stockrowWhat it does
PayPal operates a global, two-sided payments network that connects consumers and merchants. Its products help people pay for purchases, send and receive money, manage balances and finances, and use payment methods online, in person and through mobile devices. The network had 439 million active accounts across approximately 200 markets at December 31, 2025.
Consumers use PayPal and Venmo digital wallets for checkout, person-to-person transfers, international transfers through Xoom, debit and credit products, buy now, pay later, and some cryptocurrency activities. At checkout, customers can use bank accounts, wallet balances, cards, eligible rewards, certain cryptocurrencies and other stored-value products.
Merchants ranging from large enterprises to small and medium-sized businesses use PayPal and Venmo branded checkout, unbranded payment processing, buy now, pay later, point-of-sale tools, business financing, payouts, fraud prevention, risk management and payment-orchestration services. The company’s platform connects to financial-services providers and supports payments across channels and markets.
Management said on the Q3 2026 call that PayPal had organized its operations around three businesses: Checkout Solutions and PayPal, Consumer Financial Services and Venmo, and Payment Services and Xoom. It also said that Venmo had begun processing selected payments on PayPal’s infrastructure and that Venmo authentication runs on PayPal’s identity platform.
How it makes money
PayPal earns most of its revenue by charging merchants and consumers fees when it completes payment transactions and provides related services. These fees are typically linked to the payment volume processed on its platform, so transaction revenue is connected to payment activity, including branded checkout, unbranded processing, cross-border payments and currency conversion.
It also collects fees for instant transfers from PayPal or Venmo accounts to bank accounts or debit cards, facilitates cryptocurrency purchases and sales, and receives contractual compensation in some cases when sellers violate contractual terms. It generally does not charge customers to fund or draw from their accounts.
Other value-added-services revenue includes partnership revenue, interest and fees from consumer and merchant credit products, interest on certain assets underlying customer balances, referral fees, subscription fees and gateway services. Merchant-financing products can generate fees from loans and advances. Consumer credit includes short-term buy now, pay later offerings, installment products and certain card products, with product structures varying by market.
PayPal reports one reportable segment. Its FY2025 reportable-segment revenue was $33.2 billion; transaction revenues were $29.8 billion and revenues from other value added services were $3.4 billion. It was reported on 22 October 2026 that Wall Street analysts forecast Q3 2026 revenue of $8.7 billion. Management said on the Q3 2026 call that financial services represented more than 20% of 2026 transaction-margin dollars and were growing at a double-digit rate.
| Product or service | Revenue, FY2025 | Share | Change on the year |
|---|---|---|---|
| Transaction revenues | $29.8 billion | 89.8% | 3.31% |
| Revenues from other value added services | $3.4 billion | 10.2% | 14.2% |
Customers and how it sells
PayPal serves consumers, merchants, developers and platform-access partners. Consumers use its wallets and payment products for shopping, transfers and financial-management activities. Merchant customers include large enterprises and small and medium-sized businesses that use checkout, processing, payouts, financing and risk tools. A platform-access partner’s customers can use PayPal services through that partner’s login credentials.
An active account is an account that completed a transaction on PayPal’s platform during the prior 12 months, excluding gateway-exclusive transactions. One user can hold more than one active account. The company had 439 million active accounts at December 31, 2025, and processed $1.79 trillion of total payment volume in 2025.
The United States generated $18.9 billion, or 56.9%, of FY2025 revenue. Other Countries generated $14.3 billion, or 43.1%. PayPal operates in approximately 200 markets, with consumers able to send payments in approximately 200 markets and approximately 140 currencies.
Management said on the Q3 2026 call that the Venmo debit card reached 6,700,000 monthly active accounts, including 1,600,000 first-time users in the quarter. It also said that Pay Later distribution expanded through Amazon in Germany and Austria, American Eagle, Aerie and Dick’s Sporting Goods.
| Region | Revenue, FY2025 | Share | Change on the year |
|---|---|---|---|
| U.S. | $18.9 billion | 56.9% | 3.29% |
| Other Countries | $14.3 billion | 43.1% | 5.72% |
Suppliers and costs
PayPal’s payments platform uses proprietary and third-party technologies and services. It connects with financial-services providers around the world, and some consumer and merchant credit products are offered or issued through independent chartered financial institutions. The company also uses third-party cloud-service providers as well as its own data centers.
Its principal operating costs include transaction expense, sales and marketing, transaction and credit losses, research and development, and general and administrative expense. Research and development expense was $1.5 billion in 2025. Total operating expenses increased $635 million, or 2%, in 2025, driven primarily by higher transaction expense, sales and marketing expense, and transaction and credit losses.
Management said on the Q3 2026 call that it had reduced headcount by more than 2,000 and removed three organizational layers across most of the company. It also said it had migrated 7.5 billion customer records to cloud infrastructure during the quarter.
