{"id":314384,"date":"2024-09-15T14:00:52","date_gmt":"2024-09-15T14:00:52","guid":{"rendered":"https:\/\/www.techopedia.com\/?p=314384"},"modified":"2024-09-15T14:00:51","modified_gmt":"2024-09-15T14:00:51","slug":"how-does-paypal-make-money","status":"publish","type":"post","link":"https:\/\/www.techopedia.com\/how-does-paypal-make-money","title":{"rendered":"How Does PayPal Make Money? Revenue Model Explained"},"content":{"rendered":"<p>Launched in 1998, <a href=\"https:\/\/www.techopedia.com\/definition\/1564\/paypal\">US-based payments company PayPal<\/a> provides merchants and consumers with a platform to send and receive online, mobile, and in-person <a href=\"https:\/\/www.techopedia.com\/investing\/best-international-payment-collection-platforms\">payments worldwide<\/a>. The company earns revenues from transaction and other service fees.<\/p>\n<p><strong>PayPal had 429 million active accounts at the end of June 2024<\/strong>, down from 431 million a year earlier, although the average number of transactions per account increased to 60.9 million from 54.7 million over the same period.<\/p>\n<p>The company recently announced the expansion of its <a href=\"https:\/\/newsroom.paypal-corp.com\/2024-09-09-PayPal-partners-with-Shopify-to-power-a-portion-of-Shopify-Payments-in-the-U-S\" target=\"_blank\">partnership with Shopify in the US<\/a>. It will become an additional online card processor for Shopify Payments via its PayPal Complete Payments solution for marketplaces and platforms, which will contribute to PayPal&#8217;s revenue in the future.<\/p>\n<p>How does PayPal make money? This article looks at the company&#8217;s divisions and sources of revenue.<\/p>\n<div class=\"su-note\"  style=\"border-color:#dddddd;border-radius:3px;-moz-border-radius:3px;-webkit-border-radius:3px;\"><div class=\"su-note-inner su-u-clearfix su-u-trim\" style=\"background-color:#F7F7F7;border-color:#ffffff;color:#333333;border-radius:3px;-moz-border-radius:3px;-webkit-border-radius:3px;\">\n<h2><span id=\"key_takeaways\">Key Takeaways<\/span><\/h2>\n<ul>\n<li>Financial service provider PayPal primarily generates revenues from transaction fees, which it charges retailers and consumers for processing the payments they send and receive.<\/li>\n<li>Beyond transaction fees, PayPal generates revenue from currency conversion, subscription fees, lending, and other services.<\/li>\n<li>PayPal has expanded its business over the years through partnerships with e-commerce platforms such as Shopify and acquisitions of companies like Venmo, broadening its market reach.<\/li>\n<li>PayPal has faced criticism for some of its policies, such as user privacy and handling of personal information, a lack of transparency around account freezes, and relatively high fees.<\/li>\n<\/ul>\n<\/div><\/div>\n<div>\n    <section class=\"toc-sticky w-100 bg-white \">\n        <div class=\"toc-sticky__container container\">\n            <div class=\"toc-sticky__open d-flex align-items-end\" data-bs-toggle=\"collapse\"\n                 aria-controls=\"multiCollapse1\"\n                 data-bs-target=\"#multiCollapse1\">\n                <button\n                        class=\"btn btn-primary collapse-action-btn p-1 rounded-circle\"\n                        type=\"button\"\n                >\n                    <i class=\"icon-chevron-up\"><\/i>\n                <\/button>\n                <span id=\"toc-current-title\" class=\"d-flex align-items-center\">\n                    Table of Contents\n                <\/span>\n                <span class=\"toc-main-title-permanent\">Table of Contents<\/span>\n            <\/div>\n            <div\n                    class=\"collapse my-3\"\n                    id=\"multiCollapse1\"\n            >\n                <ol class=\"StepProgress\">\n                                                                        <li class=\"StepProgress-item current\">\n                                                <div class=\"StepProgress-item__group\">\n                            <a data-id=\"key_takeaways\"\n                               onclick=handleScrollToTitle(\"key_takeaways\")\n                               class=\"StepProgress-item__link\" data-level=\"2\">Key Takeaways<\/a>\n                                                    <\/div>\n                                                <\/li>\n                                                                        <li class=\"StepProgress-item\">\n                                                <div class=\"StepProgress-item__group\">\n                            <a data-id=\"h2_paypals_financials_revenue_growth_through_years\"\n                               onclick=handleScrollToTitle(\"h2_paypals_financials_revenue_growth_through_years\")\n                               class=\"StepProgress-item__link\" data-level=\"2\">H2: PayPal's Financials: Revenue Growth Through Years<\/a>\n                                                    <\/div>\n                                                <\/li>\n                                                                        <li class=\"StepProgress-item\">\n                                                <div class=\"StepProgress-item__group\">\n                            <a data-id=\"future_growth_plans\"\n                               onclick=handleScrollToTitle(\"future_growth_plans\")\n                               class=\"StepProgress-item__link\" data-level=\"2\">Future Growth Plans<\/a>\n                                                    <\/div>\n                                                <\/li>\n                                                                        <li class=\"StepProgress-item\">\n                                                <div class=\"StepProgress-item__group\">\n                            <a data-id=\"the_dark_side_of_paypal_controversies_criticism_challenges\"\n                               onclick=handleScrollToTitle(\"the_dark_side_of_paypal_controversies_criticism_challenges\")\n                               class=\"StepProgress-item__link\" data-level=\"2\">The Dark Side of PayPal: Controversies, Criticism &amp; Challenges<\/a>\n                                                    <\/div>\n                                                <\/li>\n                                                                        <li class=\"StepProgress-item\">\n                                                <div class=\"StepProgress-item__group\">\n                            <a data-id=\"paypal_competitors\"\n                               onclick=handleScrollToTitle(\"paypal_competitors\")\n                               class=\"StepProgress-item__link\" data-level=\"2\">PayPal Competitors<\/a>\n                                                    <\/div>\n                                                <\/li>\n                                                                        <li class=\"StepProgress-item\">\n                                                <div class=\"StepProgress-item__group\">\n                            <a data-id=\"the_bottom_line\"\n                               onclick=handleScrollToTitle(\"the_bottom_line\")\n                               class=\"StepProgress-item__link\" data-level=\"2\">The Bottom Line<\/a>\n                                                    <\/div>\n                                                <\/li>\n                                                                        <li class=\"StepProgress-item\">\n                                                <div class=\"StepProgress-item__group\">\n                            <a data-id=\"faqs\"\n                               onclick=handleScrollToTitle(\"faqs\")\n                               class=\"StepProgress-item__link\" data-level=\"2\">FAQs<\/a>\n                                                    <\/div>\n                                                <\/li>\n                                                                        <li class=\"StepProgress-item\">\n                                                <div class=\"StepProgress-item__group\">\n                            <a data-id=\"references\"\n                               onclick=handleScrollToTitle(\"references\")\n                               class=\"StepProgress-item__link\" data-level=\"2\">References<\/a>\n                                                    <\/div>\n                                                <\/li>\n                                    <\/ol>\n                <div class=\"toc-sticky__container__disperse\"><\/div>\n                <div class=\"toc-sticky__btn-top justify-content-center\">\n                    <button class=\"btn btn-link d-flex align-items-center\" onclick={btnTop()}><p>Show Full Guide<\/p><img decoding=\"async\"\n                                src=\"\/wp-content\/plugins\/table-of-contents\/assets\/images\/arrow-up-circle.svg\"\n                                alt=\"arrow-up-circle\">\n                    <\/button>\n                <\/div>\n            <\/div>\n        <\/div>\n    <\/section>\n    <div class=\"toc-sticky-list\">\n        <div class=\"toc-sticky__container container\">\n            <div class=\"toc-sticky__open d-flex align-items-end\" data-bs-toggle=\"collapse\" aria-controls=\"multiCollapse2\" data-bs-target=\"#multiCollapse2\">\n                <button class=\"btn btn-primary collapse-action-btn p-1 rounded-circle\"\n                        type=\"button\">\n                    <i class=\"icon-chevron-up up\"><\/i>\n                <\/button>\n                <span id=\"toc-current-title\" class=\"d-flex align-items-center\">\n                    Table of Contents\n                <\/span>\n            <\/div>\n            <div  class=\"collapse my-3\" id=\"multiCollapse2\">\n                <ol class=\"StepProgress\">\n                    \t\t\t\t\t \t\t\t\t\t                                                     <li class=\"StepProgress-item current \">\n                                                    <div class=\"StepProgress-item__group\">\n                                <a data-id=\"key_takeaways\"\n                                   