PayPal at Morgan Stanley Conference: Strategic Innovations Unveiled

On Wednesday, March 5, 2025, PayPal Holdings Inc. (NASDAQ: PYPL) presented its strategic vision at the Morgan Stanley Technology, Media & Telecom Conference. CEO Alex discussed the company’s initiatives, including branded checkout improvements and omnichannel expansion, while addressing competitive pressures in the payments industry. Despite challenges, PayPal remains optimistic about leveraging AI and partnerships for growth.

Key Takeaways

• PayPal aims for 8% to 10% branded checkout growth by 2027.
• Venmo’s monthly inflow reaches $18 billion, with plans for further integration.
• PayPal plans to launch an NFC wallet in Germany this year.
• AI is central to efficiency and revenue-generating initiatives.

Financial Results

• Managed $1.7 trillion globally in commerce last year.
• Targeting 8% to 10% growth in branded checkout by 2027.

Operational Updates

• Branded checkout adoption increased from 5% to 30% in the U.S., aiming for 80% globally by 2027.
• 3 million new debit card customers added in the latter half of last year.
• AI is used to automate tasks, enhancing efficiency.

Future Outlook

• Rapid innovation expected in 2025 and beyond.
• Focus on omnichannel investments globally.
• Continued emphasis on AI for cost reduction and efficiency.

Q&A Highlights

• CEO dismissed concerns about losing market share to competitors.
• Commerce API rollout is underway, enhancing merchant-consumer connections.
• NFC wallet expansion planned for Germany later this year.

For a detailed account of PayPal’s strategic initiatives and insights from the conference, refer to the full transcript below.

Full transcript - Morgan Stanley Technology, Media & Telecom Conference:

James Flossett, Senior Fintech Analyst, Morgan Stanley: As an introduction, I’m James Flossett, Senior Fintech Analyst at Morgan Stanley. Very pleased to be here at the conference with you all. I also have a quick disclosure to read. Please see the Morgan Stanley Research Disclosure website at morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative.

So Alex, thank you very much for joining us.

Alex, CEO, PayPal: Thank you, James. Good to be here.

James Flossett, Senior Fintech Analyst, Morgan Stanley: Yes. No, it’s great to have you back. At this time last year, you’d been in the seat and running PayPal as CEO for just a few months at that time and really starting to kick off your initiatives. So with that in mind, it’s been a big year. You did an Investor Day recently.

That was really well. I thought when we were talking about it beforehand, I thought that that was one of the more informative Investor Days I’ve been to in a long time. And for those of you that have interest in PayPal and want to spend time, really look through the work that the team put together because there’s a lot of great information and perspective on the business. But as part of that Investor Day, your team also outlined a detailed plan of initiatives and targets. Can you talk to us a little bit about the key milestones you feel like you’ve achieved in the last year or so since we last talked here at the conference?

And maybe more importantly, what you’re most excited about delivering as you look to transform?

Alex, CEO, PayPal: Yes. So if you haven’t had a chance to look at the Investor Day materials, I would recommend them. This was something that from the day that I got to the seat at PayPal, I really wanted to get an Investor Day on the books. But we needed to make sure that we really had our hands around the business and could provide the transparency that when I first got here and talked to many of you, you all were looking for. And I think we did the best we could and achieved a lot of that during Investor Day.

If I then think about the answer to your question, maybe I’ll highlight three things that I feel like we’ve got our arms around and are really excited about for the future. The first and most important is branded checkout. This is obviously a critical part of the PayPal business. It’s something that I’ve been transparent about since I got here. I was not happy with the consumer experience on the branded checkout, particularly on mobile.

And it’s something that I feel like we now have real clarity of how to improve the experience and a roadmap of rolling it out through merchants. So feeling really good about our ability to take a very stable branded checkout experience and results that we posted the last few years, but really start to inflect it. And I think at Investor Day, we talked about really looking to inflect branded checkout. The second is our expansion into omni channel. This is something as I talk to customers, they love PayPal, they love Venmo.

But we really had just been focused on the e commerce side of things. And they would ask us time and time again, why can’t I use my PayPal or why can’t I use my Venmo everywhere I want to make a purchase. And so over the past year, we’ve worked really hard to make launch our PayPal everywhere experience, start to invest in Venmo debit card, Venmo pay with Venmo. And we really feel like we have a path now to provide an omnichannel experience for both PayPal and for Venmo. And then lastly, really leveraging the two sides of our ecosystem, this massive consumer base as well as a huge merchant base and combining the data into what I’ve been talking about as the future of commerce.

