Customer base expansion accelerated
PayPal’s (PYPL) customer base continued to expand in 2017, with the expansion gaining momentum from quarter to quarter throughout the year. Active customer accounts increased 15% YoY (year-over-year) to 227 million in 4Q17, an increase from 14% YoY in 3Q17 and from 12% YoY in 2Q17. PayPal’s active customer accounts increased 11% YoY and 10% YoY in 1Q17 and 4Q16, respectively.
PayPal’s One Touch service continued to draw more users. The company said it ended 4Q17 with 80 million consumers using One Touch. There were 40 million One Touch users a year ago.
Stock of PayPal rivals fell on strong One Touch numbers
One Touch is a PayPal payment service specifically designed to speed up checkout. As the name suggests, One Touch users only need to log in to their PayPal account once to make a payment, and they’ll never have to do that again when making future payments. The idea behind One Touch is that skipping the login will make checkout faster and easier, thus encouraging people to always want to pay with PayPal.
One Touch can thus be viewed as a tool that PayPal is leveraging to fend off competition from the likes of Square (SQ), Fiserv (FISV), Worldpay (WP), and Qiwi (QIWI). The stocks of these PayPal rivals fell the day after PayPal’s report of strong One Touch metrics.
Transaction volume rose 32% amid strong account activity
In 4Q17, PayPal processed $131 billion in total payments, a 32% rise YoY. The increase was partly driven by strong account activity as payment transactions per active account rose 8% YoY.