A $250 Million E-Commerce Game Changer – TradingView News

PayPal Holdings Inc PYPL is preparing to challenge e-commerce giants such as Amazon.com Inc AMZN AND Shopify Inc STORE thanks to the innovative Fastlane checkout solution. With Amazon owning 45% of the US e-commerce market and Shopify 13%, PayPal is making strategic moves to expand its market share and increase revenue.

The analyst expects PayPal Fastlane revenue to grow to $250 million by FY26

JPMorgan analyst Tien-tsin Huang highlights PayPal’s potential in the digital commerce space, noting that its “smart” guest checkout, known as Fastlane, identifies 70% of consumers, increasing conversion rates from 45-50% to 80%.

Huang estimates this could add $100-250 million to incremental revenue by FY26, which would translate into a 70-170 basis point increase in the company’s (JPMorgan) estimated transaction margin for PayPal. He explains that PayPal’s Fastlane, with its ability to transform guest checkouts into more lucrative branded transactions, offers significant growth opportunities.

It projects that each 1% increase in the penetration of branded transactions by non-branded guests at Fastlane could generate approximately $51 million in net revenue.

The analyst also notes that PayPal’s global total payment volume (TPV) grew 13% in 2023, and BrainTree, its primary unbranded checkout offering, saw processing volume increase by 30%. By comparison, Amazon’s total gross merchandise volume (GMV) grew 12% in 2023.

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Apple Pay and Google Pay join the competition

Adding to the competitive landscape, Apple Inc‘S AAPL Apple Pay and Alphabet Inc GOOG GOOGLE Google Pay also plays a significant role in the digital commerce space.

According to Huang, Apple Pay has a mid- to high-single-digit share of the U.S. e-commerce market, similar to PayPal Branded, while Google Pay has a low-single-digit share. These platforms offer hassle-free and secure payment options, but PayPal’s Fastlane aims to surpass them by drastically improving conversion rates at guest checkout.

This enhanced feature not only increases PayPal’s market presence, but also provides a compelling value proposition for merchants looking to optimize their checkout processes and increase sales conversions.

Huang highlights that with a potential net revenue opportunity for Fastlane of $850 million, this innovation could significantly improve PayPal’s position in the competitive e-commerce market, offering significant benefits to sellers in the form of improved conversion rates and additional revenue streams.

Read now: Apple and Mastercard move increases competition for PayPal: BofA analyst

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Latest ratings for PYPL

Date	Reliable	Action	WITH	Down
March 2022	B from securities	Discounts	To buy	Neutral
February 2022	Mizuho	Maintains		To buy
February 2022	Barclays	Maintains		Overweight

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