We rolled that out at Investor Day as a first part, which is our commerce API, which is leveraging the data that we have, 80,000,000 plus shopper profiles, where consumers have opted in and started to allow us to collect their shopping information across all of their purchases and then be able to leverage that to personalize the experience with merchants, enable merchants to from the moment that they want to find that customer, maybe even before they’ve hit the website, all the way through to post purchase experience, creating a rich, personalized, highly engaged checkout experience that we think will redefine the future of commerce. So ensuring that we’ve nailed that branded experience, expanding into omni channel and then ensuring that we are really thinking about the future of commerce as well.

James Flossett, Senior Fintech Analyst, Morgan Stanley: So as part of that process, and it really is a process and a journey that you’re on, You’ve identified for twenty twenty five innovation, product adoption, partnership and efficiencies as kind of the focus areas for the year. Can you help us maybe rank order those and speak to each of them a bit in terms of what your key to dos are below each of those key initiatives?

Alex, CEO, PayPal: Yes. So look, they are all essential. I think it’s okay to have four things that are essential. Innovation is something that I’m really proud of. It’s my background.

It’s something that as a product leader in the past, I think you’re either innovating or you’re sort of dying. And I think as a company, PayPal had been in a bit of the doldrums after being known for many, many years as an innovator in payments and in commerce. I think we sort of hit a dry spell, and I think we picked that up. I’m really proud of the innovations we put out in 2024, including Fastlane, including PayPal Everywhere, including some of the Venmo innovations that are now starting to really accelerate adoption there. We inflected not only our transaction margin, but also customer growth and customer engagement as well.

And I think we’re just getting started. We’ve really started to invest in how we build product, how we now build our services, how we’re leveraging our data. So I think what you should expect from us in ’twenty five and beyond is a rapid pace of innovation. And that obviously lets us outpace the competition, and that’s going to be important, particularly around branded checkout Because again, everything comes back to our ability to be create a deep value proposition for both our consumers and merchants. I think we have a really exciting roadmap of innovation for branded checkout.

The second is adoption because obviously innovation without adoption is just sort of throwing things out into the ether and that’s not fun. And so really making sure that we leverage our go to market muscles, something I talked about again at Investor Day, but something that we are tactically working on a day by day basis, which is reinventing the way that we go to market, ensuring that we’re leveraging the breadth and scale of the organization to sell everything that we have. To be transparent, in the past, we really have been going to market from in a siloed way. We had individual teams that were focused on their product and selling to their merchants and trying their best, but not doing it holistically and not doing it at scale. And we’ve completely revamped our go to market muscle.

And now the conversation we’re having with merchants are completely different. We are now, again, able to take not just processing, but our value added services, not just checkout button, but buy now pay later and just really thinking about holistically what can we bring to bear for the market. Partnerships, you’ve seen us, I think, change our mindset when it comes to partnerships. Throughout 2024, we announced a number of really, really exciting partnerships. First, Fastlane adoption, right?

This is something that we’ve talked about bringing together folks that I think in the past have been thought of as purely competitors, people like Adia and last week we announced Chase, right? These are key partners now that are helping us distribute our best in class checkout experience. But then other partners, deep partnership with Shopify, deep partnership with Meta. And so just continuing to think about that. And as I look into 2025 and beyond, our ability to leverage the data that we have, the commerce API that we have and both sides of the ecosystem to help our partners deliver on their expectations, I think is going to be something you should expect from us.

And then lastly, efficiency. As we continue to leverage AI, there is a lot of opportunity for us to take cost out of the business. We are at an incredible scale. We managed last year $1,700,000,000,000 in commerce. When you do that on a global basis across 200 different markets, you’re doing a whole lot of work to do risk, to do compliance, to ensure that every country that you operate in is getting the right reports that are required by law.

A lot of that can be automated now. And traditionally, we’ve been doing it manually. We are now investing heavily in AI to be able to bring a lot of cost out of the system. So those are the four initiatives.

James Flossett, Senior Fintech Analyst, Morgan Stanley: No, that’s great. And so I want to go back to kind of one of the things that you mentioned there right at the beginning of that comment was around branded checkout. At the Investor Day, you and the team outlined a plan to accelerate branded checkout to 8% to 10% growth by 2027. Can you remind us the steps that you’ve laid out to get there? What the drivers are?

And how we should think about cadence from 2025 to 2027 to that those target levels?

Alex, CEO, PayPal: Yes. So I keep talking about branded checkout because it’s our most important initiative. Just as a level set, branded checkout has been very consistent for a number of years now. We have over 400,000,000 active consumers, over half of those are monthly actives. So we have a very loyal and very consistent user base, even in my opinion with sort of in the past a lackluster product, a product that hadn’t been keeping up with the efficiency gains and the consumer experience that I would have expected, particularly on mobile.

