what products and services it has, how indispensable they are. Does it have any competitive advantage (economic moat), how defensible is it, and whether the trend is decreasing or increasing, and what is likely to happen in the long term.

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Let's start with some numbers to show how strong PayPal is in the online payment services market, according to Statista:

• 👥 It had 434 million active users in 2024 and 438 million in 2025,
• 🌐 10.3 million websites offer PayPal checkout,
• 🏪 36 million sellers use PayPal services,
• 🥇 PayPal has a 43–45% share of the global payment processing market, making it the #1 option (excluding card issuers Mastercard and Visa), while Stripe has a 20–29% share,
• 💸 The total amount of money passing through their systems in 2024 was 1680 billion USD, in 2025 it is expected to be over 1700,
• 💰 this was associated with 32.8 billion USD in revenue,
• 🏦 Generate $6.8 billion in free cash in 2025,
• 🛒 Used in 200 different marketplaces worldwide.

You can read more about the statistics here: Chargeflow.

As you can see from the image above, PayPal (PYPL) is actually a group of services and does not rely on more than just its checkout service and digital wallet. We've already talked about Venmo and Braintree, let's look at the rest:

• 🪙Paydiant: Paydiant is a mobile payments and digital wallet platform that PayPal acquired in 2015, primarily for white-label purposes. The idea is to enable large merchants and banks to build their own branded mobile payments app on PayPal-level technology without the PayPal brand. Optimized for NFC, QR, and in-app payments, it was more of a strategic technology acquisition than a standalone product. Competitors: FIS (Worldpay), Fiserv (Clover), M2P fintech, Temenos Payments, Goesecke+Devirant.
• (I.e.Xoom: Xoom is PayPal's international money transfer service, acquired in 2015. Its focus is on cross-border money transfer: sending money abroad quickly via bank transfer, cash withdrawal or mobile wallet. The target audience is typically immigrants and people with international connections who are looking for a cheaper and faster alternative to traditional money transfers. Xoom is a separate revenue stream, heavily fee- and exchange-rate-based. Competitors: Wise, Western Union, MoneyGram, Remitly, WorldRemit and many other smaller fintech apps.
• (I.e.Simility: Simility is a fraud and risk management platform that PayPal acquired in 2018. Its machine learning-based solution analyzes transactions, user behavior, and patterns in real time to detect fraud. It's not a consumer product, it's an infrastructure: PayPal protects its own systems and its enterprise customers, especially in marketplaces and high-volume payment environments. Competitors: Stripe Radar, Forter, Riskfied, Sift, Feedzai.
• ????Zettle (formerly iZettle): Zettle is a POS and small business payment solution – essentially a debit card terminal – that PayPal acquired in 2018. It offers a card reader, cash register software and simple business management features, primarily for small and medium-sized merchants, connecting online and offline. The strategic goal was to make PayPal strong in physical stores, not just online checkout, mainly in Europe and other non-US markets. PayPal also has a partnership with Verifone, which is also a POS terminal provider, so PP can integrate with Verifone's system. Competitors: Square (now Cash App, owned by Block Inc.), SumUp, Stripe Terminal, Worldline, Adyen POS.
• 👛hyper-wallet: Hyperwallet is a payout platform that PayPal acquired in 2018. It is not used for accepting payments, but for mass payments: it is used by marketplaces, gig platforms, affiliate networks, and gaming platforms when money needs to be transferred to thousands of users worldwide. Competitors: Stripe Connect, Tipalti, Payoneer, Adyen Payouts, Wise Platform.

As you can see from the above, PayPal's (PYPL) solutions cover certain segments of the financial market, so they compete with several competitors at once. Stripe, which is a private company, Adyen, Block (Stripe), and Wise are quite capable, but of course, smaller opponents should not be underestimated either, the market is incredibly dense.

🍯The Honey Scandal

The Honey scandal is one of the worst corporate stories I've ever come across, specifically about the rip-off of customers and influencers. Honey was a fake coupon search plugin created by Ryan Hudson and George Ruan that activated at checkout and listed itself as an affiliate source even if it didn't provide a real coupon or users originally came from a different affiliate link.

What is an affiliate link? Let's say you're a tester writing an in-depth review of a vacuum cleaner, or a stock analyst analyzing Wise's services. You get a commission back for products purchased based on your analysis, which is your salary. How does the seller know that the traffic comes from you? By placing a marker on the link that identifies the tester, and it may also contain other parameters, such as time, source, campaign, product, etc.

However, if Honey was running in the browser, it would simply steal the revenue of YouTubers, affiliates, coupon sites, content creators, and everyone else by changing the cookies and the tag at the end of the link in the browser, spoofing the source. Honey would continuously run paid ads and sponsorships on YouTube content creators, to the point of becoming one of the biggest advertisers on YouTube of all time, and then simply steal that money back through commissions. It would also offer users fake coupons, or ones that were intentionally worse than the available coupons, to keep prices high and thus make more money. Those affected included Marques Brownlee, Linus Tech Tips, Mr Beast, MoistCritikal, Gamers Nexus, JayzTwoCents, and many others. Many content producers sued the Honey programmer, but they were unable to legally arrest him, even if the practice was unethical.

☝🏼Not only is it unethical, but it's also very profitable, as in 2020 PayPal (PYPL) purchased the plugin for $4 billion!, giving the company ever was its largest acquisition, which means that the program could have "stolen" a much larger amount of money from various content producers than the previous amount, otherwise it would not have been worth it for PayPal to acquire them.

If you thought that was the end of the story, it's not, because after the sale of Honey, a new program came out, Pie, which is Honey's successor, and does exactly the same thing, except it's an ad blocker that not only steals affiliate revenue, but also redirects ads that would run in your browser. An incredibly ugly story, which PayPal (PYPL) assisted with a fairly large amount of money about 5 years ago.

🤔The irony is that although PayPal (PYPL) acquired Honey in 2020 under Dan Schulman, the case only came to light in 2024, so its shadow fell on Alex Chriss and his family, not on the previous management.

🫰🏼Where does PayPal's revenue come from?

The above services generate the vast majority of PayPal's revenue, mostly by handling a lot of traffic, called Total Payment Volume, abbreviated as TPV. This is currently ~1,7 trillion USD, and the revenue from this is 32,86 billion USD, so the take rate, or commission rate, is between 1700-1,8%, which is how much PayPal (PYPL) receives for the amount of money transferred through its systems. This amount is divided into two parts:

• Transaction revenue from TPV: 29,56 billion USD
• Revenue from VAS, i.e. added services: 3,3 billion USD (e.g. foreign exchange, interest income, risk management, etc.)

From the above, VAS is the much higher margin business, while TPV margins are decreasing due to industry pressure. To simplify the above: if revenues are diverted to another service provider, it does not go to PayPal (PYPL), so the company prefers to give up their fees, just so that TPV does not fall, in exchange for a lower take rate. So in the long run, it is simply interesting for PayPal to redirect its business towards VAS-type services, because it earns much more from them.

🏰Economic moat🏰

In this segment, I examined whether the company has any economic competitive advantage, which Warren Buffett referred to as the “economic moat,” which deters competitors from besieging the company’s fortress, i.e. its business, and taking its market. In this case, these could be the following:

• 🫸Cost/scale advantage: partly yes, but in this market I think this is not a decisive factor. Simply because they have a lot of competitors and PayPal is not the cheapest of them, so they are constantly forced to compete on price with Stripe, Adyen and similar providers in the unbranded checkout segment. Volume is everything, everyone is trying to transfer as much money as possible through their systems, and in return they are willing to do this at a lower margin. Dedicated services usually run with a higher margin, but the volume is lower.
• 🫸Switching cost: partly yes, especially with their mature services, for example, branded checkout is legendary and users prefer it over other providers. It is also not that easy to replace the infrastructure of payment providers, because it is terribly difficult for sellers to do so. This is especially true for large seller marketplaces like eBay and the like. However, on the consumer side, there is no such limitation, you simply have to press another button or download another application.
• 🫸Network effect: there are some, the more people know about PayPal, the more people will use it, and the more merchants will implement it to attract customers. However, if customers start using another platform where PayPal is not present, they will avoid the service, so I think the platform business is stronger, not the gatekeeper service that they have integrated. A good example of this is Aliexpress a few years ago, where there was only Ali Pay, but because of this, customers did not leave the platform, but PayPal was also brought back onto the platform. What would happen if, for example, Google Pay were to appear on it? Nothing, customers would be free to switch.
• 🫸Intangible assets, know-how, trademark:  significant, since PayPal is known for its mature services, which are closely linked to security, refunds and the ability to open a dispute with sellers in case of non-performance or mis-performance. However, Alibaba also offers this, and Amazon, for example, has a similar option, although not as an external service. But, despite this, I think that PayPal has a trust advantage over its competitors, not so much technological, but rather, the name is known to users, unlike, say, Adyen, which is a B2B service provider. Of course, the huge amount of data collected can also be best classified in this category, which in practice means processing 26 billion transactions per year.
• 🫸Barriers to entry: small size medium, large size large. A very good example of this is the mushrooming of fintech startups, typically backed by venture capital, such as Revolut. However, for them to become global players is a much more difficult matter. They need a serious financial infrastructure, they need to create the right trust, and the size of the company must be large enough to compete with their competitors. On top of this, there are regulatory and consumer protection requirements, obtaining licenses, distributing in multiple countries, signing contracts with card issuers, and I could list more, all of which are quite expensive, while they have to keep the service fee low to compete with their competitors. A good example of this is Wise (LSE:WSE), which uses the scale economies shared model and returns a portion of its profits to customers in the form of fee reductions. However, it is also true for this market segment that there are no monopolies, dozens of companies compete for supremacy, who can fit next to each other because the market is huge and growing very quickly. So, if a service provider wants to tick all the necessary conditions, it will have to spend a lot of money to maintain its competitive advantage.

