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Investing.com - Shares of PayPal surged by more than 9% in early U.S. trading after the digital transactions service said it had signed an agreement with OpenAI to embed its payments wallet into ChatGPT.
CNBC first reported the announcement. It came out prior to the unveiling of PayPal’s latest quarterly report, in which the firm lifted its full-year earnings guidance for its current fiscal year.
Under the agreement, which was notched over the weekend, users will be able to pay for items found on the ChatGPT artificial intelligence tool through PayPal’s digital wallet, CNBC said.
Starting next year, PayPal users will be able to purchase items on ChatGPT and merchants can sell on it as well, PayPal CEO Alex Chriss told CNBC.
In a statement on Tuesday, PayPal added that the move will create "a platform for tens of millions of small businesses and the largest brands in the world to sell within ChatGPT."
PayPal, which has been attempting to position itself at the center of a possible digital transactions network fueled by agentic AI shopping in the future, said it will manage merchant routing, payment validation, and "orchestration behind the scenes" of payment processing for its sellers on ChatGPT.
Under the partnership, PayPal is also expanding its AI strategy with OpenAI to sale access to ChatGPT’s enterprise offerings for its more than 24,000 employees, the company said.
"While we’re constructive on these announcements for PayPal, we also suspect that most payment service providers will eventually partner with OpenAI and participate in agentic commerce, making the move table stakes for the industry," analysts at Wolfe Research said in a note.
In the third quarter, the firm reported adjusted earnings per share of $1.34, topping Bloomberg consensus estimates, thanks partially to a better-than-anticipated jump in total payment volume. Net revenue of $8.42 billion also surpassed projections.
Transaction margin dollars -- a gauge of the profit PayPal makes on each transaction after accounting for direct costs -- grew by 5.9% versus a year ago to $3.87 billion. Analysts had seen the figure at $3.78 billion.
Given "another strong quarter," PayPal decided to raise its financial guidance, Chriss said. Adjusted earnings per share for the year are now seen at $5.35 to $5.39, up from $5.15 to $5.30 previously and above Bloomberg estimates of $5.25.
The group also expects full-year transaction margin dollars to stand at $15.45 billion to $15.55 billion. It had seen the number at $15.35 billion to $15.5 billion.
PayPal’s board also approved the initiation of a quarterly cash dividend program and declared a cash dividend of $0.14 per share, payable on December 10 to shareholders of record as of the close of markets on November 19.
"The Company intends to pay a cash dividend on its common stock on a quarterly basis going forward, subject to and contingent upon market conditions and approval by the Board in its sole discretion," PayPal said.