PayPal (NASDAQ:PYPL) is focusing on financial services, consumer engagement and merchant checkout as it works toward faster transaction margin and earnings growth, Chief Financial Officer and Chief Operating Officer Jamie Miller said.
Miller said the company has raised its 2026 guidance twice and is targeting 2% transaction margin dollar growth and mid-single-digit earnings-per-share growth for the year. Over the medium term, PayPal is aiming for mid-single-digit transaction margin dollar growth, operating leverage and capital deployment that together support double-digit EPS growth.
The strategy follows a reorganization in April under CEO Enrique Lores, who joined in March. Miller said the changes are intended to simplify operations and sharpen the company’s focus on financial services, Venmo, payment processing and consumers.
Checkout investment and regional performance
Branded checkout growth has stabilized at 1% to 2% in each of the past four quarters, Miller said. She estimated that European de minimis tariff policy actions reduced third-quarter growth by about 70 basis points.
In the U.S., Miller cited growth in services and travel and said a merchant-focused playbook has improved growth at participating merchants. The program includes changes to checkout experiences, product placement and co-marketing, such as cashback offers for customers who choose PayPal.
Miller said PayPal recently highlighted 11 large merchants representing more than 20% of its U.S. checkout total payment volume. Where some or all of the playbook was in place, PayPal grew faster than those merchants’ e-commerce growth, she said.
The company has focused on its top 50 U.S. merchants and plans to broaden the effort to its top 200 global merchants in 2027. European work is expected to begin around the middle of that year, with Germany a primary market and the U.K., France, Italy and Spain also part of the plan.
Miller described Germany as stable and improving, while the U.K. remains challenging. She said PayPal’s buy now, pay later product launched with Amazon in Germany and Austria in the third quarter and was off to a good start.
Cost cuts to fund reinvestment
PayPal expects to remove more than $700 million in gross costs by the end of 2026 as part of a program targeting more than $1.5 billion in cost reductions over two to three years, Miller said. The company expects to reinvest most, if not all, of the savings over time.
The program includes organizational changes, geographic and portfolio prioritization, and increased use of artificial intelligence and automation. Miller said PayPal has reduced its organizational layers from nine to six and taken out more than 25% of its management layers.
PayPal’s 2026 investment in initiatives supporting checkout and engagement is about $300 million, equivalent to a couple of percentage points of transaction margin dollar growth, Miller said. She cautioned that the timing of cost reductions and investments means investors should not simply annualize second-half operating expenses to estimate 2027 costs.
Financial services and Venmo
Financial services currently accounts for more than 20% of PayPal’s transaction margin dollars, Miller said. The business spans consumer credit and debit products, buy now, pay later and merchant lending. She said the company sees room for financial services to become a larger growth contributor.
At Venmo, Miller said debit and Pay with Venmo usage have each grown at rates of 40% to 50%. Customers using those products generate twice the monetization of those who only use peer-to-peer payments, she said. Miller described an opportunity to increase Venmo’s average revenue per account four to six times over time through additional products and adoption.
Miller also said PayPal expects mergers and acquisitions to play a role in its strategy, but any deal must meet tests for strategic fit, financial returns and execution. Its bank charter application is currently designed around merchant lending and deposits, which could diversify funding sources. PayPal nevertheless expects to remain generally balance-sheet light while maintaining shareholder returns, she said.
About PayPal (NASDAQ:PYPL)
PayPal Holdings, Inc. operates a global digital payments platform that helps consumers and businesses send and receive payments online and in person. Its services include PayPal checkout and digital wallets, Venmo peer-to-peer payments, Braintree payment processing for merchants, and Xoom international money transfers. The company traces its roots to Confinity, founded in 1998, and the online payments business that developed through its merger with X.com. PayPal became part of eBay in 2002 and was spun off as an independent public company in 2015.