It follows directly from the above that since PayPal (PYPL) is not the cheapest or the largest provider in the B2B segment and, as you will see, is growing more slowly than the financial market, so you can't get a wide economic moat. The reason for this is that its mature services are what are really strong, but today this is no longer the driving force in the market, so I can't judge PayPal as anything more than a narrow economic fortress.I looked at Morningstar's analysis, and they came to the same conclusion.

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🎢PayPal (PYPL) metrics🎢

In this section, I examined what metrics characterize the company, how it stands on the revenue side, what margins it operates with, whether it has debt, what the balance sheet shows. I look for items that are extreme – too high debt, high goodwill, etc. - what return on capital the company works with, what its cost of capital is, how the revenue and cost sides are structured. I also examine trends, owner value creation, and how the company uses the cash generated.

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📈What is the S&P 500 yield?📉

Compared to previous analyses, I have introduced a new section to compare the metrics below. Since many people use the US stock market index as a benchmark and also buy S&P 500 ETFs, it is worth looking at what companies are doing in aggregate (obviously, you should be happy if the company you are analyzing outperforms these values).

S&P 500 2024 data:

• 📈 SP&500 revenue growth: + 7 %
• 💹 SP&500 Profit Growth: + 10 %
• 📊 SP&500 gross margin: 45%
• 💼 SP&500 net margin: 13%
• 🔁 SP&500 ROE: 15%
• 🏗️ SP&500 ROIC: 12%
• ⚙️ SP&500 ROCE: 11%

I include SP500 data in every analysis, but I must point out that research puts the annual growth of the financial market at 14,5% until 2030. Of course, these are never really accurate, but even if there is a variance in the data, you can still accept that there is significantly more growth in the segment than the +7% due to the continuous expansion of the online space and the financial transactions taking place there. What is the solution to this? You compare the data with your competitors, which I did in Competitors section, but until you get there, it's worth keeping this in mind.

🔑Key indicators, KPIs

Before I dive into analyzing the metrics, it's worth clarifying a few critical concepts:

• TPV traffic (Total Payment volume): the total traffic flowing through all of PayPal's systems, which was ~1,700 billion USD in 2024. From this amount, we get PayPal's revenue using the take rate. TPV includes both branded and unbranded checkout traffic, as well as all other traffic that can be associated with the company, such as P2P money transfers.
• take rate: a percentage that PayPal takes from TPV turnover, this is roughly 1,7-1,8% in 2025. The tricky thing about the take rate is that not all companies calculate it the same way, for example, Block has around 3%, but this probably includes some of the fees passed on to other service providers (e.g. use of Mastercard and Visa systems, bank costs, etc.).
• PSP traffic (Payment Service Provider): the amount of money that PayPal (PYPL) transfers through its systems. When we say that PayPal is a PSP, we mean that PayPal is technically and legally an intermediary between the buyer and the seller during the payment process. However, this metric only includes non-branded traffic generated by others, e.g. white-label solutions, Braintree traffic, etc.
• TMD (transaction margin dollar): TMD is a PayPal-specific financial metric that shows how many dollars of gross margin are generated in the transaction business. Simply put, this is transaction revenue-transaction costs, or the difference between the two. What is included in this:
  • 💵 transaction revenues: PYPL fees and commissions,
  • 💳 transaction costs: card network fees (Mastercard, Visa), bank charges, interchange fees, processing costs, etc.
  • 📊 TMD is not about profit, but the gross contribution to PayPal's operations, essentially the gross profit margin.
• Number of active accounts (active accounts): The number of active accounts primarily shows whether the number of users using the services is increasing. However, this number must be adjusted for the number of new active users and churn. PayPal (PYPL) considers active accounts to be those that have made at least 1 transaction in the last 12 months.
• Average revenue per account (ARPA): shows how much money a user leaves with PayPal through their activity.
• Number of payment transactions (number of payment transactions): a telling figure, but you also need to look at the total payment volume. For example, if the number of payment transactions falls but the TPV still increases, it means higher-value purchases, so it's worth interpreting the two indicators together.
• Conversion rate: shows how many people are using PayPal's checkout service (e.g., Fastlane increased guest checkout rates by 50%).

The above chart shows that between 2017 and 2022, the number of PayPal (PYPL) users increased dramatically, this was Dan Schulman's forced growth path. In 2023, Alex Chriss took over as CEO, since then the numbers have stagnated, but the efficiency has increased, as you can see from the numbers below. In other words, it can be much more efficient with almost the same number of users.

Let's start with revenues and margins. In 2025 LTM, PayPal (PYPL) revenues were as follows (incomplete, as the year is not over yet):

Revenue distribution by type:

• 📊 TPV: ~1756 billion USD (+6,3% YoY).
• 📉 Take rate: 1,8%.
• 💰 Income: USD 32,8 billion (+4,5% YoY).
  • 🔁 Transaction revenue: 90%, USD 29,6 billion (+3,6% YoY).
  • ➕ IRON income: 10%, USD 3,3 billion (+12,8% YoY).

Revenue by region:

• 🇺🇸 USA: USD 18,7 billion (+2,7% YoY)
• 🌍 Non-US: 14,1 billion USD
  • 🇬🇧 UK: Not announced separately since 2023
  • 🌐 Other countries: Not announced separately since 2023
• 📊Total revenue: USD 32,8 billion (+4,5% YoY)

It's a shame that PayPal (PYPL) no longer breaks out non-US traffic, because for example in Germany, the world's 3rd largest economy, PayPal is incredibly dominant, used by 90% of users, while in England this figure is still 80%. This is probably due to their eBay past, as eBay.de/eBay.co.uk are still quite popular today. In America, the same is 77% for the top 1000 stores, which is a shockingly high number. Worldwide, PayPal is still the third largest online payment solution behind Mastercard and Visa. true, with a pretty big lag (and I think this statistic doesn't include China, with Tencent's WeChat and Alibaba's Ali Pay).

From the above, it can be seen that PayPal (PYPL) was not able to grow so much, but the more monetizable VAS leg is growing faster. It can be said that PayPal (PYPL) is growing slower than the market, but it is doing it stably and the same is roughly visible in the metrics.

The problem with the above is that PayPal (PYPL) lumps together different revenue legs into one number, even though their take-rate, margin, growth, and many other values ​​are not the same. Unfortunately, PayPal (PYPL) does not disclose in sufficient detail exactly what changes by how much and how, but I tried to collect the values ​​​​based on various statements, conference calls, K and Q reports, but it contains assumptions:

Segment (OVERLAP)	TPV (USD billion)	Take rate (estimate)	Revenue (USD billion)	% of total revenue	Comment
Branded checkout (PayPal button)	~ 720	2,4-2,7%	~ 18,0	Up to 56%	Highest margin, PayPal core business
Braintree - unbranded checkout	~ 570	0,20-0,25%	~ 1,3	Up to 4%	Low-margin, volume-based processing
Venmo (monetized transactions)	~ 18	~9–10%	~ 1,7	Up to 5%	Pay with Venmo, debit card, instant transfer
Venmo P2P (non-monetized)	~ 380	Up to 0%	~0	Up to 0%	Engagement, not a direct source of revenue
Buy Now, Pay Later (BNPL)	~ 40	3-4%	~1,3–1,6	~4–5%	Checkout funnel, customer acquisition
Card acceptance (offline / Tap to Pay)	~ 120	Up to 1,5%	~ 1,8	Up to 6%	Physical commerce, terminal-less acceptance
Currency exchange, cross-border transfers, other fees	did	did	~4,0–5,0	~13–16%	Currency exchange, cross-border transactions
Altogether	1 700	~1,7–1,8%	~ 32	Up to 100%	Consolidated PayPal model

If you add up the numbers, it comes to 1828 billion USD, but that's not a mistake, there is some overlap in the numbers because BNLP belongs to branded checkout, Venmo belongs to the P2P line, while Tap to Pay is branded, offline is unbranded checkout, and so on. The rest of the margins look something like this:

• 💱 Foreign exchange (FX): 250–400 basis points, or a 2,5–4% fee (this is why you have to disable the option on PayPal to do the conversion, because it's expensive),
• 🌍 cross-border transactions: 0,2–0,5% fee,
• 💸 user fees: remittance, card transfer, P2P acceleration plus other fees, this can be essentially any amount.

