Paypal Reports “Strong Adoption & Trading Of Crypto” In Q2; Currently Working On Allowing Transfers To Third-party Wallets
CEO Dan Schulman “really pleased with the momentum… on crypto” but said it isn't the main course as they are onto what the next generation of the financial system looks like in terms of CBDC, smart contracts, and interesting DeFi applications.
Reporting weaker than expected second-quarter earnings, PayPal saw a drop of 23% in its net profit from a year earlier to $1.18 billion.
According to the statement, the company's revenue grew 19% year over year in the quarter ended June 30.
The total payment volume of the payments giant grew 40% to $311 billion, while the Venmo app saw its payment volume grow by 58% to $58 billion. Q2 transaction revenue rose 17% to $5.80 billion from $4.95 billion in the year-earlier period, while quarter over quarter, transaction revenue rose by 3%, from $5.6 billion. Pay with Venmo revenues grew by 183% year over year.
While the company excludes crypto payments from total payment volume, part of transaction revenue comes from its crypto services.
PayPal started allowing its users in the US to buy, sell, hold, and check out with cryptocurrencies in October last year, while Venmo began supporting crypto services in April, where the company reported “strong adoption and trading of crypto.”
CBDCs, Smart Contracts, and DeFi
“We continue to be really pleased with the momentum we're seeing on crypto,” said Dan Schulman, President and Chief Executive Officer of PayPal, during the company’s Q2 earnings call.
They’re currently working on open banking integration, which will increase the ability to fully integrate it into ACH and make faster payments, which is expected to be launched next month in the UK.
“We're working right now on transfers to third-party wallets.”
“I will say this, like all of that is interesting, but it isn't the main course in terms of what we are trying to do with our blockchain and digital currency business unit. We are clearly thinking about what the next generation of the financial system looks like, how we can help shape that.”
PayPal is actually working with regulatory agencies regarding central bank digital currencies, and the company wants to capitalize on the connection between digital wallets and CBDCs.
“How can we use smart contracts more efficiently? How can we digitize assets and open those up to consumers that may not have had access to that before? There are some interesting DFI applications as well. And so we are working really hard.”
New Features Coming up
PayPal added 11.4 million net new active accounts for a total of 403 million active accounts. These new additions were down from the 14.5 million in Q1 and 23.3 million in the year-earlier period.
With eBay transitioning off its platform, which will be completed by the end of the third quarter, PayPal said it is causing a “short-term drag” on growth.
PayPal has a network of 32 million merchants, and Venmo boasts over 500k with 300k new business profiles created in Q2 alone.
“In the next several months, we plan to be fully ramped in the U.S.,” said the company. New features that PayPal is working on include high-yield savings, early access to direct deposit funds, messaging capabilities outside of P2P, and additional crypto capabilities and customized deals and offers.