onclick=handleScrollToTitle(\"key_takeaways\")\n                                   class=\"StepProgress-item__link\"\n                                   data-level=\"2\">Key Takeaways<\/a>\n                                                            <\/div>\n                                                    <\/li>\n                    \t\t\t\t\t \t\t\t\t\t                                                     <li class=\"StepProgress-item \">\n                                                    <div class=\"StepProgress-item__group\">\n                                <a data-id=\"h2_paypals_financials_revenue_growth_through_years\"\n                                   onclick=handleScrollToTitle(\"h2_paypals_financials_revenue_growth_through_years\")\n                                   class=\"StepProgress-item__link\"\n                                   data-level=\"2\">H2: PayPal's Financials: Revenue Growth Through Years<\/a>\n                                                            <\/div>\n                                                    <\/li>\n                    \t\t\t\t\t \t\t\t\t\t                                                     <li class=\"StepProgress-item \">\n                                                    <div class=\"StepProgress-item__group\">\n                                <a data-id=\"future_growth_plans\"\n                                   onclick=handleScrollToTitle(\"future_growth_plans\")\n                                   class=\"StepProgress-item__link\"\n                                   data-level=\"2\">Future Growth Plans<\/a>\n                                                            <\/div>\n                                                    <\/li>\n                    \t\t\t\t\t \t\t\t\t\t\n\t\t\t\t\t\t <span class=\"show_moretoc\">Show Full Guide<\/span>\n\t\t\t\t\t\t \t\t\t\t\t \t\t\t\t\t\t  \t\t\t\t\t                                                      <li class=\"StepProgress-item ms_hidetoc\">\n                                                    <div class=\"StepProgress-item__group\">\n                                <a data-id=\"the_dark_side_of_paypal_controversies_criticism_challenges\"\n                                   onclick=handleScrollToTitle(\"the_dark_side_of_paypal_controversies_criticism_challenges\")\n                                   class=\"StepProgress-item__link\"\n                                   data-level=\"2\">The Dark Side of PayPal: Controversies, Criticism &amp; Challenges<\/a>\n                                                            <\/div>\n                                                    <\/li>\n                    \t\t\t\t\t \t\t\t\t\t \t\t\t\t\t\t  \t\t\t\t\t                                                      <li class=\"StepProgress-item ms_hidetoc\">\n                                                    <div class=\"StepProgress-item__group\">\n                                <a data-id=\"paypal_competitors\"\n                                   onclick=handleScrollToTitle(\"paypal_competitors\")\n                                   class=\"StepProgress-item__link\"\n                                   data-level=\"2\">PayPal Competitors<\/a>\n                                                            <\/div>\n                                                    <\/li>\n                    \t\t\t\t\t \t\t\t\t\t \t\t\t\t\t\t  \t\t\t\t\t                                                      <li class=\"StepProgress-item ms_hidetoc\">\n                                                    <div class=\"StepProgress-item__group\">\n                                <a data-id=\"the_bottom_line\"\n                                   onclick=handleScrollToTitle(\"the_bottom_line\")\n                                   class=\"StepProgress-item__link\"\n                                   data-level=\"2\">The Bottom Line<\/a>\n                                                            <\/div>\n                                                    <\/li>\n                    \t\t\t\t\t \t\t\t\t\t \t\t\t\t\t\t  \t\t\t\t\t                                                      <li class=\"StepProgress-item ms_hidetoc\">\n                                                    <div class=\"StepProgress-item__group\">\n                                <a data-id=\"faqs\"\n                                   onclick=handleScrollToTitle(\"faqs\")\n                                   class=\"StepProgress-item__link\"\n                                   data-level=\"2\">FAQs<\/a>\n                                                            <\/div>\n                                                    <\/li>\n                    \t\t\t\t\t \t\t\t\t\t \t\t\t\t\t\t  \t\t\t\t\t                                                      <li class=\"StepProgress-item ms_hidetoc\">\n                                                    <div class=\"StepProgress-item__group\">\n                                <a data-id=\"references\"\n                                   onclick=handleScrollToTitle(\"references\")\n                                   