Since we don't know the extent of it, it obviously distorts the overall picture somewhat. Of the above, the currency exchange/cross-border transfers/other fees are the trickiest, because they are not TPV-based, but appear as direct fees:

Main TPV category (non-overlapping)	TPV (USD billion)	Related monetization layers	Revenue contribution (USD billion)	% of total revenue	Comment
Branded checkout	~ 730	Branded merchant fee BNPL (overlay) FX / cross-border (overlay)	~20,5–21,5	~64–67%	PayPal core business, highest margin
Unbranded processing (Braintree)	~ 570	processing fee FX / cross-border (overlay)	~2,5–3,0	~8–9%	Low margin, volume engine
P2P (PayPal + Venmo combined)	~ 400	Venmo monetization (overlay) Instant transfer fee	~1,7–2,0	~5–6%	Engagement + delayed monetization
All TPVs	~1 700	—	~ 32	Up to 100%	Consolidated PayPal model

As for margins, you can see how TPV growth and competition have eaten into gross margins, and this stack still accounts for 90% of PayPal's revenue, while the VAS segment only accounts for 10%. However, if we look at the net profit margin, it has risen from 8,8% to 13-15% in the last 3 years, as the proportion of higher value-added services began to increase. If you look at EBITDA or operating margin, which are the purple and orange graphs, they have essentially changed little.

Revenue alone does not reveal much about the company's financial situation, it is always worth comparing it with the debt ratio:

• 💰income: USD 32,860 million
• 🤑profit: 4917 million USD
• 🫰🏼cash: 8995 million USD
• 💸net debt: $1410 million (~4% of revenue, ~28,6% of profit)
• 💶Debt/Equity: 0.6
• 👛interest coverage, EBIT/interest: 14.4

From the above, it can be seen that the company is sitting on a lot of cash, but it also has debt of 10,405 million USD, the difference between the two is the net debt of 1410 million USD. Interestingly, both Block and Adyen have negative debt, meaning they have much more cash than debt. I'm generally quite sensitive to debt, as it's a fixed amount that has to be repaid with interest, while revenue is a hypothetical thing, and in an economic downturn it can really hit many companies. Here are a few examples:

• Burberry Stock Analysis (BRBY) – The Knight Does Not Charge,
• Kering Stock Analysis (PPRUY) – Gucci is not selling,
• Nike Inc. (NKE) Stock Analysis – Chasing Innovation.

These are completely different industries, but it is worth reading what happened to the companies, fortunately PayPal is much less cyclical. But, I would not call it anti-cyclical, since the amount of money transferred through their systems depends on the consumption of products, so in a crisis it will likely decrease. However, this amount of debt is very far from unmanageable and the high cash ratio allows or would allow for rapid debt reduction. Why doesn't PayPal do this? The answer to this comes in the next chapter.

🧮What do ROIC and ROCE metrics show?🧮

ROIC – Return on Invested Capital – shows how efficiently the company uses its total invested capital to generate profit. Read more here.

• It shows the company's fundamental value creation capability.
• It filters out the impact of the financing structure.
• If ROIC exceeds the cost of capital (WACC), the company is creating value.

ROCE – Return on Capital Employed – shows how efficiently the company uses its long-term financing sources. Read more here.

• It measures the profitability of business activities.
• It does not take into account tax effects.
• A good basis for comparison between different industry players.

Indicator	What does it measure?	Who is it useful for?	When is it considered good?
ROCE	Total return on capital	Long-term investors	If higher than the industry average
ROIC	Return on invested capital	Equity investors	If higher than WACC
ROE	Return on equity	Shareholders	If stable and sustainably high

PayPal (PYPL) Ownership Value Creation

On the owner value side, I usually look at what the company uses the free cash generated. Basically, a company can do the following things with cash:

1. 🔄 puts it back into business
2. 📉 reduced debt
3. 💵 pays dividends
4. 📊 buys back shares
5. 🏢 acquires other companies

PayPal (PYPL) is an interesting company in that it does all of the above 5 forms of capital investment. The company spends most of its money on development and maintenance of operations. In terms of quantification, out of 32,8 billion USD, the latter consumes ~15 billion USD, SG&A is 6 billion USD, while 9-10% of the annual expenditure, or 3-3,5 billion USD, is spent on development, and this has decreased in proportion over the years. The reason for this is that the business cannot absorb an infinite amount, so a relatively large amount of cash is generated.

The chart above illustrates PayPal (PYPL)’s efficiency gains. The basic concept is that if a company’s revenue increases by X and its costs increase by the same amount, nothing really happens, and if those costs are fixed, it gets worse. Above, you can see the revenue growth, along with administrative and other expenses, in purple columns, and research and development, in green columns, and reverse charges. As you can see, these columns have essentially been stagnant or falling since the end of 2022, as can be seen in the percentage display. In other words, PayPal (PYPL) spends less on these costs than it earns, so it naturally has more resources for other things. And this is thanks to the new management, they are essentially getting more out of the same resources than before.

And here I would like to go back to the point that if approximately 6-6,5 billion USD of cash is generated annually and cannot be reinvested in the business, then it should be used for something else: acquisitions, dividend payments or share buybacks. You can read about the former in the next chapter, but the following is worth knowing about the other two:

• 💵PayPal (PYPL) pays a dividend, 09,2%, $0,14/share from 2025, but not paid before,
• 📊PayPal (PYPL) is buying back shares, often to a greater extent than the cash generated.

I would like to add two thoughts to the above: I am not particularly happy about the former, I think this is a mood-boosting measure on Alex Chriss' part, the amount of which could be 10% of the net profit. There was no particular reason for the introduction, I would have been much happier if they had bought back more shares. The latter is a much more lucrative use of cash than paying taxable dividends if the stock is currently undervalued. I'll cut to the chase: PayPal (PYPL) is currently one, and from this perspective, increasing debt is fully justified, as it creates additional value. The master of this was Harry Singleton at Teledyne, worth reading up on. Share buybacks are partly offset by stock option issuance, but the amount has been reduced by less than half since 2020, which is commendable.

Let's jump to value creation, as this is perhaps where the biggest lesson can be drawn from the ROIC and ROCE indicators. As I have written in other stock analyses, the ROIC>WACC relationship should be examined, which in 2025 looks like this: 20,1%>between 8-12%, so there is plenty of value creation. Of course, the data below can only be objectively examined in light of the data of competitors, but one thing is clear: after the failure of the great Dan Schulman's super app development in 2022, the numbers started to rise drastically, and the outbreak in 2020-21 is due to the COVID hype. If you look at the period 2014-2019, you can see that the metrics have improved a lot, which to me means that the company's ship has finally turned in the right direction, leaving behind the forced growth, the Honey scandal, and the all-solving, but otherwise unfeasible application project, and instead they are focusing on the proper monetization of their traffic.

One more interesting thing to finish off: in the chart below you can see the % value for shareholder value creation, which is the sum of dividend payments, share buybacks, and debt reduction. Since PayPal (PYPL) has not paid a dividend so far, this cannot be included in the value below, just as debt reduction cannot be included either. So, essentially the value of the share buyback shapes the numbers, except for the last year, where the dividend payment also appears. In practice, this means that:

• 2021: $3211 million, offset by $1376 million in compensation, representing a net share repurchase of $1835 million
• 2022: $4056 million, offset by $1261 million in compensation, representing a net share repurchase of $2795 million
• 2023: $4875 million, offset by $1475 million in compensation, representing a net share repurchase of $3400 million
• 2024: $5952 million, offset by $1230 million in compensation, representing a net share repurchase of $4722 million
• 2025: $5820 million, offset by $1075 million in compensation, representing a net share repurchase of $4745 million

💡It reduced the number of its own shares by 9,65% in 2024 and by 3.65% in the first half of 2025, looking like a typical cannibal stock.

In addition to the above, a USD 15 billion share buyback program was approved in 2024, of which USD 3228 million remains, without expiration, so the above trend will certainly continue for a while.

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💵PayPal (PYPL) Acquisitions💵

In this section, I examine how acquisitive the nature of the company is and what impact each acquisition had on the life of the company, if any.

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PayPal (PYPL), while I wouldn't call it a serial acquirer, has been avidly acquiring other providers in the past. That's because its checkout service, which has a completion rate of around 90% — the number of people who pay after the checkout process begins — compared to the usual industry average of 50%, isn't a very high-growth business these days. That's why it's looking to add services like Braintree and Venmo, which have much higher volume in the online payments segment, to its ecosystem.

Year / date	Acquired company	Purchase amount	Comment
2013.09.26	Braintree	800 million USD	Payment processing infrastructure, including Venmo
2015.04	Paydiant	approx. 230 million USD	White-label mobile wallet technology
2015.04	CyActive Security	approx. 43 million USD	Anti-fraud and cybersecurity system
2015.07.01	Xoom	approx. 890 million USD	International money transfer like Wise
2017.07.10	TIO Networks	approx. 238 million USD	Bill payment platform (later written off as a loss)
2017.09	Swift Financial	approx. 183 million USD	SME financing
2018.05	Jetlore	approx. 16 million USD	AI-based e-commerce recommendation system
2018.05.17	iZettle (Zettle)	approximately 2,2 billion USD	POS and SME payment solutions (like Teya)
2018.06.19	hyper-wallet	400 million USD	Bulk payments
2018.06.21	Simility	120 million USD	Anti-fraud and risk management system
2019.11.20	Honey	approximately 4 billion USD	Coupon browser extension, affiliate income
2021.03.08	Curv (not to be confused with Curve, which was acquired by Lloyds)	not reported	Digital asset custody
2021.06	Happy Returns	not reported	Return solution
2021.09.07	Paidy	approximately 2,7 billion USD	Japanese BNPL operator

Most of the names above, except for Honey, Xoom, and Venmo/Braintree, which belong together, have not been heard of much so far, these are usually B2B services hiding in the background. BNPL, or buy now, pay later, is actually a lending service in which consumers receive the product first, but only pay for it in installments, and it is a phenomenon that is clearly spreading.

