Branded Checkout Helps Buoy PayPal As It Eyes Crypto And BNPL

PayPal Holdings Inc. recorded a tepid 1% growth rate in revenue in the first quarter, with overall transaction revenue flat, but the company’s stress on branded checkout appears to be yielding more optimistic results, the company reported early Tuesday. PayPal is also building up its cryptocurrency business and beginning a more pronounced move into buy now, pay later, its top executives said during a conference call to discuss first-quarter results.

It’s early for BNPL and crypto, but PayPal is clearly looking at these products as future growth drivers. “I wouldn’t say we’re reordering any priorities,” chief executive Alex Chriss told equity analysts during the call, but “we think there’s an opportunity to lean in [to BNPL].” Along with that initiative, PayPal recently announced rewards for crypto spending. “It’s still early, we haven’t seen any big shifts yet,” Chriss said.

Ongoing strategies, like promoting branded checkout and pushing Venmo, clearly remain key to the company’s plans for volume and profit growth. Branded transactions—where consumers use PayPal or Venmo rather than third-party methods processed by PayPal—grew 8% in the quarter, up from 6% a year ago, according to Chriss. Online branded dollar volume increased almost 6%, “and we expect to increase that over time,” Chriss said.

Venmo volume, meanwhile, was up 10%, compared to 8% a year ago. Originally a peer-to-peer payments platform, Venmo in the form of Pay with Venmo is growing “rapidly,” Chriss said, with JetBlue in January becoming the first airline to accept it. “We expect more merchants over the coming quarter,” he said. At the same time, “approximately” 2 million PayPal and Venmo debit cards were in the hands of users as of the quarter’s end, Chriss noted, adding, “we are focused on getting these cards into even more consumers’ hands.”

The stress on Venmo comes as the product generated a 20% increase in revenue in the quarter. “That’s the highest rate we’ve achieved in years,” Chriss said. Now, PayPal is ready to push its branded strategy in Europe, beginning with Germany. “We think we’ve got a good playbook now,” noted Chriss, with Pay with Venmo, he said, a key part.

For the quarter, PayPal recorded total payment volume of $417.2 billion, up 3% from the same period last year. Volume growth has slowed notably since the 14% rate logged in the first quarter a year ago. “We’ve made a choice to shift away from unprofitable volume,” notably in the company’s Braintree unit, said Jamie Miller, chief financial officer. Braintree is the processing platform for PayPal’s unbranded processing.

Revenue for the quarter totaled $7.79 billion, virtually flat with last year’s first quarter.