class=\"StepProgress-item__link\"\n                                   data-level=\"2\">References<\/a>\n                                                            <\/div>\n                                                    <\/li>\n          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pageLegendCollapse);\n\tjQuery('span.show_moretoc').click(function(){\n\t\tjQuery('span.show_moretoc').hide();\n\t   jQuery('.ms_hidetoc').show();\n\t});\n    });\n\n    \/\/ When the user clicks on the button, scroll to the top of the document\n    function btnTop() {\n        const pageLegend = document.querySelector('#multiCollapse1');\n        document.querySelector('html').classList.remove('overflow-hidden');\n        pageLegend.classList.remove('overflow-auto');\n        pageLegend.style.height = 'auto';\n        window.scrollTo({\n            top: 0,\n            behavior: 'smooth'\n        });\n    }\n\n    const handleScrollToTitle = (id) => {\n        const el = document.getElementById(id);\n        const headerHeightDifference = window.innerWidth < 992 ? -30 : -15;\n        window.scrollTo({\n            top: el.offsetTop - 60 - headerHeightDifference - 10,\n        });\n    }\n<\/script>\n\n<h2><span id=\"h2_paypals_financials_revenue_growth_through_years\">H2: PayPal&#8217;s Financials: Revenue Growth Through Years<\/span><\/h2>\n<div class=\"infogram-embed\" data-id=\"2122523f-b504-40ae-bd28-f7e7937dce14\" data-type=\"interactive\" data-title=\"PayPal Revenue History, 2014-2024\"><\/div>\n<p><script>!function(e,n,i,s){var d=\"InfogramEmbeds\";var o=e.getElementsByTagName(n)[0];if(window[d]&&window[d].initialized)window[d].process&&window[d].process();else if(!e.getElementById(i)){var r=e.createElement(n);r.async=1,r.id=i,r.src=s,o.parentNode.insertBefore(r,o)}}(document,\"script\",\"infogram-async\",\"https:\/\/e.infogram.com\/js\/dist\/embed-loader-min.js\");<\/script><\/p>\n<p>The latest PayPal revenue breakdown shows that the company&#8217;s revenues increased by 8% year on year during the second quarter of 2024 to $7.9 billion, up from $7.3 billion a year earlier.<\/p>\n<div class=\"su-accordion su-u-trim\">\n<div class=\"su-spoiler su-spoiler-style-fancy su-spoiler-icon-plus\" data-scroll-offset=\"0\" data-anchor-in-url=\"no\"><div class=\"su-spoiler-title\" tabindex=\"0\" role=\"button\"><span class=\"su-spoiler-icon\"><\/span><strong>How Much Does PayPal Make a Year<\/strong><strong>?<\/strong><\/div><div class=\"su-spoiler-content su-u-clearfix su-u-trim\">\n<ul>\n<li>The company&#8217;s revenues have climbed steadily from $8 billion in 2014.<\/li>\n<li>PayPal&#8217;s annual revenue surpassed the $20 billion mark in 2020.<\/li>\n<li>Last year, it reached $29.8 billion, an increase from $27.5 billion in 2022.<\/li>\n<\/ul>\n<\/div><\/div>\n<div class=\"su-spoiler su-spoiler-style-fancy su-spoiler-icon-plus su-spoiler-closed\" data-scroll-offset=\"0\" data-anchor-in-url=\"no\"><div class=\"su-spoiler-title\" tabindex=\"0\" role=\"button\"><span class=\"su-spoiler-icon\"><\/span><strong>Is PayPal profitable<\/strong><strong>?<\/strong><\/div><div class=\"su-spoiler-content su-u-clearfix su-u-trim\"> PayPal&#8217;s profit during the second quarter of 2024 increased by 10% to $1.1 billion. The company&#8217;s <strong>annual profit in 2023 jumped by 76% to $4.2 billion<\/strong>. <\/div><\/div>\n<div class=\"su-spoiler su-spoiler-style-fancy su-spoiler-icon-plus su-spoiler-closed\" data-scroll-offset=\"0\" data-anchor-in-url=\"no\"><div class=\"su-spoiler-title\" tabindex=\"0\" role=\"button\"><span class=\"su-spoiler-icon\"><\/span><strong>How Much Money Does PayPal Have<\/strong><strong>?<\/strong><\/div><div class=\"su-spoiler-content su-u-clearfix su-u-trim\"> At the end of the second quarter, the company held <strong>$7.7 billion in cash and equivalents<\/strong>. <\/div><\/div>\n<div class=\"su-spoiler su-spoiler-style-fancy su-spoiler-icon-plus su-spoiler-closed\" data-scroll-offset=\"0\" data-anchor-in-url=\"no\"><div class=\"su-spoiler-title\" tabindex=\"0\" role=\"button\"><span class=\"su-spoiler-icon\"><\/span><strong>What Is PayPal's Net Worth? <\/strong><\/div><div class=\"su-spoiler-content su-u-clearfix su-u-trim\">\n<p>With the increase in online transactions and technology stock prices during the COVID-19 pandemic, PayPal&#8217;s net worth, or market cap, <strong>more than doubled in 2020 to $274.41 billion<\/strong>.<\/p>\n<p>However, its share price has since declined, and its <strong>market cap dropped to $66.2 billion in 2023<\/strong>.<\/p>\n<\/div><\/div>\n<\/div>\n<p><strong>\u00a0<\/strong>As of September 2024, PayPal&#8217;s <a href=\"https:\/\/www.techopedia.com\/definition\/market-cap-market-capitalization\">market capitalization<\/a>, or market value, was <strong>$71.93 billion<\/strong>. It has gained 8% since 2023 and climbed from $44.3 billion in 2015.