PayPal Makes Unbranded Checkout a ‘Strategic Imperative’ As Its CEO Prepares to Retire

PayPal has been known for some time as a major alternative for checkout online, but now the company is making it plain it’s putting considerable resources behind checkouts where its services function entirely in the background.

So-called unbranded checkout, led by the company’s Braintree processing platform along with a relatively new service called PayPal Complete Payments, is expected to help drive e-commerce volume for PayPal at a time when consumers are turning increasingly to online buying. “Unbranded is a strategic imperative for us,” Dan Schulman, PayPal’s chief executive, told equity analysts Monday afternoon. The service “is growing faster than the market and we are taking share,” he added, though he did not cite numbers.

Launched late in 2021, PCP is aimed at small businesses and enables them to accept cards and digital wallets as well as a range of Venmo and PayPal services. In April, the service added the ability to accept Apple Pay, a move PayPal had foreshadowed in its November earnings call.

Now Schulman, who said in February he would retire by year’s end, is counting on big results, and soon. “Unbranded services will become a clear market leader,” driving margin growth for PayPal, he said during the Monday call, held to discuss the company’s first-quarter performance. “We put a lot of investment in unbranded checkout and it’s taking off.” So much so that PayPal has improved its outlook for e-commerce growth, which the company entered the year thinking would be flat. “It’s a much improved outlook” now, he added.

Pushing its traditional branded checkout remains PayPal’s “highest priority,” Schulman said, adding that service remains the company’s “highest-margin product.” But, he said, “we want to drive unbranded. It helps with our data collection, and no question it will be a source of margin expansion.”

In other markets, Schulman asserted PayPal is stealing market share in the buy now, pay later market, though he did not cite figures. The company was early to market with a service supporting BNPL, a checkout option whose installment-payment feature gained appeal with consumers during the pandemic. The PayPal app, meanwhile, is now being used by 55% of PayPal’s consumer base, he added. The app was thoroughly redesigned in 2021as a so-called super app, taking on features such as discounts and rewards through PayPal’s Honey service.

Schulman, 65, took over as CEO in 2015 in the wake of the payments company’s separation from former owner eBay Inc. The PayPal board has put together a search committee to find his successor, he told the analysts Monday. An announcement should come by the end of the year, he added, matching the timing of his departure.

For the quarter, PayPal processed $355 billion in payments volume, a 10% rise year-over-year. Peer-to-peer volume on PayPal, Venmo, and Xoom increased 2% to $91 billion, accounting for 26% of total payment volume. Venmo alone processed $62.7 billion in volume, up 9%. Active accounts totaled 433 million, up 1%, compared to a 9% growth rate a year ago. Revenue grew 9% to $7.04 billion, with operating income of $1.6 billion, up 19%.