How PayPal Makes Money (2024)

PayPal Holdings Inc. (PYPL) operates a digital payment platform that enables merchants and consumers to make digital and mobile payments worldwide. The company's platform comprises payment solutions by trusted brands, including core PayPal, Venmo, Zettle, and Honey. It generates revenue through fees on payment transactions it completes for its customers and through other services.

PayPal's Industry

PayPal operates in the highly competitive global payments industry comprised of larger, dominant companies and smaller, agile competitors. The company competes with a broad range of payment solution providers, including Visa Inc. (V), Mastercard Inc. (MA), JPMorgan Chase & Co.'s (JPM), Square Inc. (SQ), and Stripe.

PayPal operates as one segment and does not break out its financial performance data into separate reportable segments. However, the company does provide a breakdown of revenue into two types:

• Transaction Revenues: PayPal charges merchants and consumers fees for each transaction completed on its payments platform based on the volume of activity, or TPV. Fees are also charged on currency conversions, cross-border transactions, fund transfers from customers' PayPal or Venmo accounts to their debit cards or bank accounts, cryptocurrency transactions, and other miscellaneous fees.
• Value-Added Services: PayPal generates revenues through partnerships, referral fees, subscription fees, gateway fees, and services offered to merchants and consumers. The company also earns interest and fees on its portfolio of loan receivables and interest on certain assets underlying customer balances.
  

PayPal's Financials

PayPal announced in Feb. 2024 financial results for the 2023 fiscal year (FY), which ended Dec. 31, 2023. The company posted a net income of $4.25 billion, a 76% increase over 2022. Revenue rose 8% year-over-year (YOY) to $29.8 billion.

PayPal processed $1.53 trillion in total payment volume (TPV). As of Dec. 31, 2023, PayPay had 426 million active accounts across 200 markets.

History and Leadership

Founded in 1998, PayPal became eBay's leading payment processor in 2002. By 2011, PayPal had over 100 million active users in 190 markets. The company went public in 2015. In 2024, under the leadership of President and CEO Alex Chriss, PayPal and Venmo are incorporating artificial intelligence (AI) to benefit merchants and consumers.

Recent Developments

In late 2023, PayPay reorganized its operations to align with consumers, small businesses, and large enterprises to deliver more efficient end-to-end experiences. In May 2024, PayPal announced a new leadership team to create a new advertising platform and strengthen its consumer group and global marketing and communications.

The Bottom Line

PayPal started in 1998 to deliver digital and mobile payment solutions. In 2024, PayPal processes transactions through platforms like Venmo. Most of the company's revenue is earned through transaction fees to merchants and consumers for each transaction completed on its payments platform.