The problem is that a significant portion of the roughly $12 billion above has not been particularly profitable or is still scaling, and that amount does not include Curv and Happy Returns. The main problem is that their checkout service has been around for about 20 years, if it could really scale at a significant rate, I think it would have happened by now. Its existence is advantageous in that the company has economies of scale, and other services can be added to this system, but Braintree Venmo was bought for 12! and yet it is smaller than Stripe or Adyen, while Xoom was bought for 10!, and since then Wise has grown out of the ground, which is essentially beating everyone to death in the EU. However, PayPal can thank Braintree for successfully channeling big names like Uber and Airbnb, plus it has $570 billion in TPV, so I consider this a successful acquisition. Xoom may not have made a big splash, but at least it generates positive cash flow, so it's not a failed acquisition either, but I don't really see why PayPal wants to fight countless other competitors in this segment.

When I think of iZettle, Sqaure and SumUp, I remember seeing mostly Teya and SumUp POS terminals in Europe, the former is a star in Central and Eastern Europe, the latter is going west. iZettle was originally Swedish, I haven't seen it much anywhere, while Square is mainly popular in the US, so the online cash register market hasn't worked out for PayPal, to put it mildly, especially since it hasn't generated 2,2 billion USD in revenue so far. Honey was probably brutally overpaid and the solution itself is highly questionable, at least from a moral point of view. They haven't had any significant acquisitions since 2022, and I think the reason for this is that the company has burned itself a few times, so I don't expect any big, transformative acquisitions in the future, plus the new management's approach is different from that of the previous leaders.

💡To sum up: PayPal (PYPL) has been squandering its owners' wealth quite a bit before 2023, trying to integrate all sorts of services, which have had mixed success, but have been expensive in return. I've seen better capital allocation than this, but this is mediocre at best.

However, since Alex Chriss took over as CEO in 2023, PayPal (PYPL) has been mostly into partnerships rather than acquisitions. The table below shows that it has formed some kind of strategic alliance with many global companies, and interestingly, some of these include competitors such as Fiserv, Adyen (ADYEN) and Verifone. They also have a number of agentic AI collaborations, this one about integrating the aforementioned AI-based product recommendations with post-purchase payment and checkout services. However, I would be cautious with the AI ​​hype, as no one knows where this is going to go at the moment.

Partners	Date of notification	Focus area	Collaboration details
Amazon	June 2024	Merchant payment options, e-commerce integration	PayPal and Venmo payment options in Amazon's "Buy with Prime" service
Adyen	August 2024, 29	Accelerated guest exit, increased conversion	PayPal Fastlane one-click guest checkout launches in the US
Fiserv	August 2024, 29	Simplifying exit, platform integration, stablecoin payments	Expanded partnership to streamline payment processes; later collaboration on stablecoin-based payments
Shopify	September 2024	Operational efficiency, merchant tools, e-commerce integration	PayPal wallet integration into Shopify Payments in the US
Verifone (POS provider)	February 2025, 25	Omnichannel payments, in-person expansion	Expanded partnership for enterprise-grade omnichannel payment solution, supporting global in-store payments
Perplexity AI	2025. May	Agentic commerce, AI integration, conversational shopping	Purchase directly via chat using PayPal or Venmo, testing the “agentic commerce” concept
PayPal World (global payment platforms)	July 2025	Interoperability, cross-border trade, digital wallets	Launch of a new global platform to connect payment systems and digital wallets; launch partners: Mercado Pago, NPCI (UPI), Tenpay Global
Blue Owl Capital	September 2025	Balance sheet optimization, credit risk management	Blue Owl manages PayPal's US BNPL (Buy Now, Pay Later) receivables under multi-year agreement
Google	September 2025	Agentic commerce, AI integration, enterprise payment processing	Multi-year collaboration to create new AI-powered shopping experiences; PayPal checkout, Hyperwallet and Payouts integration into Google Cloud, Google Ads and Google Play
Shopware (acquisition)	2025. October	E-commerce platform expansion, international growth, entry into the European market	PayPal acquires Carlyle's stake in open source platform Shopware, increasing its ownership stake to approximately 41%.

💡From the above, it can be seen that Alex Chriss and management are finally not focusing on expensive acquisitions, but on much more effective collaborations and increasing the efficiency of their processes.

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🤵PayPal (PYPL) Management🤵

In this section, I examine who runs the company and how. What is the bonus system, how much risk – skin in the game – do the managers take on while running the company? Is there a family connection, or perhaps a special “heritage” factor?

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The management before and after 2023 was almost completely replaced, all members were removed, including the CEO. Based on this, it is worth examining the last 3 years, because we know that Dan Schulman's financial policy, which diverged in all directions, was not very successful.

Before 2023	After 2023
Dan Schulman — President & CEO	Alex Chriss — President & CEO
John Rainey — Chief Financial Officer	Jamie Miller — Chief Financial Officer & Operating Officer
Sri Shivananda — Chief Technology Officer	Srini Venkatesan — Chief Technology Officer
Mark Britto — Chief Product Officer	-
Jonathan Auerbach — Chief Strategy, Growth & Data Officer	Kausik Raiopal – Strategy, Corporate Development & Partnerships
Suzan Kereere — EVP, Global Markets	Suzan Kereere — President, Global Markets
Peggy Alford — EVP, Global Sales	Peggy Alford — EVP, Business Operations
Louise Pentland — Chief Legal Officer	Louise Pentland — Chief Legal & Business Affairs Officer
Aaron Karczmer — Chief Risk Officer	Aaron J. Webster - Chief Risk Officer
-	Diego Scotti — EVP, General Manager, Consumer Group
-	Michelle Gill — EVP, General Manager, Small Business & Financial Services
-	Isabel Cruz — Chief People Officer

From the above it can be seen that basically everyone in the management except Suzan Kreere has been replaced, which clearly shows the previous dissatisfaction. However, positions have also changed, so a one-to-one comparison cannot be made with the previous one and there is no need to. The board of directors consists of 12 people, but the CEO and chairman of the board is Alex Chriss, who is counterpointed by the 11 board members.

But I'll get back to management, because operational management is what's important to us. Let's see what you need to know about each leader:

🤵🏼CEO – Alex Chriss

• 👔 He replaced Dan Schulman in September 2023, previously at Intuit, with a background primarily focused on SME, platform, and monetization. He is not a "visionary" CEO, but rather focuses on efficiency.
• ✂️ He scaled back on the overarching super app concept and didn't invest in increasing user base, as rewards users typically have a higher churn rate. Instead, he cut back on low-margin services and focused on what really makes PayPal money.
• 💰 Reward: The maximum salary is ~48 million USD, of which 6,6 million USD is the base salary.
• 📊 Shares held in PayPal: $11,3 million in shares, which is 0,014%. That's roughly 2 months of his total compensation, which I think is a no-brainer.

🧑🏼‍🎓CFO, COO - Jamie S. Miller

• 👔He spent 12 years at General Electric, and also worked at Ernst & Young and Cargill as CFO. His main focus is on financial and budgetary discipline, with a strong margin, cash flow and ROIC focus. He has been in the business for 30 years.
• ✂️He is also a member of the board of directors of Qualcomm, and he graduated from the University of Miami with a science degree.
• 💰Reward: 13 million USD.
• 📊Stake in PayPal: $2,7 million in shares, which is 0,0043%. That's nothing in my eyes, 2 months of full compensation.

👨🏼‍💼CTO - Srini Venkatesan

• 👔Previously, he was the deputy CEO of Walmart and basically performed technology tasks at the company. Before Walmart, he developed Yahoo's technology platform and participated in the integration of various acquisitions. Before Yahoo, he was the CTO of Marketo, which was acquired by Adobe. I wrote about it here: Adobe Inc. Stock Analysis (NYSE: ADBE)He was also a member of the technology teams at StubHub and eBay.
• ✂️He graduated from Bharati University with a degree in electrical engineering.
• 💰Reward: maximum of 17,5 million USD.

👩🏼‍💼President of International Markets – Suzan Kereere

• 👔Suzan Kereere is the only one left from the pre-2023 management, making her a veteran PayPal executive. He was previously at competitor Fiserv, where he oversaw the Clover and Carat platforms. Before that, he was the head of growth at Fiserv, primarily responsible for business development, but also gained experience at several Fortune 100 companies. He previously led a global team at Visa, but also had experience at American Express.
• He is also a board member of 3M and Alvin Ailey, and has worked for the American Red Cross and many other organizations. He graduated from Columbia with a degree in economics.
• 💰Reward: maximum of 29,4 million USD.
• 📊Stake in PayPal: $1,9 million in shares, which is 0,0033%. I think the same as Jamie S. Miller, this is a minimal amount of risk for the manager with such a large share package.