<\/p>\n<div class=\"infogram-embed\" data-id=\"2fad36e7-c1f3-49dd-939a-ca0f4e912a08\" data-type=\"interactive\" data-title=\"PayPal Market Cap History, 2015-2024\"><\/div>\n<p><script>!function(e,n,i,s){var d=\"InfogramEmbeds\";var o=e.getElementsByTagName(n)[0];if(window[d]&&window[d].initialized)window[d].process&&window[d].process();else if(!e.getElementById(i)){var r=e.createElement(n);r.async=1,r.id=i,r.src=s,o.parentNode.insertBefore(r,o)}}(document,\"script\",\"infogram-async\",\"https:\/\/e.infogram.com\/js\/dist\/embed-loader-min.js\");<\/script><\/p>\n<p>PayPal&#8217;s Business Model<\/p>\n<p>PayPal&#8217;s products include several brands it has acquired over the years, including Venmo, Zettle, and Honey. It has <strong>12 subsidiaries<\/strong> that contribute to PayPal revenue streams.<\/p>\n<div class=\"su-spoiler su-spoiler-style-fancy su-spoiler-icon-arrow-circle-1 su-spoiler-closed\" data-scroll-offset=\"0\" data-anchor-in-url=\"no\"><div class=\"su-spoiler-title\" tabindex=\"0\" role=\"button\"><span class=\"su-spoiler-icon\"><\/span><strong>PayPal Subsidiaries<\/strong><\/div><div class=\"su-spoiler-content su-u-clearfix su-u-trim\">\n<ul>\n<li><strong>Braintree<\/strong><\/li>\n<li><strong>Chargehound<\/strong><\/li>\n<li><strong>Happy Returns<\/strong><\/li>\n<li><strong>Honey<\/strong><\/li>\n<li><strong>Hyperwallet<\/strong><\/li>\n<li><strong>Paidy<\/strong><\/li>\n<li><strong>PayPal Credit<\/strong><\/li>\n<li><strong>Simility<\/strong><\/li>\n<li><strong>Swift Financial<\/strong><\/li>\n<li><strong>Venmo<\/strong><\/li>\n<li><strong>Xoom<\/strong><\/li>\n<li><strong>Zettle<\/strong><\/li>\n<\/ul>\n<\/div><\/div>\n<ul><\/ul>\n<p>PayPal&#8217;s business model involves <strong>making money from merchants and consumers<\/strong>. Opening an account and sending PayPal payment is free, but the company charges merchants fees for processing their transactions and consumers for transferring or converting money.<\/p>\n<p><strong>The company splits its revenues into two categories:<\/strong><\/p>\n<ul>\n<li><strong>Transaction Revenues<\/strong><br \/>\nThese are the fees PayPal charges merchants and consumers to facilitate transactions based on the Total Payment Volume (TPV) on its payments platform. They also include the fees it charges for currency conversion, cross-border transactions, instant transfers to bank accounts, cryptocurrency transactions, and fines for customers violating its contract terms.<\/li>\n<li><strong>Revenues from other value-added services<\/strong><br \/>\nIncome PayPal receives from partnerships, referral fees, subscription fees, gateway fees, card reader sales, cash advances and other services, as well as interest and fees on loans and customer balances.<\/li>\n<\/ul>\n<h3>Merchant Services<\/h3>\n<p>PayPal provides retailers and other merchants with a range of services to receive and manage their customer payments. Its payment platform allows merchants to accept payments from credit and debit cards, PayPal, Venmo, and other <a href=\"https:\/\/www.techopedia.com\/definition\/1776\/digital-wallet\">digital wallets<\/a>, <a href=\"https:\/\/www.techopedia.com\/definition\/27531\/cryptocurrency\">cryptocurrencies<\/a>, and gift cards, as well as other local payment methods in various countries.<\/p>\n<p>In addition to payment processing, services include fraud prevention, <a href=\"https:\/\/www.techopedia.com\/definition\/25836\/it-risk-management\">risk management<\/a>, and access to credit and <a href=\"https:\/\/www.techopedia.com\/definition\/26418\/data-analytics\">data analytics<\/a> to help businesses improve sales.<\/p>\n<h3>Consumer Services<\/h3>\n<p>PayPal&#8217;s consumer services center on its digital wallet, which allows them to pay retailers using their preferred payment method. Users can also make <a href=\"https:\/\/www.techopedia.com\/definition\/31702\/peer-to-peer-p2p\">peer-to-peer<\/a> through PayPal, Venmo, and Xoom. PayPal provides lending services to consumers in certain countries.<\/p>\n<p>The Venmo digital wallet is a popular mobile application in the US used to make peer-to-peer payments and purchases from certain merchants.<\/p>\n<p>The Xoom international money transfer service allows consumers to transfer money, pay bills, and reload prepaid mobile phones.<\/p>\n<h2><span id=\"future_growth_plans\">Future Growth Plans<\/span><\/h2>\n<p>PayPal put in place a new management team in November 2023, which is executing a transformation strategy &#8220;to position PayPal for long-term durable and profitable growth&#8221;.<\/p>\n<p>This involves &#8220;enhancing customer experiences for our next phase of growth,&#8221; according to the company&#8217;s <a href=\"https:\/\/s201.q4cdn.com\/231198771\/files\/doc_financials\/2024\/q2\/PYPL-2Q-24-Earnings-Presentation.pdf\" target=\"_blank\">quarterly presentation<\/a>, and raising its investment in its growth initiatives.