- Revenue$33.2B
- Cost of revenue−$19.4B
- Research and development−$3.1B
- Selling, general and administrative−$4.3B
- Other operating costs−$331.0M
- Operating income$6.1B
Competitive position
PayPal competes globally with banks and financial institutions, payment networks, card processors, card-on-file services, digital wallets, mobile-payment providers, buy now, pay later providers, real-time-payment systems, peer-to-peer and remittance services, point-of-sale technology providers, cryptocurrency and stablecoin offerings, and payment-adjacent software providers. It also competes with cash and checks.
Its branded checkout business faces competition from Apple Pay and Shop Pay. Management also said in 2026 that competitive intensity had increased, including in Europe. Competition can shift as new entrants emerge, companies combine, partnerships change, and established businesses enter adjacent payment categories.
PayPal differentiates its offerings through the acceptance of its services across e-commerce, mobile and offline channels; multiple funding options; consumer and merchant protection programs; dispute resolution; merchant analytics; payment-method choice; and risk-management capabilities. It uses transaction data from buyers, sellers, senders and recipients on its two-sided network in its efforts to manage fraud and develop services.
Our reading: The two-sided network is a meaningful moat source because it links consumer and merchant relationships and supplies transaction data from both sides, but it operates in a market with many payment alternatives [item1].
Our reading: Brand trust, protection programs, regulatory licenses and integrations across payment methods support retention and acceptance, but Apple Pay and Shop Pay show that branded checkout faces direct competing wallets and checkout products [item1; facts]. No competing companies are named in the provided competition evidence; Apple Pay and Shop Pay are named competing products.
Growth opportunities
PayPal’s growth plan centers on improving branded checkout, increasing monthly active accounts, expanding consumer and merchant financial services, growing Venmo monetization, attaching more value-added services to payment processing, and increasing use across online and in-person commerce. It also seeks to expand partnerships, modernize the One PayPal platform, and develop capabilities in crypto and digital currencies, agentic commerce, advertising-related services and cross-wallet interoperability.
The company sizes consumer financial services at more than $200.0 billion annually across its top six markets and says that market is growing at a low-double-digit rate. Management said on the Q3 2026 call that only 23.0% of Venmo customers used one of its financial-services products. It said customers using financial services had average revenue per active account between two and five times that of consumers who did not use them.
Management said on the call that payment-services processing volume grew 8% and value-added-services attachment increased to 6% from 5% a year earlier. It is investing in specialized sales staff to sell services including payouts, risk-as-a-service and invoicing. It also said its modular risk platform uses real-time data and AI to cut credit-decision times nearly in half in Canada, Italy and Spain.
The company expects financial services, Venmo and payment services to contribute a greater share of transaction-margin-dollar growth over time. Management said it expects branded-checkout total-payment-volume growth to improve, although its longer-term plan does not require a return to historical growth rates.
- $25.4BFY2021
- $27.5BFY2022
- $29.8BFY2023
- $31.8BFY2024
- $33.2BFY2025
Structural risks
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Competition and changing customer preferences. PayPal faces substantial and increasingly intense competition worldwide from established and new payment providers, as payment technology, merchant and consumer preferences, and price sensitivity change rapidly.
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Cybersecurity and system availability. Cyberattacks, security vulnerabilities, business interruptions and systems failures could impair websites, applications, products or services, harm the business and damage customer confidence.
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Regulation and compliance. The company is subject to extensive payments, lending, consumer-protection, anti-money-laundering, sanctions, privacy, data-protection and cryptocurrency regulation across jurisdictions. New rules, interpretations, penalties or enforcement can require operational changes and increase costs.
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Credit, fraud and counterparty losses. Fraud, account takeovers, identity theft, malicious counterparties, borrower defaults and failures by financial counterparties can lead to losses, liabilities and remediation costs.
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Macroeconomic and international exposure. Tariffs, inflation, international conflicts and interest rates can reduce consumer spending and increase bankruptcies, credit losses, foreign-exchange fluctuations and business disruption. A substantial portion of revenue is generated outside the United States.
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Data and AI requirements. The business processes personal and financial information across borders, while privacy, cybersecurity and artificial-intelligence rules continue to evolve and may constrain AI-driven features or require added investment.
Bottom line
Our reading
Our reading: PayPal is a global payments platform whose revenue is principally tied to transaction activity, supplemented by credit, interest and payment-adjacent services [item1; item7]. Its business rests on a large consumer-and-merchant network, PayPal and Venmo brands, payment integrations and risk capabilities [item1]. Financial services, Venmo and payment-services attachment are central to management’s growth plan, while branded checkout remains exposed to direct wallet and checkout competition and the company operates under extensive regulatory, fraud, technology and macroeconomic risks [call_prepared; item1; item1a].