📌In practice: Although Diego Scotti and Aaron Webster are not included in the list above, they are both deputy managing directors and have maximum compensation of $17,2 million and $18,4 million, respectively, which is quite impressive. In connection with the above, my observation is that the management members do not really take risks with their own assets, so it is difficult to see the situation in which, based on their share package, their interests point in the same direction as PayPal as a company. If I add up the maximum compensation of the top five management members, it is over 100 million USD, and that does not include the compensation of the finance and technology leaders. In contrast, the amount of shares owned by the five executives is 19 million USD, which is not even a fifth of their annual salary, which is quite sad.

In addition to the above individuals, director David Wyatt Dorman has a 5,1 million USD share position, David M. Moffett has a 4,2 million USD share position, while the two executive vice presidents, Frank Keller and Michelle Gil, have a 3,4 million USD and 2,8 million USD stake. In the image above, you can see the insider stock transactions, in November there was a pre-announced sale worth 1,7 million USD, which is usually linked to RSU, i.e. stock awards. You can track the transactions here: insider trading.

🤑PayPal (PYPL) Management Compensation

In connection with the above, I concluded that management is currently not really motivated to align their interests with those of the company, as they have little capital in it. However, their long-term incentives and their salaries, which I believe are particularly high but surrounded by relatively difficult conditions, still encourage them to move forward in the common interest. You can't say they're doing a bad job, because they've gotten the company pretty much in order compared to the period before 2023, and we can't blame the current management for the mistakes they made earlier. So I'll vote for them for now, but in the case of PayPal, I would pay special attention to management communication in the future.

As for the compensation, the structure is quite typical, a multiplier is added to the base salary, which is tied to various metrics, this is called PBRSU, or performance-based, short-term incentives, within 1 year, where the multiplier depends on the role played by the given manager. Specifically, the PBRSU bonus depends on:

• 📈 from revenue growth
• 📊 and operating margin growth
• 💵 transaction margin dollars
• 📉 Non-GAAP EPS
• ⚙️ cost efficiency (operating leverage)

Since the values ​​are linked to the industry focus group – such as Visa, Mastercard, Fiserv, Block, Salesforce, etc. – they are not percentages, you can see them in the image below. In addition to these, there are also metrics measuring personal performance, which are also determined individually and not as a percentage. Overall, the whole thing is quite complicated, and anyone who wants to can figure it out in the diagram below. Long-term incentives, or LTI, are typically tied to total shareholder return and are determined based on a 3-year cycle. It's a crappy document, you can look here.

However, no matter how I calculated it, this management could be brutally well-paid if all the conditions are met, and this can be mainly attributed to the stock options. In 2024, the maximum is 48 million USD for the CEO, but in 2023 he immediately received a package of nearly 42 million, quasi as an entry bonusHowever, the package is locked for 3 years, so it really motivates the CEO to make PayPal perform well. Overall, it's incredibly difficult to understand all of this, and it would take a person on their toes to predict the 2025 salary in advance.

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🆚Competitors: PayPal (PYPL) opponents🆚

In this section, I examine who the competitors of the analyzed company are, what is their market position, whether they are in a subordinate, secondary or superior role. What is their market share and what is their specialty? Are they losing or gaining market share to their competitors?

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PayPal (PYPL) competes with competitors in three different sub-segments:

• 🚪check-out service, under the PayPal name (branded checkout): Google Pay, Apple Pay, Ali Pay, WeChat, etc.
• ➡️Background white-label infrastructure: which does not run under the PayPal name (Braintree, unbranded checkout): Adyen, Stripe, less relevant: Checkout.com, Worldpay/Fiserv.
• 💸Direct money transfer services (Venmo, P2P, peer-to-peer): Cash App (Block Inc,), Zelle, Wise (formerly Transferwise), Revolut, WeChat, Ali Pay, and instant bank transfer.

Not all financial service providers compete in every segment, and not all markets are open. In other words, the segments are quite fragmented, there is cross-competition, and there are overlapping solutions integrated into platform businesses:

🚪Checkout Services (PayPal)

This is PayPal's B2C leg. When it comes to checkout services, PayPal primarily has to compete with platform business providers, of which Apple Pay is practically the dominant player on iOS, while Google Pay is not the dominant player on Android, but it is very dominant. WeChat and Ali Pay are special because they also compete in the peer-to-peer segment. In the Chinese domestic market, payment service providers are practically a state monopoly, and PayPal (PYPL) cannot enter. However, consumers are paying not only within the internal market, but also across borders, which PayPal (PYPL) entered with its acquisition of GoPay.

I think it is safe to say that PayPal is a dominant player in Europe with its branded checkout business, The competition in the American market is much greater, and here the margins and take rate, i.e. the amount that remains after the transferred traffic, are also lower, but PayPal is the market leader here with 42-45%. In Europe, however, WeChat is not used much, while the Aliexpress platform also has a PayPal payment option, but unfortunately Europe does not account for the majority of the traffic.

➡️White label service (Braintree)

White-label is a service that has no brand, just an underlying empty but working system that any service provider can integrate into. For example, if Uber or Airbnb needs such a system, they can use PayPal's Braintree infrastructure, but the name does not appear anywhere, but is fully integrated into the client's system. With this method, PayPal can reach a much wider range of B2B customers, thus increasing their turnover, but in return, their pricing power decreases, since consumers do not identify the service with PayPal.

The brightest shining stars in this sub-segment, besides PayPal, are Adyen, Square, and Stripe, which are non-publicly traded companies. It is an industry standard that as volume increases, the take rate, i.e. the amount they receive back after turnover, decreases. This allows them to maintain their competitive advantage and put pressure on their competitors, a phenomenon that affects everyone equally, in return they can count on higher turnover, which compensates for the lower take rate. Although Adyen's take rate is not shown in the image above, as far as I could find, it is around 1,5-1,6%, which is slightly below PayPal. Since it is quite difficult to highlight only this part of PayPal's business, it is quite difficult to compare the players, especially because, for example, Adyen's revenue is 1/15th of PayPal's, but they are also growing the fastest.

Another complicating factor is that Block (X Y Z) reports these numbers without clarifying exactly what it keeps and what it passes on as usage fees to other providers like Visa and Mastercard. However, the amount of money transferred by the three companies, the take-rate, and the growth can be estimated.

Company name	Traffic (TPV / year)	Take rate	net income (annual)	Growth
Adyen	~1280 billion EUR (2024)	~0,15-0,16%	~2 billion EUR (2024)	~33%YoY (TPV), ~23% net revenue
Stripe	~$1400 billion (2024)	~ 0,3%	~$4 billion (2024)	~38% YoY (TPV), profitable, but we don't know
Braintree (PayPal)	~$570 billion (2024)	~0,15-0,3%	~1,3 billion USD (2024)	12,8% (PayPal's total TPV is only 4,5%)

The image below shows the value creation metrics, which aren't drastically different, but PayPal (PYPL) beats its competitors. This is misleading because if a company is focused on growth and burning money, its real metrics can be much better than what the data sources show. PayPal is the largest player, so it doesn't have to spend as much free cash on the same thing as the much smaller Adyen, so it's worth including revenue growth and net profit margin to see who's making how much from their business.

As you can see in the picture below, Block went from a very high peak to a ground zero, while Adyen is growing at 25-40% per year with a very high net profit margin, meaning it is making a killing on its business. PayPal's net profit margin has risen from 8,8% to 11-14%, so it is on a positive trend after the change of management. The numbers below are roughly reflected in the valuations. What is not visible in the picture is the base from which these companies started:

• 💶 Adyen income: USD 2 billion (2024)
• 🧱 Block income: USD 24 billion (2024)
• 💙 PayPal income: ~$32,8 billion (2024)

In other words, Adyen is able to grow quickly because it is a company with much smaller revenue that is currently scaling, but we don't know if it were fifteen times the size of PayPal, would it still grow like this?

I also searched for other gateway providers and came up with the following list: Shopify Payments, Stripe, PayPal, Adyen, Authorize.net, Square, Clover, but there are also smaller players like PaySafe, Leadres, PaymentCloud, CardX, Stax or Payment Depot. So the segment is incredibly dense, but the three most important competitors in my opinion are the three above.

💸Direct money transfer services (Venmo)

In the peer-to-peer, or P2P, segment, I don't think PayPal is doing well in Europe, although Venmo is only available in the US, but you can also send and receive money through PayPal. My experience is that no one uses it, everyone is a Wise or Revolut customer instead. Moreover, Wise is growing brutally fast in this segment, but it is quite weak in the US market.

