PayPal Holdings flagged a macroeconomic drag on shoppers in its third-quarter earnings results, with that negative impact continuing for now.
Consumers are spending less with each transaction amid economic volatility, executives of the digital payments company said during an earnings webcast with analysts Tuesday.
“Overall, we have seen relatively consistent growth in the number of checkout transactions, but basket sizes or average order value has decreased,” said Jamie Miller, who is the company’s chief financial and operating officer. “We've observed this trend continuing through October.”
PayPal’s third-quarter total payments volume rose 8% over the year-ago quarter to $458.1 billion, but the company’s transactions decreased 5% to 6.3 billion, according to the earnings release.
“At the same time, this improvement was offset by pockets of softer consumer discretionary spending in Europe and the U.S. later in the quarter,” Miller said.
Payment transactions per active account, on a trailing 12-month basis, fell 6% to 57.6, though active accounts overall rose 1% to 438 million.
The company’s third-quarter branded PayPal check-out volume grew 8%, on a currency neutral basis, with the online portion of that rising 5%, according to a company presentation.
PayPal CEO Alex Chriss pointed to the online volume expansion as “solid growth, especially with the macro choppy global trends we continued to see this quarter.”
He noted the need to keep beating back the heightened digital payments competition. Rivals include digital buy now, pay later companies such as Klarna and tech titans like Apple.
“Given the competitive intensity online we know more work is needed to close the gap between our performance and overall e-commerce growth,” Chriss acknowledged, saying the company would continue to focus next year on drawing merchants to its redesigned check-out, pushing for prioritization of PayPal by merchants and driving biometric adoption.
The Conference Board reported Tuesday that the U.S. index that tracks consumer confidence declined by one point to 94.6 in October, down from a revised September 95.6 figure, the Associated Press reported.
Meanwhile, executives at card network Visa, which reported fiscal fourth-quarter earnings results Tuesday, gave a more sanguine view of the economy, saying consumers remained resilient, with a stable macroeconomic outlook.
To drive growth, PayPal is also leaning into its buy now, pay later and Venmo peer-to-peer offerings, Chriss said.
“One of the things that continues to set Venmo apart is its user base: young, affluent, digitally native consumers who are shaping the future of commerce,” he said. Venmo revenue jumped 20% for the quarter over last year, according to the earnings presentation.
The company’s BNPL service, which provides installment financing, including with interest charged in some cases, also showed increased customer appeal. The growth “puts us on track to process close to $40 billion in BNPL” volume this year, Chriss said.
“As we move into 2026, we will be leaning more into these efforts and expanding across key international markets,” he added.
Third-quarter net income rose 24% to $1.25 billion, up from $1.01 billion in the year-ago quarter, as third-quarter revenue climbed 7% over last year to $8.42 billion.
“We're on the right path and have the right initiatives in place, both to drive acceleration and increase growth investments as we move through next year,” Chriss said.
Investments include development of AI-driven agentic shopping, which has yet to be used widely, but has attracted a swarm of companies determined to use such commerce. On Tuesday, PayPal issued two press releases with respect to the initiative, including that it will adopt AI platform ChatGPT’s protocol for merchants using OpenAI checkout processes.
Still, some analysts who follow the company aren’t convinced that PayPal’s flagship branded service will accelerate growth.
“Our view is that investors are too optimistic about PayPal’s long-term economic growth and are perhaps too enamored of today’s ChatGPT integration announcement,” William Blair analysts said in a Tuesday note to the financial firm’s clients. “Although agentic commerce offers some value, the technology is immature and unlikely to bend the branded TPV growth curve.”
The analysts praised the company’s management for jump-starting Venmo growth and echoed its confidence in BNPL’s prospects. “However, the bottom line is that we anticipate limited branded volume growth acceleration,” the analysts concluded.
