For more than two decades, PayPal was the default at online checkout. Shoppers saw the button, clicked it, and moved on. Merchants embedded it because customers expected it, and that reflexive habit built a fintech empire.
Now the habit is fading, and fewer shoppers are clicking the PayPal button. The company’s branded checkout growth slowed to just 1% in the fourth quarter. Apple Pay, Google Pay, and buy-now-pay-later services are pulling younger consumers toward faster, phone-native alternatives.
For anyone who shops online, sends money through Venmo, or holds PayPal stock (PYPL), the shift is worth understanding. The outcome will shape how you pay for things, what checkout looks like, and which companies control that process.
PayPal’s branded checkout has stalled at the worst possible time
The core problem is that PayPal makes most of its money when shoppers click the PayPal button at checkout. That button generates far higher fees than any other product the company offers.
PayPal’s branded checkout button is its bread and butter, said Mizuho analyst Dan Dolev, offering a blunt assessment to the Los Angeles Times. “The yield they get when you click on the branded checkout button is multiples of any other product that they have,” he said.
PayPal reported an adjusted profit of $1.23 per share on revenue of $8.68 billion, below Wall Street estimates. Since January, the stock has fallen more than 20%. From its July 2021 peak near $307, shares have lost roughly 85% of their value.
Related: PayPal quietly makes bigger moves into business banking
PayPal attributed part of the slowdown to what executives described as a “K-shaped economy,” where wealthier Americans continue spending while lower- and middle-income shoppers pull back. Since PayPal’s user base skews toward middle-income consumers, any pullback in everyday spending hits its checkout volume directly.
Now, shoppers have more ways to pay online, and many of those alternatives feel faster and more seamless. The checkout button that once dominated is now one option among several, and younger consumers are picking different ones.
Apple Pay is closing in on PayPal’s U.S. user count
PayPal’s core U.S. users will grow by fewer than 1% year-over-year to 92.1 million in 2026, eMarketer forecasts. In the same period, Apple Pay is expected to reach 90.5 million U.S. users. Google Pay is projected to hit 55 million.
The gap that once felt enormous is now razor-thin.
Apple Pay is especially popular among Gen Z shoppers who do far more of their buying on their phones, Grace Broadbent, a senior analyst at eMarketer, told the Los Angeles Times. A double-click of the iPhone’s side button authenticates and completes a purchase in seconds. There is no redirect, no login, and no password to remember.
More Tech Stocks:
- Morgan Stanley sets jaw-dropping Micron price target after event
- Nvidia’s China chip problem isn’t what most investors think
- Quantum Computing makes $110 million move nobody saw coming
Google has taken a different but equally effective approach by integrating its payment service directly into Chrome, Android, and its broader product ecosystem. For consumers already embedded in either Apple’s or Google’s world, the default payment option is whichever wallet their phone already knows.
PayPal’s checkout experience, by contrast, requires an extra step. Shoppers click the button, get redirected to PayPal’s login page, authenticate, and return to the merchant. For a generation that has never known a world without mobile payments, the extra step is a dealbreaker.
PayPal’s leadership shakeup signals how serious the problem is
PayPal’s board removed CEO Alex Chriss in February 2026 after two-and-a-half years, saying his pace of execution did not meet expectations. Chriss had been brought in specifically to fix the branded checkout problem, but the company acknowledged it was too optimistic about how quickly merchants would adopt upgraded checkout features.
New CEO Enrique Lores took over in March. Lores spent decades at HP, where he rose from an engineering intern to chief executive and led the company’s split into HP Inc. and Hewlett Packard Enterprise. He had served on PayPal’s board for nearly five years before stepping into the top role.
PayPal is investing $400 million to improve and grow its branded checkout in 2026. The company has also seen growth in its subsidiary Venmo, where revenue climbed 20%, and payment volume rose 13%. Buy-now-pay-later services have expanded as well. But those products generate significantly lower margins than the branded checkout button.
Dolev sees reason for cautious optimism. PayPal retains a globally recognized digital wallet with 439 million active accounts across roughly 200 markets, he told the Times. Few competitors can match that scale. But the question is whether Lores can convert that scale into renewed checkout growth before the window closes.
PayPal is investing millions to improve its branded checkout.
Shutterstock
How PayPal went from pandemic darling to turnaround story
PayPal’s current struggles are a sharp reversal from its pandemic-era dominance. When Covid lockdowns pushed shopping online in 2020, PayPal’s stock surged more than 116% in a single year. Its share price peaked near $307 in July 2021.
Then the boom faded, and people returned to stores. Then PayPal’s growth engine, the branded checkout button, started sputtering. Over the last five years, the stock has lost more than 80% of its value.
The company’s history dates back to 1998, when Max Levchin, Peter Thiel, and Luke Nosek founded the startup that would eventually become PayPal after merging with Elon Musk’s online bank X.com.
The company went public in 2002, was acquired by eBay for $1.5 billion shortly after, acquired Braintree and Venmo in 2013, and spun off as an independent company in 2015.
What the payments shift means if you shop online or hold PYPL stock
The competitive realignment in digital payments has practical consequences for consumers and investors alike. Here is what to keep in mind.
For online shoppers:
- Compare payment options at checkout. Apple Pay, Google Pay, and shop-branded payment systems often offer faster processing and sometimes better purchase protections. PayPal remains widely accepted, but it is no longer the only frictionless option.
- Review your saved payment methods. If your PayPal account is linked to an old bank account or expired card, update it. A failed PayPal transaction mid-checkout is one of the most common reasons shoppers abandon a cart and switch to a competitor’s wallet.
- Watch for buy-now-pay-later terms. BNPL options from Affirm, Klarna, and PayPal itself are increasingly available at checkout. They can be useful for spreading out large purchases, but missed payments can result in fees and, in some cases, credit score damage.
For investors watching PYPL:
- Branded checkout is the metric that matters most. PayPal’s first-quarter earnings, expected in May, will show whether the $400 million investment is accelerating checkout growth or if the 1% pace is becoming the new normal.
- Acquisition rumors add a wild card. Reports in February that Stripe expressed preliminary acquisition interest sent shares up 15% in a week. No deal has materialized, but the speculation underscores how cheaply the market values PayPal relative to its user base and global reach.
- Venmo is a bright spot, but a small one. Venmo’s revenue growth of 20% and the expansion of its Pay with Venmo feature (volumes up 32%) show promise. But Venmo’s margins are thinner than branded checkout, which means it cannot fully replace the revenue PayPal is losing at the button.
The real question is whether PayPal can reinvent the checkout button
PayPal’s challenge is not that people have stopped paying online. Global digital payment transactions continue to grow year over year. The challenge is that the checkout experience has evolved, and PayPal’s core product has not kept up with how people actually use their phones.
AI-driven shopping is an additional wildcard, as tech executives across the industry are discussing a future in which AI agents shop and complete purchases on behalf of consumers. Last year, PayPal partnered with Perplexity, an AI company, to enable purchases directly within chat-based search interfaces. Whether those partnerships translate into volume remains to be seen.
The digital payments industry is no longer PayPal’s to lose. It has already lost significant ground. The question now is whether a new CEO, a $400 million investment, and a still-massive global user base are enough to reclaim it. The next earnings report in May will be the first real test.