But it’s important to note, we have a very loyal, very consistent branded checkout base. We have now innovated and are working on rolling out the innovation. So we have now, improved through cohorts an improvement depending on whether it’s a vaulted experience or a one time pay sheet experience of 100 to 400 basis point improvement on our checkout experience, including things like buy now, pay later, attach because of the redesign. So we feel really good about now having a best in class experience on both desktop and mobile. So that means reduced latency.

It means a frictionless experience. It means on whatever device you’re on, whether it’s on a desktop device, you put your finger on your keyboard and you’re checking out using biometrics. It means on a mobile device, you’re just smiling at your phone and checking out automatically. These are now experiences that are in market, and those cohorts are performing very well. We have to now ramp those.

We’ve talked about going from, I think, two quarters ago, we were at 5% adoption. We’ve now ramped that up to 30% in The U. S. We, at Investor Day, talked about getting to 80% globally adoption in the next couple of years by the end of twenty twenty seven. So we have a very clear line of sight to get there with our best in class experience.

So that’s our path, and that’s why I have conviction that our branded checkout will inflect and will be growing at or above e commerce. There’s one thing just because it’s important and I hear it from time to time, it feels like every few months there’s another rumor about some competitor that’s coming in and potentially taking branded checkout share. The rumors so far, as far as I can tell and all the data that I look at, the rumors are nonsense. I can tell you, we look at the data very, very closely. We look at it on desktop.

We look at it on mobile. We look at our share of checkout. We look at competitors. And we have not seen any degradation in our share of checkout from competitors launching products, whether it’s on mobile, whether it’s on desktop, whether it’s on other platforms. And so again, we have a very stable base.

And now as we put our new innovations into market, I feel really good about inflecting our branded checkout.

James Flossett, Senior Fintech Analyst, Morgan Stanley: So let’s talk about competition because as you said is I think that’s been a common refrain in the market for in the investor community for years. So it seems like you guys have maintained or PayPal branded checkout has maintained about 20% or so share of online checkout pretty consistently. Where do you think PayPal stacks up against the competition today in terms of checkout? And you laid out your strategy and targets, but what have you assumed in terms of PayPal’s ability to compete with other wallets and then the process of actually gaining share or increasing that proportion of checkout?

Alex, CEO, PayPal: Yes. So the way I think about it is, again, I go back to we’ve had very consistent, very stable checkout and branded checkout share over the last few years. And that is, again, I think, again using my words, with a value proposition that and an experience that hasn’t been as competitive as we are now. So if you look at where we are now, our experience, I think we have leapfrogged the competition. I think it is now an easier experience.

I also don’t think that that’s enough to start taking share at the rate that I want to take share. So now it’s about creating a value proposition that leapfrogged the competition yet again. And so when you think about commerce API, when you think about our ability to provide data, when you think about the rewards and the ads platform that we’re starting to put out, for me, branded checkout is not just about creating a frictionless experience. A frictionless experience is what was needed ten years ago when typing into credit card was hard and it was hard for merchants to be able to accept a payment. What’s now really going to be the differentiator for the future is as a consumer, how will I get a personalized experience?

And how will the value proposition when I see 15 different buttons on a screen, how do I know that PayPal is the one that I should be choosing? So first and foremost, as I’ve said, we’ve got to have a great experience. Second, we’ve got to make sure that our consumers can pay the way they want to pay. That’s why buy now, pay later is now deeply integrated into our product. We’ve even launched crypto as a deeply integrated part of our product.

You can check out with Bitcoin. You can check out with TWD. You as a consumer can pay the way you want to pay. Again, that is above and beyond competition. The next element is now putting value proposition and allowing merchants to communicate with consumers at the moment of purchase or even before.

That’s why our commerce API becomes a complete differentiator. This is again not just having every button be the same. This is about ensuring that when a merchant can ping our commerce API, as soon as the customer reaches the website, they can personalize the website. Instead of giving them something generic, they can say, oh, I know this is the shopping journey you’re on. I know these are the items that you’re looking for.

This is the size of shoe that you are. These are your favorite colors. And I know that you’re a PayPal user. So I can put a Buy Now button right there on the checkout page, and we know Buy Now converts higher. I can now customize the button to be unique to you.

So you saw we did a partnership with Amazon. If you’re an Amazon Prime user, you’ll soon be able to have that button say you’re getting free shipping. We know that automatically is going to improve conversion rates when on the button it will say you qualify for free shipping with Amazon Prime. Think about all the other things we can put on the button as we start to bring our ads platform to bear and our rewards platform to bear. So now the merchant can know this is a new customer.

