Venmo and BNPL carry PayPal to Q2 success

By the numbers: In Q2, PayPal’s total payment volume (TPV) jumped 36% year over year (YoY), hitting $311 billion—up from the same period last year, when the metric grew 30% YoY. TPV increased nearly 81% compared with Q2 2019, reflecting PayPal’s strong growth during the pandemic.

PayPal wrapped up Q2 with 403 million active accounts, netting 11.4 million new active accounts (of which 1.5 million were merchant accounts)—slower growth than Q2 2020, when the payments giant brought in a whopping 21.3 million thanks to the rise in digital payments demand. PayPal also reported a 58% yearly increase in Venmo volume, which hit $58 billion. On the company’s earnings call, CEO Dan Schulman said that a resurgence in travel and events contributed to the firm’s strong performance.

Looking ahead: Here are four areas that will likely prop up PayPal’s business in the next quarter and beyond.

  • Buy now, pay later (BNPL): Since launching in August 2020, the service has processed more than $3.5 billion in TPV, with more than $1.5 billion coming in Q2 alone—and the company has expanded into new markets in the last few months, like Australia. Unlike other BNPL providers, PayPal has the advantage of a significantly larger existing merchant base that it can use to capture business and increase BNPL revenues.
  • Venmo: Schulman has big plans for Venmo—he noted that PayPal plans to include features like high-yield savings, early access to direct deposit funds, improved bill pay functionality, and messaging capabilities. These features can help build out the platform, and if PayPal chooses to charge for some of these perks or tie fees to them, it could bring the app closer to meeting its 2022 profitability goal.
  • In-store payments: Schulman said PayPal will be very aggressive on this front—and it’s already made moves in the space. The company launched Zettle, its small-business point-of-sale business, in the US in early July after introducing the solution in the UK. It also expanded its in-store payment network through a partnership with Fiserv in April. Building out its presence in the space can help the company grab a piece of the US in-store payments market, which is expected to hit $5.621 trillion this year, per Insider Intelligence forecasts.
  • Cryptocurrencies: The company is working on integrations for its crypto service, like Automated Clearing House (ACH) support to enable faster payments and the ability to make transfers to third-party wallets. These enhancements, coupled with the company’s decision to raise the weekly crypto purchase limit to $100,000, can help make the service more attractive to customers and help it stay ahead as competitors like Square lean into the space.

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