The situation in the US is not much better, despite PayPal's presence with Xoom and Venmo. The former is a cross-border service, the latter is a simple P2P money transfer.. I searched the internet for the Top 5 money transfer providers in the USA and the following came up: Zelle, Venmo, Cash App (formerly Square. owned by Block Inc.), PayPal, Google Pay, Apple Cash, the latter only works on Apple devices. So the market is quite divided here too, but I tried to find numbers for the providers, which is a little complicated because some companies are either private or only publish the data together, so it's not really possible to isolate the P2P leg separately. The situation is further complicated by the fact that companies also use other metrics. For example, Apple doesn't disclose payment volume, Block's Cash App provides the amount received, which is not the classic TPV, while Google Play provides UPI, transaction number, and share. But I gathered what I knew to give an idea of ​​the magnitude:

• 🟢Wise: USD 194 billion (total assets under management, pure-play P2P platform)
• 🔵Revolut: $1000 trillion (total assets under management, only a portion of which is P2P traffic)
• 🤑Cash App: $275 billion (inflow)
• 💸Venmo: not disclosed, but 1,7 billion USD in revenue, based on this, if we calculate the average PayPal take-rate, which is 1,7-1,8%, the TPV is 170 billion USD (but this is just speculation).

As you can see, the amount of money passing through the P2P market is much smaller than what passes through payment networks, making it difficult to compare it with the previous two sectors.

📌Practically about the above: I am, to put it mildly, uncomfortable with drawing any serious conclusions. It is very difficult to separate out who the really strong players are in the sub-segments, but my opinion is that there is not really one super-dominant company, or if there is, it is PayPal. The market is expanding incredibly quickly, which gives everyone enough room to grow, but the platform providers seem to be significantly more serious players than the service providers that are integrated into it. I think it's easy to see that checkout companies are more dependent on Google, Amazon, or Apple than vice versa. Yes, PayPal is not bad among these, but the overcrowded market tells me that no one is really dominant here.

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⚡What are the risks of PayPal (PYPL)?⚡

In this section, I examine all the risks that could affect the company's long-term future. Currency, regulatory, market disruption, and so on.

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PayPal (PYPL) is in a very difficult situation because it is one of the sectors where innovation is booming brutally. Fintech companies are mushrooming, announcing some kind of disruptive technology every day, the competition is extremely high, this is very different from an oligopolistic market. The good news is that the annual growth rate is about 15%, which is encouraging for now, but it is not an easy company to hold from an investor's point of view. PayPal (PYPL) has a lot of risks to take in several sub-segments, where competitors regularly attack it.

🧑🏼‍💼Execution risk

• 🚨 The previous management demonstrated how PayPal can be mismanaged.
• ⚙️ More efficient operation instead of growth.
• 🎯 Management's interest in PayPal's (PYPL) long-term goals.

I don't think I need to explain why the behavior of the previous management was problematic, the forced growth failed, which is why the leaders were replaced in 2023. Since then, the tide has turned, the metrics are improving, the company has become more efficient, but I still get a bit of side-talk from the management. However, the numbers show otherwise, improving margins, efficiency indicators, better cash generation, and a decreasing number of shares. I think it's plausible that PayPal is on the right track, but it still requires close monitoring of developments.

🏛️ Regulatory risk (US, EU, China, stablecoins)

• 🌏 Cinchona: PayPal is just tolerated infrastructure, not a serious player, instead there is Tencent WeChat and Alibaba Ali Pay.
• ???????? EU: PSD2, AML, KYC, interchange ceilings (fees may be charged on bank card fees).
• ???????? USA: CFPB, state-level financial regulation.
• 🪙 Stablecoin (PYUSD): underlying stability risk.

PayPal operates in a highly regulated space, and this is not a one-time risk, but a constant battle with the authorities. In the US, the CFPB and state regulators, in Europe PSD2 (financial payment regulation), AML (anti-money laundering), KYC (know your customer) and interchange caps, and in China, the tolerated infrastructure status all limit the room for maneuver. I don't think the latter will change, in China it is a state monopoly. The PYUSD stablecoin is a separate layer of risk: if successful, it will be targeted, if not, it will be a money sink. PayPal cannot innovate aggressively without triggering a regulatory reaction, but if it is successful, it can also set a precedent for competitors, since it managed to get through the authorities.

⚔️ Margin pressure from competitors

• ⚙️ Adyen: ultra-low take-rate, very strong embeddedness in the B2B sector.
• 🧑💻 Stripe: higher added value, rapid innovation.
• (I.e. Block / Square: offline + online segment, added to SMBs.
• 📱 Apple Pay/Google Pay: they decide who they allow onto their platform.

Stripe, Adyen and Block are all doing the same thing, albeit from different directions: they are pushing prices down. Adyen is playing for volume with an extremely low take-rate, Stripe is sucking up growth with developer experience and rapid innovation, and Block is connecting SMBs with offline-online integration. PayPal is defending itself here, not attacking: the average take-rate is on a long-term downward trajectory because competitors are squeezing it out. The big question is, who is eating whose market? Are the opponents sucking the air out of PayPal and it hasn't turned out better because the entire market is growing? Actually, this hasn't been revealed yet.

📱 Platform dependency (Apple, Google, Amazon, Shopify)

🏗️ PayPal does not own a platform.

🍎 Apple → iOS
🤖 Google → Android / Chrome
(I.e. Amazon, Meta, Shopify → traffic controllers

PayPal is not a platform owner, but a tolerated but useful service. On iOS, Apple Pay, on Android, Google Pay, on the online marketplace side, Amazon, Meta, Shopify decide who gets on the platform. An OS-level button, a default setting is enough to push PayPal into the background. This is strategic vulnerability: PayPal does not own the user entry point. However, if it were that easy to replace PayPal's activity, it would have already happened, as these platforms also have their own solutions, while the service was recently returned to Aliexpress in Europe. While users cannot be forced to use a single checkout service, they also have no switching costs, so they prefer to let others in in exchange for the extra traffic.

🧠 Brand erosion, “old button” effect

The PayPal brand:

• 👁️ known,
• 🛡️ reliable,
• ???? but not exciting.

PayPal's brand is strong, but not particularly innovative. It's reliable, but not exciting. Younger users use Apple Pay, Revolut, Cash App, and PayPal only comes to mind when nothing else is available. I've been thinking a lot about how receptive young people are to PayPal, because as a Gen Y, even over 40, I find their service old-school, so what does a 25-year-old Gen Z person think? PayPal is a bit like a dinosaur stuck in a new age and still doesn't want to die out. However, Venmo and Fastlane are aimed at the younger generation, and I have one problem with that: It is slowly reaching users. They promise that by 2027 it will be available to 80% of them, but it is currently somewhere around 30%.

🧩 Braintree paradox (internal cannibalization)

Braintree is vital against Stripe and Adyen, but it is a lower-margin, unbranded infrastructure. The more it grows, the more it degrades PayPal's average take-rate, and the less PayPal branded checkout grows, but the TPV increases. Ultimately, these two things are mutually exclusive. If PayPal gives it to players like Uber, Airbnb, or Taco Bell, then why would companies integrate PayPal branded checkout and pay PayPal more?

🛡️ Fraud, dispute and buyer protection costs

🎯 PayPal's unique service that sells itself:

• 🛡️ buyer protection (that's why I started using it at the time),
• ⚖️ dispute resolution (I've already gotten a lot of money back from them after resolving disputes for various online purchases).

This, however:

• 💸 expensive,
• 🎭 susceptible to abuse,
• 🧮 margin-eating activity.

Buyer protection is one of PayPal's biggest value propositions, but it's also a cost trap for the seller. The higher the throughput, the more disputed transactions, abuse, and manual handling there will be. These directly eat into margins and are difficult to fully automate. However, if the company gives up on this, it will have no unique services left to offer compared to its competitors.

🌍 Macroeconomic and e-commerce cyclicality

📈 PayPal revenue = transactions × consumption.

• 📉Recession → fewer transactions (the amount of money flowing through decreases),
• 🛒 slowdown in online commerce → TPV pressure (on which revenue essentially depends),
• 🔒 weak pricing power → cannot raise prices because competitors underbid (in fact, it has to lower them because of Adyen).

PayPal's revenue is closely tied to consumption and online commerce. During a slowdown, fewer transactions flow through it because people don't have money to spend, and it can't raise prices either. This is pro-cyclical business, not crisis-proof infrastructure.In other words, PayPal's (PYPL) business model is not defensive, so those who hold it for the long term can probably expect large swings (although, as much as the stock has been beaten to death, almost everything has been priced out of it).

I made a self-check list that confirms the thesis about the company:

1. low or zero debt: YES/PART/NOT
2. significant economic benefit that can be protected in the long term: YES/PART/NOT
3. excellent management: YES/PART/NOT
4. excellent indicators, significant owner value creation: YES/PARTLY/NO
5. The majority of the total return comes from reinvesting the cash generated, not from dividends: YES/PARTLY/NO
6. appropriate company valuation: YES/PARTLY/NO

In relation to the above, I can say that this is not an easy stock to hold. There are many positives, but there are also mountains of risks. In fact, debt is not that much of a problem with annual cash generation of 6-7 billion USD and management can still be excellent if it proves to be better than the previous one, although it will not be difficult to show better performance.

💡What bothers me the most is that there is a lot of competition in this segment, a lot of disruptive effects, and rapid technological development, which is difficult to plan in advance. On the other hand, the company is very cheap, but it is not a good idea to decide on investments like throwing money.

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👛PayPal (PYPL) Valuation👛

In this section, I will examine the company's current valuation compared to historical values ​​and consensus fair values.

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Rating metrics

In the two rows below you can see valuation metrics. The first row shows the current valuation, the second row shows the historical valuation. Although I don't think these metrics are particularly good - they hide a lot - they can be used as a benchmark.