I’ve never seen this customer before. I want to convert them, but PayPal knows this customer. I know they’re a PayPal user. On that button, I can now give them a 5% off reward. To again drive conversion up.

So this to me is we’re taking branded checkout. We had to get to parity or better on just the experience. And now we’re leapfrogging the competition when it comes to actually creating the ability for our consumers to buy the way and pay the way they want to and then merchants to be able to communicate through the button, through the experience to those consumers. To me, that is a game changer when it comes to overall end to end commerce. And I think that will be our clear advantage as we go forward.

James Flossett, Senior Fintech Analyst, Morgan Stanley: So I like the way you kind of laid out all those things that we can imagine or is easy for us to understand on how that can benefit you. Talking about the improvement in latest and the latest checkout integration, you talked about at the Analyst Day that you’ve got coverage of about 30% in The U. S. Today and you want to drive that to 80%. What are the specific enhancements and changes that are included in this current integration?

And maybe more importantly from a merchant perspective, what are the benefits the merchant sees when they convert? And what are your hurdles conversely to getting wider coverage to driving it to 80% eventually to 100%?

Alex, CEO, PayPal: Yes. So there’s a lot of questions. So bear with me. I love it. First clarity, 30% today in The U.

S. We’re a very global company. So if you think about that from a global perspective, it’s call it low double digits, high single digits of total penetration overall. When we talk about where we want to be or next few years, it is 80% globally, okay. So we have line of sight to be able to get that distribution out.

To your question, what does that get from the consumer and merchant experience? It gets the better experience. So now we’ve got a buy now, pay later experience on the pay sheet. It gets a vaulted experience. It gets an updated button that can now be dynamic.

It gets our commerce API that starts to enable merchants to be able to ping us and say, hey, is this a PayPal customer? Great. I actually don’t need to show any other buttons because I can have one button. It’s called PayPal and it includes buy now, pay later and every way that our customer wants to pay because I know that’s how they check out. And we’ve shown that the conversion rate is very high when you reduce the number of buttons and you show the one that they want to use.

So all of that is wrapped in. And then we’re building additional parts of the commerce API. So all those things I talked about, being able to make it dynamic, being able to put rewards through it, all of that is with one integration pattern. And this is really important. This is a huge shift from where PayPal has been in the past.

The reason I can’t just snap my fingers and go from 0% on an integration pattern to 100% is because we never had consistency of our integrations. We have fifteen year old integrations out there, hundreds of integration patterns from the last ten to fifteen years of distribution. Every year, there would be a new way to integrate with PayPal and we never deprecated anything and we never really gave the merchant a reason to upgrade. So we are holding on to fifteen years of legacy integrations. That is changing.

We now have a best in class integration. It is giving the merchant dramatically improved conversion rates as well as a better way to integrate with their consumers. So they are now adopting and wanting to move to the latest and greatest integration. And we are deprecating the old integrations. So by the time we get to a certain level of penetration in The U.

S, call it 50%, sixty %, seventy %, we will actually communicate to our merchants that we are deprecating any old integrations and they will move to the new one. By the time we are a couple of years out and we are now at 80 plus percent on global adoption of our new branded experience and our new commerce API, we will now be on one integration experience that allows us to roll out new innovations seamlessly. So we don’t need our partners to have to keep upgrading, which is really cumbersome and painful deep when it’s deeply embedded into their checkout experience. This will now be the latest and greatest API and the latest and greatest integration so that we can continue to innovate for them. So that’s why this is a again, I wish I could snap my fingers and just make this all happen instantly.

But this investment that we’re going to make over the next couple of years to get global ubiquity of our new experience will not only drive better conversion rate, better branded experience, but now will set us up as we continue to innovate for customers. So let’s talk about consumer profiles, personalized shopping. That’s kind of the message that you started off with at the Investor Day. You’ve mentioned it a

James Flossett, Senior Fintech Analyst, Morgan Stanley: few times here today. And you’ve talked about consistently moving to one customer view. Earlier a few minutes ago, you talked about having 80,000,000 customer profiles already in place. Can you tell us a little more about the data advantage you think that PayPal has and that’s and what’s enabling that? And how can that be translated into a more personalized shopping experience?

And over what time frame should we be thinking?

Alex, CEO, PayPal: Yes. So this is the biggest if you have a mindset shift about PayPal, I think the biggest one that I’d have you take away is that we are moving from just being a payments company, just enabling a consumer and a merchant to transact to truly being a commerce company. We have so much data and information that we see across our ecosystem, the combination from both sides of our ecosystem between consumers and merchants at such a level of scale that now leveraging AI, we are able to do magical things for our merchants and for our consumers. And that’s across online, it’s across offline and it’s across agendech commerce as well. So what does that look like?

