PayPal Reports 45% Year-Over-Year Transaction Growth

Transactions at PayPal Inc. totaled 77.7 million and added up to $4.35 billion in value in the second quarter, up 45% and 53% respectively over the year-ago period, according to a quarterly report released this week by Internet auctioneer eBay Inc., the online payment processor's parent company. PayPal's average ticket is now $56, up from $53 a year ago. PayPal also reported that it reached 50.4 million accounts in the second quarter, of which it considers 15.5 million to be active. It defines an active account as one that sent or received at least one payment during the quarter. A year ago, PayPal had 10.2 million active accounts out of a total account base of 31.1 million. PayPal accountholders include buyers, sellers, and those who are both. PayPal's dependence on its parent company's activity deepened in the most recent period, as auction traffic accounted for 69% of all PayPal dollar volume, up from 66% a year ago. Also, although the San Jose, Calif.-based processor racked up solid year-over-year growth in transactions and payment volume, it saw transactions drop 2% in the second quarter from the first quarter, while dollar volume remained flat. Transactions had risen at rates ranging from 6% to 19%, and payment volume 7% to 22%, in the previous four quarters over the prior periods. PayPal reported transaction revenue for the quarter of $158.8 million, up 60% over the same period last year and a 2% uptick from the first quarter. This revenue came to 3.64% of PayPal's payment volume, up from 3.5% a year ago. Processing costs amounted to 1.34% of volume, little changed from a year ago but up 9% from year-end 2003, while the loss rate dropped to 0.25% from 0.32% in 2003's second quarter.