• Share price (2025-04-01) 60.7 USD; P/E: 12.2; EV/EBITDA: 8.9; P/FCF: 10.4 (Based on Finchat.io)
• Historical median valuation (10-year average): P/E: 42.34; EV/EBITDA: 23.2; P/FCF: 22.94 (Based on Gurufocus)

Why don't you see a DCF model in this segment? Because each input data produces a huge variance in the output, and most of the data is an estimated value. Therefore, the valuation will never actually be a single exact number, but rather a range can be defined where the current valuation falls.

You should apply a margin of safety to this price range, according to your risk appetite. 

So don't expect an exact price, no one can say this for a stock. However, there are fair value prediction services, almost every major stock screening site has one, I've aggregated them below. However, if you want a good stock support service, subscribe to The Falcon Method (The Falcon Method), entry prices are given for the stocks analyzed there.

Rating (If there is an ADR, it will be placed here)

• Wall street estimates: (71.76+137.63)/2=105 USD (I took into account the Alphaspread, the average of the two extreme values:)
• Peter Lynch Median P/E: $180.26
• Morningstar: $94 (4 stars)
• Gurufocus: $82.82
• AlphaSpread: 98.45 USD (% overvaluation compared to base case)
• SimplyWallst: $120.26
• The Investor Podcast: 97 USD (but even higher based on other analyses, I've seen target prices around 200 USD)

Average (based on 7 reviews): $111 (46% underrated)

How to interpret the numbers? The above "margin of safety" rule should be applied according to your convictions, so if you really believe in the company, you can buy it at fair value, but if you proceed in 10% increments (whose convictions are strong), the math would look like this:

• 10% margin of safety: 111*0.9=99,9 USD
• 20% margin of safety: 111*0.8=88,8 USD
• 30% margin of safety: 111*0.7=77,7 USD
• 40% margin of safety: 111*0.6=66,$6 (current price is below this)
• 50% margin of safety: 111*0.5=55,5 USD

Of course, the list could be continued indefinitely, but the point is that the right purchase price for you is determined by the level of your conviction.

However, I think the NOPAT yield, which is the net operating profit after tax, is much more telling than the above. It's not the number itself that's interesting, but what's happened since the end of 2022, when the management change took place. The share price crashed and NOPAT skyrocketed, which is typically the valuation situation that I really like. It is highly unlikely that a company will be worth the same as it was 3 years ago, when its revenue, margins, and PayPal (PYPL) were much lower and fundamentally in much worse shape than they are now.

Let's interpret the image.. Revenue increased by 83% while the exchange rate remained the same, The NOPAT yield rose to 8,4%, which is specifically the category that was beaten to death. I analyzed only one company that traded at such a low valuation: Lululemon Stock Analysis (LULU) – The Power of Yoga Pants. But LULU's growth has just turned negative for the first time in history, while PayPal is continuously growing, which is a big difference.

In the image above you can see the numbers of the EVA framework. On the left, you can essentially see that the current value added in the red column is offset by very little capital expenditure, which is in blue. A The gray area that prices future added value has practically disappeared, the market is pricing in the death of the company. The same can be seen on the right, on the FGR chart, the blue line approaches zero, meaning there is no growth priced into the company, while the EVA margin takes on a value of around 10%, while the S&P500 average is around 5%. Think about the chances that a company that is constantly increasing its revenue will disappear from the market because it is trading at such a valuation, which is completely unrealistic. If you go back to the beginning of the chapter, the same can be seen in the P/E, EV/EBITDA, and P/FCF values, the company can be purchased at half to a third of its historical valuation.

☝🏼This represents extreme underpricing for PayPal, which is consistently growing its revenue, has high cash generation, and its other metrics are improving. This is typically a safe buy if you can tolerate the associated risks.

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🌗Significant news and the last quarter🌗

In this section, I will examine what happened in the last quarter, whether there were any significant news/events. If the company reports semi-annually, we examined this period.

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After PayPal's (PYPL) Q3 quarter, several interesting conferences were held, where PayPal also participated, so I will report on these in a telegram style, but only covering those values ​​where there is a difference (I will not repeat the same ones for every conference):

• 2025-10-28: PayPal Q3 earnings report
• 2025-11-13: KBW Fintech Payments Conference 2025
• 2025-11-19: Citi's 14 th Annual FinTech Conference
• 2025-12-03: UBS's 2025 Global Technology and AI Conference

PayPal Q3 report

PayPal's Q3 earnings call was held on October 28, 2025, and the following key information was announced:

• Transaction Margin Dollars (ex-interest): 7%-8% growth in 2025.
• Non-GAAP EPS: +15% growth in 2025
• Q3 non-GAAP EPS: + 12%.
• Number of active accounts: +2% year-on-year 227 million (438 total)
• Total Payment Volume (TPV): +8%, +7% adjusted for currency, reached USD 458 billion in the quarter
• Branded Experiences TPV: +8% adjusted for currency effects, +10% in the USA.
• Buy Now Pay Later (BNPL) volume: +20%, on track to reach $40 billion TPV in 2025.
• Venmo TPV: +14% (+2% QoQ), on track to reach $1.7 billion TPV in 2025.
• PSP volume: +6%.
• Q3 free cash flow: 2.3 billion USD.
• Tap-to-pay (NFC-based payment, no POS terminal required): +65%.
• Dividend payment: a dividend of up to 10% of cash flow is introduced.

Next report: 2026-02-03

📌In practice: the above looks good compared to the metrics the company was able to show a few years ago. However, if we look at the growth that Adyen and Stripe are able to show, then shareholders cannot be so happy. The problem is that management is usually quite vague when it comes to specifics. On the other hand, when it comes to some PayPal (PYPL) innovation, the management uses huge words, at least all their new features are groundbreaking.

It's also annoying that it's incredibly difficult to break down the company's revenue into its different legs. There is a large mass called TPV, and you can do the math to see how much of a share BNLP, P2P, Braintree, and branded checkout account for in this and with what margin. So it is quite difficult to translate the annual 20-40% growth into brand awareness, economic competitiveness, or anything else that is sufficiently exact. Of course, competitors are no better in this regard, so it is very difficult to compare the numbers of, for example, Adyen, Stripe or Block with those of PayPal (PYPL).

I also have a gut feeling that PayPal is starting to revert to the Dan Shulman-style "we want everything at once" approach, even though metrics have improved a lot under Alex Chriss. But PP currently has so many developments that it's almost impossible to keep up - branded and unbranded logout, BNLP, P2P, debit card, crypto, stable coin, Ads Manager, small-million AI collaboration, agentic AI, etc. - and every quarter there's something new, but the older promises are always pushed to a new date.

But let's look at some management comments that support the above:

Alex Chris 2025 Q3:

• "PayPal is a fundamentally stronger company today than it was 2 years ago. Focus and execution have enabled us to drive a positive inflection across our business. Take transaction margin dollar growth, excluding interest on customer balances. We are on pace for 6% – 7% growth in 2025 compared to negative growth just 2 years ago. Revenue growth has accelerated in the past two quarters as a result of our deliberate strategy to focus on profitable growth. Operationally, we are winning new customers and deepening engagement across our existing base. We have reinvigorated unprofitable and underperforming parts of the business. We're leveraging our incredible brands to innovate and expand our addressable market beyond online payments. "
• "This quarter, BNPL volume continued to grow more than 20%, with particular strength in the US This puts us on track to process close to $40 billion in BNPL TPV in 2025. Monthly active accounts climbed 21%, and our net promoter score globally is 80.”
• "People love this product. We have everything we need to win this market. We are investing to transform our BNPL business from a payment option that consumers discover in the PayPal Wallet after they made a purchase decision into a customer acquisition channel."
• "From a financial perspective, Venmo is on pace to generate $1.7 billion in revenue this year, excluding interest income. That's up more than 20% and a 10-point acceleration from 2 years ago.”
• "We are doing this by continuing to build holistic relationships with merchants. Value-added services like payouts, adaptive payment optimization, and FX as a service deliver real, measurable value, including improvements to authorization rates and cost reduction.” – whatever that means...
• "We're laser-focused on execution across the three key areas Alex discussed: scaling our redesigned experiences, improving prioritization, and driving biometric adoption.”
• "Our strategy we've laid out very clearly is that we want PayPal to be available anywhere and everywhere that consumers want to pay, and we want merchants to be able to sell to consumers anywhere and everywhere."
• "The last part of your question was ubiquity. We obviously feel like we've got the largest breadth of merchants. We obviously have the largest breadth of consumers. Now with the partnerships, we've already announced OpenAI, Perplexity, Google. As we look to partner with any of the LLMs that are out there, we think we've actually got quite good scale and ubiquity across the ecosystem. We are very well-positioned to win as agentic commerce continues to evolve.” They like to use the word ubiquity, meaning they want an app that is present everywhere. How does this differ in your philosophy from what Dan Schulman did?

💡So there's a lot of self-aggrandizement, but in reality, about 55% of revenue still comes from branded checkout. There are a lot of catalyst elements as affiliate services, any of which could be a gold mine later on, but PayPal (PYPL) management is just over-aggrandizing themselves a little.

