Paypal’s total payment volume jumps 23% in the fourth quarter despite bumps in the road

  • PayPal’s total payment volume increased by 23% year over year in the fourth quarter.
  • The omicron variant and lack of stimulus funds may have delayed volume growth.
  • Insider Intelligence publishes hundreds of insights, charts and forecasts on the payments and commerce industry. Learn more about becoming a customer.

By the numbers: PayPal’s total payment volume (TPV) grew 23% year-over-year (YoY) in the fourth quarter, in line with 24% year-over-year growth in the third quarter, according to the publication results from PayPal. POS growth slowed from the fourth quarter of 2020, when it increased by 36% year-on-year.

Chart showing top PayPal users worldwide


Insider information


The company added 9.8 million accounts in the fourth quarter, 3.2 million of which came from its acquisition of Paidy in September. Transactions per active account, which PayPal uses as an indicator of engagement, were up 11% year-over-year, in line with third-quarter performance.

More on this: During the company’s earnings call, Chief Financial Officer John Rainey said PayPal started the quarter well, noting October’s “holiday shopping progress.”

But he also pointed to factors that contributed to a softer end to the quarter:

  • Rainey blamed the omicron variant in December and inflation for lower user spending. He said the lack of stimulus funds — which helped spur spending last year — also hurt PayPal’s volume growth in the fourth quarter, especially for lower-income customers.
  • The migration of eBay’s business has also affected PayPal’s settings: in June, eBay began handling its own seller payments, which were previously handled by PayPal. CEO Dan Schulman said the migration went faster than expected.

Future outlook: In 2022, PayPal intends to focus on user engagement, and its super app will be key to this initiative.

  • PayPal plans to convert moderately engaged users to highly engaged users. Schulman said this approach has proven to be more effective than trying to retain low-engaged users, which is more expensive.
  • In September, the firm launched its long-awaited super application. The revamped PayPal app includes several new services such as direct deposits, savings accounts (powered by Synchrony), a shopping center with integration with Honey, and a crowdfunding platform. So far, that’s paid off: Average revenue per active account doubles when customers use the app rather than just pay, according to Schulman.
  • New super app integrations can also encourage more spending among active users. In early January, PayPal confirmed that it was exploring a first-party stablecoin. Although the company has yet to make a decision on this, a stablecoin could fit well into its super app and allow it to take advantage of the growing demand for digital currencies.

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