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PayPal’s Post-Earnings Update: Swift Financial, PayPal Credit

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Part 10
PayPal’s Post-Earnings Update: Swift Financial, PayPal Credit PART 10 OF 10

Making Sense of PayPal’s Customer Metrics

More active customer base

A close study of PayPal’s (PYPL) customer metrics reveals two important trends. One trend indicates that the company has gained more consumer and merchant customers despite stiff competition in the digital payments market. As an incumbent digital payments processor, PayPal is the target of competitors like Square (SQ).

The other trend emerging from an analysis of PayPal’s customer metrics is that the company’s customers are becoming more active on the platform.

Making Sense of PayPal’s Customer Metrics

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Transaction per account jumped to $32.30

PayPal (PYPL) finished 2Q17 with 210 million active customer accounts, out of which 17 million are merchant accounts. The company had 203 million active customer accounts at the end of 1Q17 and 188 million customer accounts at the end of 2Q16. PayPal reports active customer accounts instead of active customers because a single customer may have multiple accounts.

PayPal reported that its payment transaction per active account averaged $32.30 in 2Q17, compared to $31.70 in 1Q17 and $29.4 in 2Q16, as illustrated in the chart above.

Impact of product innovation and collaborations

The increase in the number of transactions per account can be linked to PayPal’s building of strategic alliances and the release of new products.

In the last few months, PayPal has announced strategic partnerships with Visa (V), Apple (AAPL), Bank of America (BAC), and JPMorgan Chase (JPM). The company has also rolled out a variety of services and solutions in an effort to encourage its customers to use its platform more.

As a result of its active customer base, PayPal reported that its total payment volume for 2Q17 rose 23% year-over-year to $106.4 billion.

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