<\/p>\n<figure id=\"attachment_314386\" aria-describedby=\"caption-attachment-314386\" style=\"width: 1200px\" class=\"wp-caption aligncenter\"><img decoding=\"async\" src=\"https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/09\/PayPals-Customer-Experiences-300x152.png\" alt=\"PayPal's Customer Experiences\" width=\"1200\" height=\"606\" class=\"wp-image-314386\" srcset=\"https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/09\/PayPals-Customer-Experiences-300x152.png 300w, https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/09\/PayPals-Customer-Experiences-1024x517.png 1024w, https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/09\/PayPals-Customer-Experiences-768x388.png 768w, https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/09\/PayPals-Customer-Experiences-1200x606.png 1200w, https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/09\/PayPals-Customer-Experiences.png 1469w\" sizes=\"(max-width: 1200px) 100vw, 1200px\" \/><figcaption id=\"caption-attachment-314386\" class=\"wp-caption-text\">PayPal&#8217;s Customer Experiences. Source: PayPal Second Quarter 2024 Performance Report<\/figcaption><\/figure>\n<p>&#8220;Over the last year, we have been working to transform our global business from a series of products and services into a multifaceted omnichannel and open platform capable of generating value in multiple ways throughout the commerce ecosystem,&#8221; <a href=\"https:\/\/s201.q4cdn.com\/231198771\/files\/doc_financials\/2024\/q2\/CORRECTED-TRANSCRIPT_-PayPal-Holdings-Inc-PYPL-US-Q2-2024-Earnings-Call-30-July-2024-8_00-AM-ET-2.pdf\" target=\"_blank\">the company stated in its earnings call<\/a>.<\/p>\n<ul>\n<li><strong>For large enterprises<\/strong>, PayPal is focusing on an expanded DoorDash relationship, improving branded checkout flows, and bringing Fastlane\u2014which prefills payment details\u2014to market.<\/li>\n<li><strong>For small and mid-sized businesses<\/strong>, PayPal aims to increase its transactions through PayPal Complete Payments.<\/li>\n<li><strong>In consumer markets<\/strong>, the company is focusing on improving its in-app offers with major brands, driving Venmo&#8217;s monetization, and meeting consumer demand for in-person payments with expanded omnichannel capabilities.<\/li>\n<\/ul>\n<p>The company has raised its full-year guidance for transaction margin dollars to low-to-mid single-digit growth and earnings per share to the low-to-mid-teens, up from its previous estimate of mid-to-high single digits.<\/p>\n<h2><span id=\"the_dark_side_of_paypal_controversies_criticism_challenges\">The Dark Side of PayPal: Controversies, Criticism &amp; Challenges<\/span><\/h2>\n<p>While PayPal is at the forefront of online payment services, it has faced controversies.<\/p>\n<div class=\"su-tabs su-tabs-style-default su-tabs-mobile-stack su-tabs-vertical\" data-active=\"1\" data-scroll-offset=\"0\" data-anchor-in-url=\"no\"><div class=\"su-tabs-nav\"><span class=\"\" data-url=\"\" data-target=\"blank\" tabindex=\"0\" role=\"button\"><strong>Controversy Over Misinformation Policy<\/strong><\/span><span class=\"\" data-url=\"\" data-target=\"blank\" tabindex=\"0\" role=\"button\"><strong>Concerns Over Data Handling &amp; Cybersecurity<\/strong><\/span><span class=\"\" data-url=\"\" data-target=\"blank\" tabindex=\"0\" role=\"button\"><strong>Account Freezes &amp; Arbitrary Policies<\/strong><\/span><span class=\"\" data-url=\"\" data-target=\"blank\" tabindex=\"0\" role=\"button\"><strong>High Transaction &amp; Currency Conversion Fees<\/strong><\/span><span class=\"\" data-url=\"\" data-target=\"blank\" tabindex=\"0\" role=\"button\"><strong>Challenges in a Competitive Payments Market<\/strong><\/span><\/div><div class=\"su-tabs-panes\"><div class=\"su-tabs-pane su-u-clearfix su-u-trim\" data-title=\"&lt;strong&gt;Controversy Over Misinformation Policy&lt;\/strong&gt;\">\n<p>In October 2022, PayPal backtracked when it <a href=\"https:\/\/www.washingtonpost.com\/politics\/2022\/10\/10\/paypal-faces-backlash-after-floating-fines-sharing-misinformation\/\" target=\"_blank\">received backlash<\/a> after it issued a policy that would fine users <strong>up to $2,500 in damages for spreading misinformation<\/strong>. This led to thousands of users deleting their accounts and raised concerns about the company&#8217;s control over user content.<\/p>\n<\/div>\n<div class=\"su-tabs-pane su-u-clearfix su-u-trim\" data-title=\"&lt;strong&gt;Concerns Over Data Handling &amp; Cybersecurity&lt;\/strong&gt;\">\n<p>PayPal has also raised concerns over its handling of user data and cybersecurity protection following <a href=\"https:\/\/www.washingtonpost.com\/politics\/2022\/10\/10\/paypal-faces-backlash-after-floating-fines-sharing-misinformation\/\" target=\"_blank\">data breaches<\/a> and unauthorized access that could potentially compromise personal and financial information.<\/p>\n<\/div>\n<div class=\"su-tabs-pane su-u-clearfix su-u-trim\" data-title=\"&lt;strong&gt;Account Freezes &amp; Arbitrary Policies&lt;\/strong&gt;\">\n<p>Many users have reported that PayPal has frozen their accounts or held funds without explanation and claim that it has arbitrary policies. This has caused problems for small business owners and other users who rely on PayPal to handle large sums of money.<\/p>\n<\/div>\n<div class=\"su-tabs-pane su-u-clearfix su-u-trim\" data-title=\"&lt;strong&gt;High Transaction &amp; Currency Conversion Fees&lt;\/strong&gt;\">\n<p>The company has also received criticism that its transaction fees, particularly for currency conversion, are high, creating higher costs for users than competing services.