PayPal will invest in a new app to launch in 2024 alongside a new strategy to drive engagement with better consumer experiences like AI-driven shopping. 

“Redesigning our app and creating improved, frictionless onboarding paths are tangible ways that we plan to drive higher penetration,” Chief Executive Alex Chriss said during PayPal’s fourth-quarter earnings call.

Chriss called PayPal’s current mobile app experience “underwhelming,” saying the new one will better meet clients’ expectations. 

The San Jose, Calif.-based peer-to-peer payments company reported 426 million global customers, according to the company’s 10-K SEC filing today. The company has 75% of the P2P payments market share, according to Datos, a data intelligence provider.   

Only 2% of PayPal customers keep their credit cards in their PayPal wallet and redesigning the app should increase the company’s customer base, Chriss said. 

THE BIG PICTURE: PayPal is implementing AI within its operations to boost customer experience, increase merchant engagement and drive overall efficiency, Chriss said. The company is using AI in the following solutions: 

• Personalization: Connecting shoppers to merchants and giving them the best payment options; 
• Predictive analytics: PayPal’s AI will send suggestions to customers regarding what they might want to buy from a merchant next; and 
• Smart receipts: PayPal will track consumer spending to drive post-sale interactions for merchants. 

“We use AI to organize the offers for you, based on both how and where you shop, so it’s personalized to you and you can quickly find your favorites,” Chriss said. 

BY THE NUMBERS: PayPal reported: 

• Revenue of $8 billion in Q4, up 9% year over year; 
• Non-transaction related expenses, which includes technology and development costs, fell 6% YoY to $1.8 billion;
• Total payment volume of $409 billion in Q4, up 15% YoY; and 
• U.S. net revenue of $4.6 billion in Q4, up 6% YoY. 

WHAT THEY ARE SAYING: According to a Bank of America Securities report released Feb. 7, “new product initiatives are not expected to move the needle [stock price] in ’24.” 

PayPal provided a lackluster 2024 guidance which might weigh heavily on the stock price, the Bank of America report stated. 

OF NOTE: PayPal competitor Adyen reported today.  

• Adyen net revenue was 1.6 billion euros ($1.7 billion), up 22% YoY in 2023. Meanwhile, PayPal reported a net revenue of $29 billion, up 13% YoY for the same period. 
• Adyen payment volume was $1.04 trillion in 2023, up 26% YoY. PayPal, on the other hand, saw a total payment volume of $1.53 trillion in 2023, according to the company’s SEC filings. 

Amsterdam-based Adyen saw 19% of its revenue driven by embedded payments in the second half of 2023 compared with 3% in H1, according to the company’s annual letter to shareholders. North America is Adyen’s fastest-growing region as digital payments and digital wallets pick up traction among consumers. 

FORWARD LOOK: PayPal plans to invest in automation to streamline its business operations, drive efficiency and increase productivity, Chief Financial Officer Jamie Miller said during the earnings call. 

“It’s really important for us to just set the company up for the future,” Miller said. “And to do that, the innovation muscle, the commercial muscle, means that right-sizing our expense levels.” 

[stock_market_widget type=”inline” template=”generic” assets=”PYPL” markup=”{name} ({symbol}) is trading at {price} ({change_pct})” api=”yf”].

Get ready for Bank Automation Summit U.S. 2024 in Nashville, Tenn., on March 18-19! Discover the latest advancements in AI and automation in banking. Register now.