When Alex Chriss came from Intuit last fall to take over as chief executive of PayPal Holdings Inc., he made it plain there would be big changes in strategy coming soon. On Wednesday, he began delivering on that promise, asserting the payments company is going to promote so-called branded checkout forcefully as PayPal proceeds through 2024, which he called a “transition year” for the company.
“Branded checkout is a critical part of PayPal’s value proposition,” he told equity analysts on a call to discuss the company’s December-quarter results. This is especially the case for large enterprise merchants, Chriss said, according to a transcript of the call.
“Branded checkout” refers to instances where merchants explicitly offer PayPal as a payment option on their site rather than relying on the company to process the transaction in the background in an arrangement called “unbranded” checkout. Less than a year ago, former CEO Dan Schulman had pronounced unbranded checkout a “strategic imperative” for PayPal. These checkouts are processed by PayPal’s Braintree platform. Schulman retired in September.
Branded checkout, by contrast, is especially important for PayPal’s enterprise-size clients, Chriss argued during the call. “We’ve redesigned our branded checkout experience, creating more simplicity and consistency with the goal of optimizing presentment, increasing speed, and minimizing friction across all major checkout flows,” he told the analysts.
Chriss argued the speed and convenience of checkout will please customers and win their loyalty to both PayPal and the merchant. “Regardless of the customer we’re serving, we want to make the PayPal offerings so user-friendly, so rewarding, and so integrated into a customer’s life that PayPal is the obvious choice,” he said.
Laying further stress on checkout, Chriss also took time to underscore another initiative, a guest checkout called Fastlane by PayPal. “With it [Fastlane], we can recognize up to 70% of guests visiting a merchant, reduce checkout time by up to 40%, and grow the top of our branded checkout funnel,” he told the analysts, according to the transcript.
Chriss added he is also acting to tie together disparate elements of PayPal that have come to the company via acquisition. The effort, he said, is critical for cohesive growth. “The company has gone through significant growth over the last few years and a lot of acquisitions,” he noted. “We have not invested enough in creating a single platform. That again slows us down when it comes to innovation, and it slows us down when it comes to being able to leverage the data across the ecosystem.”
If Chriss is reformatting PayPal to act faster on opportunity, he’s also eyeing strategies pursued by other technology companies, including Apple Inc., which has grown more active in payments in recent years. Asked by an analyst about the opportunity facing PayPal from a regulatory change in Europe that forces Apple to open its iOS and near-field communication chip for point-of-sale transactions, Chriss did not go into detail but added PayPal is “tracking this closely. Apple is a great partner of ours.”
But Chriss added he has also acted to cut costs at PayPal, including putting through layoffs that were announced last week. He added that he had warned in the company’s November earnings call that the move was coming, alleging Thursday that “our size was slowing us down.”
“While this was not an easy decision to make, this change is necessary to execute with the focus and speed required to drive our next chapter of growth and allow us to invest in our future,” Chriss added, according to the transcript.
For the quarter, PayPal reported $409.8 billion in total payment volume, up 15% year-over-year. For all of 2023, volume was $1.53 trillion, up 13%. That performance helped drive revenue to $8 billion for the quarter and $29.8 billion for the year, up 9% and 8%, respectively. Active accounts at year’s end came to 426 million, up 2%.