<\/p>\n<\/div>\n<div class=\"su-tabs-pane su-u-clearfix su-u-trim\" data-title=\"&lt;strong&gt;Challenges in a Competitive Payments Market&lt;\/strong&gt;\">\n<p>The payments market is a highly competitive space. And the rise of cryptocurrencies and <a href=\"https:\/\/www.techopedia.com\/definition\/30246\/blockchain\">blockchain<\/a> payment technology presents challenges as well as opportunities. In August 2023, PayPal launched its own stablecoin, <a href=\"https:\/\/www.techopedia.com\/definition\/stablecoin\">PYUSD<\/a>, to compete in the cryptocurrency market. The company must innovate continuously to remain a payment leader.<\/p>\n<\/div><\/div><\/div>\n<h2><span id=\"paypal_competitors\">PayPal Competitors<\/span><\/h2>\n<p>PayPal competes with a number of other payment platforms, including:<\/p>\n<div class=\"su-accordion su-u-trim\">\n<div class=\"su-spoiler su-spoiler-style-fancy su-spoiler-icon-plus\" data-scroll-offset=\"0\" data-anchor-in-url=\"no\"><div class=\"su-spoiler-title\" tabindex=\"0\" role=\"button\"><span class=\"su-spoiler-icon\"><\/span><strong>Stripe<\/strong><\/div><div class=\"su-spoiler-content su-u-clearfix su-u-trim\"> <a href=\"https:\/\/www.techopedia.com\/news\/payment-giant-stripe-re-enters-crypto-arena-with-usdc\">Stripe<\/a> is popular with startups as it provides a user-friendly <a href=\"https:\/\/www.techopedia.com\/definition\/24407\/application-programming-interface-api\">application programming interface<\/a> (API) and seamless integration with various online platforms. <\/div><\/div>\n<div class=\"su-spoiler su-spoiler-style-fancy su-spoiler-icon-plus su-spoiler-closed\" data-scroll-offset=\"0\" data-anchor-in-url=\"no\"><div class=\"su-spoiler-title\" tabindex=\"0\" role=\"button\"><span class=\"su-spoiler-icon\"><\/span><strong>Square<\/strong><\/div><div class=\"su-spoiler-content su-u-clearfix su-u-trim\"> <a href=\"https:\/\/www.techopedia.com\/pos\/square-review\">Square<\/a> provides a comprehensive suite of payment solutions, including <a href=\"https:\/\/www.techopedia.com\/pos\/best-pos-system\">point-of-sale (POS) systems<\/a>, online payments, and financial services. <\/div><\/div>\n<div class=\"su-spoiler su-spoiler-style-fancy su-spoiler-icon-plus su-spoiler-closed\" data-scroll-offset=\"0\" data-anchor-in-url=\"no\"><div class=\"su-spoiler-title\" tabindex=\"0\" role=\"button\"><span class=\"su-spoiler-icon\"><\/span><strong>Skrill<\/strong><\/div><div class=\"su-spoiler-content su-u-clearfix su-u-trim\"> Skrill provides online money transfer and payment services with competitive currency conversion rates for international transactions. <\/div><\/div>\n<div class=\"su-spoiler su-spoiler-style-fancy su-spoiler-icon-plus su-spoiler-closed\" data-scroll-offset=\"0\" data-anchor-in-url=\"no\"><div class=\"su-spoiler-title\" tabindex=\"0\" role=\"button\"><span class=\"su-spoiler-icon\"><\/span><strong>Payoneer<\/strong><\/div><div class=\"su-spoiler-content su-u-clearfix su-u-trim\"> Payoneer enables freelancers and small international businesses to make cross-border transactions for low fees. <\/div><\/div>\n<div class=\"su-spoiler su-spoiler-style-fancy su-spoiler-icon-plus su-spoiler-closed\" data-scroll-offset=\"0\" data-anchor-in-url=\"no\"><div class=\"su-spoiler-title\" tabindex=\"0\" role=\"button\"><span class=\"su-spoiler-icon\"><\/span><strong>Apple Pay<\/strong><\/div><div class=\"su-spoiler-content su-u-clearfix su-u-trim\"> <a href=\"https:\/\/www.techopedia.com\/how-to\/how-to-use-apple-pay\">Apple Pay<\/a> provides payment platform for in-app, in-store, and online purchases integrated with Apple devices. <\/div><\/div>\n<div class=\"su-spoiler su-spoiler-style-fancy su-spoiler-icon-plus su-spoiler-closed\" data-scroll-offset=\"0\" data-anchor-in-url=\"no\"><div class=\"su-spoiler-title\" tabindex=\"0\" role=\"button\"><span class=\"su-spoiler-icon\"><\/span><strong>Google Pay<\/strong><\/div><div class=\"su-spoiler-content su-u-clearfix su-u-trim\"> <a href=\"https:\/\/www.techopedia.com\/news\/google-pay-expands-bnpl-replaces-cvv-with-biometrics\">Google Pay<\/a> provides payments for online, in-app, and in-store transactions, known for its security features and ease for Android users. <\/div><\/div>\n<\/div>\n<h2><span id=\"the_bottom_line\">The Bottom Line<\/span><\/h2>\n<p>PayPal&#8217;s business model is based on its ability to facilitate digital payments while generating revenue through a mix of transaction fees, subscription charges and financial services.<\/p>\n<p>PayPal&#8217;s strategy, which includes acquisitions, partnerships, and expansion into new financial products, is undergoing a refresh in 2024 as the company aims to establish a future growth trajectory.<\/p>\n<h2><span id=\"faqs\">FAQs<\/span><\/h2>\n<div class=\"man_faq_sec\" itemscope itemtype=\"https:\/\/schema.org\/FAQPage\"><\/time><section class=\"ms_faq ms_card \" ><div itemscope itemprop=\"mainEntity\" itemtype=\"https:\/\/schema.org\/Question\"><div class=\"accordionButton\"><h3 itemprop=\"name\">How much money does PayPal make per transaction?