And then let's see what the revenue breakdown looks like for Q3, since I already did the annual one in a previous chapter. Here you can see that the company has developed a lot in 1 year, annualizing the last month, the TPV would increase from 1700 billion to 1832 billion USD, but essentially all the numbers are increasing. This means that theoretically, Assuming a 1,7% take-rate, this would mean an additional $2,2 billion in revenue and $300 million in free cash annually, all else being equal..

Segment	TPV (million USD)	Nature of TPV	Take rate / monetization	Income (million USD)	Comment
Total payment volume	458 088	Unique (non-overlapping)	1,84% total take rate	8 417	PayPal 3Q25 reported base
US TPV	285 966	Unique – geographical breakdown	Mixed	—	Higher branded ratio
International TPV	172 122	Unique – geographical breakdown	Mixed + FX	—	FX and cross-border monetization
Cross-border (overlay)	54 316	Overlay (not added)	+0,5–2,0% fee + FX spread	Part of OVAS	International TPV subset
P2P TPV	110 746	Unique TPV block	Up to 0%	—	Engagement, not core revenue
Venmo (overlay within P2P)	85 226	Overlay	Debit, Pay with Venmo, instant fee	~425*	Monetized P2P section
BNPL (overlay)	—	Overlay (checkout sublayer)	Merchant fee + consumer interest	~350*	Within branded checkout
Tap to Pay / offline	—	Overlay (channel)	Card merchant fee	~300*	US focus, early phase
Transaction revenue	—	—	1,64%	7 522	Core processing + merchant fees
OVAS revenue	—	—	~0,20% TPV layer	895	FX, cross-border, value-added

🎰KBW Fintech Payments Conference

• Debit card: 6 million new first time users (FTUs), 70% year-over-year TPV growth.
• NFC payments (Germany): almost 6 million users.
• Venmo revenue: 20% year-over-year growth, on track to reach $1.7 billion in annual revenue (total revenue around $32 billion in 2025)
• Venmo Debit Card: 1 million new users in Q3.
• Venmo top-ups TPV: Up 60% year-over-year.
• Branded experiences (including Venmo, Omni): 8% growth year-over-year.

📌In practice: they said essentially the same thing here as elsewhere, but now there are concrete numbers that can be roughly calculated. Venmo's 1,7 billion USD revenue is already a visible amount, and the number of debit card users is also growing rapidly. However, whether customers pay via NFC, with a bank card or from an app is important in terms of what the underlying take-rate is, but this was not disclosed (or at least I couldn't find it).

🏙️15. Citi Fintech conference

• Buy Now, Pay Later (BNPL) quantity: 40 It is expected to reach USD 1.1 billion this year, a 20% increase in both volume and active users.
• Pay with Venmo TPV: exceeded $1 billion, 40% year-over-year growth.
• Venmo debit card volume: 65% growth.
• Payment Service Provider (PSP) business growth: 6% (currency neutral).
• Branded foot online growth: 5% In the 3rd quarter.
• Branded offline penetration: 10% in the USA, it doubled year-on-year (this is the traffic achieved at offline acceptance points, e.g. the number of debit cards swiped at POS terminals).
• BNPL Net Promoter Score (NPS): 80+ (a customer satisfaction and loyalty indicator that measures how likely a customer is to recommend a product or service to others. 80+ roughly means 9 out of 10 people would recommend it, 1 would not).

📌In practice: Regarding the Branded offline branch, PayPal has a partnership with a service provider called Discover, which means that PayPal services can be accessed offline in many more places. It is also considered an offline payment if you pay with your phone, but with the PayPal app, so the point is that the money flows through using the phone as a POS terminal.

🅰️UBS Technology and AI Conference

• Check-out service improvement: roughly By 1 percentage point.
• TMD growth: 7%-8% (the difference between transaction revenue and cost).
• Earnings Per Share growth: 13-16% (mid-teens).
• Annual cash flow: 6-7 billion USD.
• Buy Now, Pay Later (BNPL) growth: consistent 20% growth quarter-on-quarter (but they don't say what the base is).
• Venmo growth:  40% growth quarter-on-quarter (but they don't say what the base is).
• Branded Experiences growth (Q3): 8% globally, 10% in the USA (everything that is not unbranded is included here).

📌In practice: they said essentially the same thing as in the 2025 Q3 quarterly report.

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PayPal (PYPL) Summary

Summary of the analysis, drawing lessons.

PayPal (PYPL) resembles a real coin toss. What is undeniable is that over the past 3 years, it has become a twice as good a company while the share price has fallen, so it is absolutely clear that a strong disparity has developed between the share price and the underlying value. The reason for this is that the market does not believe that PayPal can prevail because of competitors like Stripe, Block, Adyen, because they are growing faster. However, PayPal is not just a financial gatekeeper service, and it should not be forgotten that it is still a market leader. Would other companies be able to grow as quickly if they were this big? Or if they expanded their operations to this many sub-segments? Probably not, while PayPal (PYPL) is back on a growth trajectory, generating plenty of cash, buying back its own shares, and playing in a market that's growing at about 15% a year.

So everything is okay? I wouldn't say that. I think management communication is a bit vague, They often claim that everything is perfect, that the opportunity is this big, that big, and that big, and they want to be everywhere. The reports are also quite difficult to decipher, the data could be a little more transparent. This kind of boasting is a bit like the previous management, but the numbers show otherwise: increasing margins, more efficient operations, at the same share price. So PayPal (PYPL) is on an upward trajectory, with a very beaten-down valuation, which usually means good, but one thing is for sure: this is not a "sleep well" stock, due to the many competitors and the constantly emerging new disruptive technologies.

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Frequently Asked Questions (FAQ)

What is PayPal?

PayPal is a global digital payments and commerce platform that offers online and offline payments, money transfers, card acceptance, and additional financial services. It is not a bank, but a payments infrastructure that connects consumers and merchants. Its business model is based on transaction fees, value-added services, and increasingly wallet-based solutions.

What is PayPal Venmo?

Venmo is PayPal's P2P payment app, primarily in the United States. Originally designed for sending money between friends, it can now be used for card payments, in-store acceptance, and online checkout. Its strategic value lies not in the P2P transaction itself, but in subsequent monetization, such as through Pay with Venmo, debit cards, and instant payments.

What is BNPL and how is PayPal involved?

BNPL (Buy Now, Pay Later) is a payment method where the customer pays in installments, often interest-free. PayPal offers this as a checkout layer on its own platforms. The role of BNPL is more to increase conversions and customer acquisition than as a standalone profit center.

What is TPV?

TPV (Total Payment Volume) is the total transaction volume processed on the PayPal network during a given period. It is not a revenue figure, but a volume indicator. A transaction appears once in TPV, regardless of how many services are associated with it.

What is take-rate and how is it related to TPV?

Take-rate shows what percentage of TPV is converted into revenue. It is simply the ratio of revenue to TPV. Take-rate varies by product, being higher for branded checkouts and lower for unbranded processing.

Who are PayPal's biggest competitors?

PayPal's main competitors include Stripe, Adyen, Block (Square), and the card company ecosystems. The competition is about who can build multiple monetization layers on the same transaction.

What is branded and unbranded checkout?

Branded checkout is a checkout process using a PayPal account where the brand is displayed in the checkout process. This results in a higher revenue rate. Unbranded checkout is a back-end process where PayPal technology is running but the brand is not displayed to the customer.

Is PayPal a bank?

No. PayPal is not a bank, nor is it a traditional deposit-taking or lending institution. It operates as a regulated financial services provider through partner banks, but they applied for a banking license in the US in December 2025.

What is Tap on Pay?

Tap on Pay allows a smartphone to act as a standalone card-accepting terminal without the need for separate hardware. This is key to PayPal's offline expansion, especially for small businesses.

Does PayPal have P2P legs?

Yes. Both PayPal and Venmo offer P2P money sending functionality. This generates low direct revenue, but provides strong user engagement and potential for later monetization.

What is PSP (Payment Service Provider)?

A PSP is a service provider that technically and legally enables electronic payments. PayPal is both a PSP and a platform because it offers wallet and checkout solutions in addition to processing.

What is PYUSD?

PYUSD is PayPal's dollar-pegged stablecoin that can be used as a digital dollar within the PayPal ecosystem. It aims to enable faster settlement and support future digital commerce processes.

What was the Honey scandal about?

Honey is a coupon browser add-on that has been the subject of controversy in some cases regarding the management of affiliate rewards. The issue was significant on a reputational level, but did not affect PayPal's business operations.

What is Xoom good for?

Xoom is PayPal's international money transfer service. It is used for cross-border retail transfers and generates FX-based revenue.

What does Zettle do?

Zettle is PayPal's in-store payment and POS solution. It offers a card reader, POS software, and complete in-store infrastructure, primarily for small businesses.

What is Braintree?

Braintree is PayPal’s enterprise-grade, unbranded payment processing platform. It provides the technical infrastructure to enable card and digital payments to be accepted without the PayPal brand appearing on the shopper interface. Braintree primarily serves high-volume, technically advanced merchants who want to build their own checkout experience. The model is built on a lower take-rate but high transaction volume (USD 570 billion in 2025) and is one of PayPal’s key back-end engines for unbranded processing.

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