PayPal’s efforts to boost profit have slowed its unbranded card processing business growth, causing shares to drop by nearly 10%. The digital payments giant reported a sharp slowdown in growth for its unbranded payment processing business in the fourth quarter, with total payment volume growing only 2%, compared to 29% a year earlier. This decline was largely attributed to increased competition from technology behemoths like Apple and Alphabet’s Google, as well as traditional card networks.
Despite this, PayPal’s adjusted operating margins expanded by 116 basis points to 18.4% for the full year, thanks to its focus on profitable growth. CEO Alex Chriss has been working to drive away unprofitable customers and improve pricing strategies, which has resulted in a slowdown in payment volumes but improved overall profitability.
Analysts have expressed concerns about PayPal’s ability to maintain profit margins, citing intense competition in the digital payments market. Growth in branded products also fell short of expectations, with only 6% growth compared to a forecasted 7%. The company still expects full-year adjusted profit to grow between $4.95 and $5.10 per share, but investors seem to be losing confidence.
The results may have set back some of PayPal’s progress in easing concerns about its profit margins, which had been thriving for years before the pandemic. As competition continues to intensify, it remains to be seen whether PayPal can regain its momentum and maintain its position as a leader in the digital payments market.
Source: https://www.reuters.com/business/finance/paypal-forecasts-2025-profit-above-estimates-turnaround-gains-traction-2025-02-04