<\/h3> <\/div>\n<div class=\"accordionContent\" itemscope itemprop=\"acceptedAnswer\" itemtype=\"https:\/\/schema.org\/Answer\" style=\"display:none;\"><p itemprop=\"text\">During the second quarter of 2024, PayPal made $7.15 billion in transaction revenues from 6.58 billion transactions, equating to just over $1 per transaction.<\/p>\r\n                <\/div><\/div><\/section>\n<section class=\"ms_faq ms_card \" ><div itemscope itemprop=\"mainEntity\" itemtype=\"https:\/\/schema.org\/Question\"><div class=\"accordionButton\"><h3 itemprop=\"name\">Does PayPal charge a fee?<\/h3> <\/div>\n<div class=\"accordionContent\" itemscope itemprop=\"acceptedAnswer\" itemtype=\"https:\/\/schema.org\/Answer\" style=\"display:none;\"><p itemprop=\"text\">PayPal typically charges merchants a transaction fee of around 2.9%, although this can vary by country and transaction type. It also charges fees for currency conversions and instant transfers to bank accounts.<\/p>\r\n                <\/div><\/div><\/section>\n<section class=\"ms_faq ms_card \" ><div itemscope itemprop=\"mainEntity\" itemtype=\"https:\/\/schema.org\/Question\"><div class=\"accordionButton\"><h3 itemprop=\"name\">Where does PayPal get money from?<\/h3> <\/div>\n<div class=\"accordionContent\" itemscope itemprop=\"acceptedAnswer\" itemtype=\"https:\/\/schema.org\/Answer\" style=\"display:none;\"><p itemprop=\"text\">PayPal generates revenue primarily through transaction fees it charges merchants and consumers. It also earns money from partnerships, subscription fees, currency conversion, lending, interest, and other financial services.<\/p>\r\n                <\/div><\/div><\/section>\n<section class=\"ms_faq ms_card \" ><div itemscope itemprop=\"mainEntity\" itemtype=\"https:\/\/schema.org\/Question\"><div class=\"accordionButton\"><h3 itemprop=\"name\">What are the disadvantages of PayPal?<\/h3> <\/div>\n<div class=\"accordionContent\" itemscope itemprop=\"acceptedAnswer\" itemtype=\"https:\/\/schema.org\/Answer\" style=\"display:none;\"><p itemprop=\"text\">PayPal receives criticism for high transaction fees\u2014for international transactions and currency conversions\u2014account freezes, privacy concerns and limited buyer protection.<\/p>\r\n                <\/div><\/div><\/section>\n<div class=\"reference-content\">\n<div class=\"reference-heading reference-content-collapsible-heading\">\n<h2><span id=\"references\">References<\/span><\/h2>\n<\/div>\n<div class=\"reference-content-body\">\n<ol>\n<li><a href=\"https:\/\/newsroom.paypal-corp.com\/2024-09-09-PayPal-partners-with-Shopify-to-power-a-portion-of-Shopify-Payments-in-the-U-S\" target=\"_blank\">Press Release: PayPal partners with Shopify to power a portion of Shopify Payments in the U.S.<\/a> (Newsroom.paypal-corp)<\/li>\n<li><a href=\"https:\/\/companiesmarketcap.com\/paypal\/revenue\/\" target=\"_blank\">PayPal (PYPL) &#8211; Revenue<\/a> (Companiesmarketcap)<\/li>\n<li><a href=\"https:\/\/companiesmarketcap.com\/paypal\/marketcap\/\" target=\"_blank\">PayPal (PYPL) &#8211; Market capitalization<\/a> (Companiesmarketcap)<\/li>\n<li><a href=\"https:\/\/s201.q4cdn.com\/231198771\/files\/doc_financials\/2024\/q2\/PYPL-2Q-24-Earnings-Presentation.pdf\" target=\"_blank\">No title foundPayPal Second Quarter 2024 Performance Financial results &amp; company highlights<\/a> (S201.q4cdn)<\/li>\n<li><a href=\"https:\/\/s201.q4cdn.com\/231198771\/files\/doc_financials\/2024\/q2\/CORRECTED-TRANSCRIPT_-PayPal-Holdings-Inc-PYPL-US-Q2-2024-Earnings-Call-30-July-2024-8_00-AM-ET-2.pdf\" target=\"_blank\">CORRECTED-TRANSCRIPT PayPal Holdings Inc PYPL US Q2 2024 Earnings Call<\/a> (S201.q4cdn)<\/li>\n<li><a href=\"https:\/\/www.washingtonpost.com\/politics\/2022\/10\/10\/paypal-faces-backlash-after-floating-fines-sharing-misinformation\/\" target=\"_blank\">PayPal faces backlash after floating fines for sharing misinformation<\/a> (Washingtonpost)<\/li>\n<\/ol>\n<\/div>\n<\/div>\n<\/div>","protected":false},"excerpt":{"rendered":"<p>Launched in 1998, US-based payments company PayPal provides merchants and consumers with a platform to send and receive online, mobile, and in-person payments worldwide. The company earns revenues from transaction and other service fees. PayPal had 429 million active accounts at the end of June 2024, down from 431 million a year earlier, although the [&hellip;]<\/p>\n","protected":false},"author":286558,"featured_media":314398,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_lmt_disableupdate":"","_lmt_disable":"","om_disable_all_campaigns":false,"footnotes":""},"categories":[562],"tags":[],"category_partsoff":[],"class_list":["post-314384","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-e-commerce"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v24.2 (Yoast SEO v24.5) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>How Does PayPal Make Money? Revenue Model Explained<\/title>\n<meta name=\"description\" content=\"How does PayPal make money? 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