It’s earning season and likely one of the most important times in recent history to pay attention to how companies are faring in this unusual and unpredictable era. One of the cheerier announcements came from PayPal. In a comparative embarrassment of riches, PayPal chalked up payment volume growth of 30% over last year, as they are perfectly positioned for card-not-present and other forms of digital payments.
Here’s the Wall Street Journal’s take on PayPal’s earnings report:
Total payment volume grew 30% from a year earlier in the second quarter in constant currency terms, despite a nearly two-thirds drop in travel and events. That is up from 19% growth in the first quarter. June was the fastest-growing volume month for PayPal since it separated from eBay in 2015. Notably, even cross-border transactions grew 24% in the second quarter from a year earlier: People may not be traveling, but online shoppers are happy to digitally cross borders.
Even if some old habits return, PayPal has now sharply expanded its core user base. It added more net new active users in the quarter than it did in all of 2016. It also added 1.7 million more merchants who accept PayPal in some form, about triple the usual quarter’s growth.
Pay Pal plans to increase its attention to new payment technologies to capitalize on its current growth, including investments in QR code payment capabilities which are much more prevalent in Asia than they are in the west:
The question for investors is, when the world returns to something resembling normal, will PayPal have permanently altered its place in the landscape? That depends in part on some initiatives now under way. PayPal said it has struck a deal with CVS Pharmacy to enable the retailer to add PayPal and Venmo QR codes to store checkouts, allowing users to easily pay with their smartphones. If PayPal can take a meaningful share of in-store shopping, where it hasn’t had a big presence historically, that could bolster its position among rivals.
Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group