So online, our ability to say, hey, this is the shopping journey that you’re on. We’ve seen the purchases that you’ve made. We know that you bought a tent over here and so you’re likely on a camping trip. And so when you walk into a new store, you go into a new online experience, we know that we can put hiking boots up in front of you. And by the way, we know what your shoe size is, your favorite color and all of the other information about your shopping profile.

And again, consumers are opting in. They are trusting PayPal to be able to store that shopper information and share it in an anonymous fashion to the merchant in a way that allows the merchant to personalize that experience. To me, that type of personalization is what we’ve been wanting for in commerce for years and years and years, but nobody has been able to do it at the scale that we have and on an open ecosystem. So you can get some of this with merchants today that are at scale, but it’s all within their closed ecosystem. What we’re offering is an API across the ecosystem that allows any merchant, large or small business, to be able to tap into that and personalize the experience.

And so again, if you fast forward into the AgenTek world as well, our ability to allow you to be able to have a trusted payment platform and provide profile information so that agents can go shopping on your behalf, again, that’s not happening today, but that is going to have to happen for the future of commerce. And I think PayPal leveraging our AI and leveraging this API is an opportunity for us to be a leader in that space. And those are the conversations we’re having with partners now that are AI platforms and trying to think about how they’re going to connect their consumers to merchants. And we already have those connections and those shopper profiles. So again, we’re just getting started there.

In terms of timing, this is happening now. So this is not pie in the sky future. Our commerce API is rolling out now. We We have merchants that are adopting it now. They are pinging the API and finding out, hey, this is a PayPal user.

These are shopper profiles that I can start to personalize the experience on. You started to see us do partnerships like the one I mentioned with Amazon. So this is now happening. And again, this is as we think about our ability to inflect branded checkout conversion as well as start to think about new levers for growth, whether it’s our ad platform, whether it’s the commerce API monetization, this is how we think about the future.

James Flossett, Senior Fintech Analyst, Morgan Stanley: Got it. So let’s talk about so that’s the commerce future. Going back to kind of some of your targets and we’ve spent a lot of time talking about branded today. Part of branded is Venmo, an amazing brand and in a lot of ways has different use cases, but also demographic reaches in some markets. And part of the monetization strategy with Venmo is driving pay with Venmo usage.

And it’s been interesting because we track every quarter on the top 500 e commerce merchants in The U. S. And what payment types they accept. And the increase in Venmo pay with Venmo acceptance has been notable, particularly over the last year, year and a half. So starting to make really good progress on the acceptance.

But ultimately, you’re expecting that Venmo and Venmo monetization will support up to one percentage point of that improvement in branded checkout that you’re targeting. You laid that out pretty clearly. Generally, that merchant acceptance is critical to driving adoption of payment types. So how does PayPal or how do you plan to help scale pay with Venmo Acceptance? How can you leverage PayPal’s BaaS near 90% acceptance online to drive that?

And what are your challenges? Like how do you take advantage of where you already are with PayPal and get Venmo to draft off of that?

Alex, CEO, PayPal: Yes. So this is this will sound crazy, but this is one of the biggest no brainers we’ve got in the company. Venmo is ubiquitous across The U. S. As you said, an incredibly powerful demographic that everybody wants access to.

Young, affluent, people that are trying to figure out how to spend it now, dollars 18,000,000,000 coming into the Venmo ecosystem every month. And we’ve just not provided great monetization opportunities for our customers to be able to spend their money. So our debit card, which we’ve talked a lot about and are seeing great adoption and pay with Venmo. Our customers have the money coming into their ecosystem. They just think of the most basic use case you can think of.

You’re planning a trip with your friends. And everyone says, great, I’ll go buy the tickets for our trip, Venmo me the dollars, but there was no way for them to actually use those dollars through the Venmo ecosystem to actually pay. So now pay with Venmo gives them that opportunity. So we signed up JetBlue as an example. So now I can go to JetBlue with my Venmo account, buy those tickets and have all of my friends bring that money in.

Again, biggest no brainer. The mistake was on execution. We had a very thoughtful and ambitious team that was the Venmo team from an acquisition we did over a decade ago, calling merchants independently and trying to figure out how to sell with them. Instead of leveraging the massive breadth and ubiquity that the PayPal ecosystem already has. We are the most ubiquitous branded option in the world with PayPal.

And we have a go to market team that is engaged with tens of millions of merchants around the world, well, that team is now selling Venmo. Again, it sounds so obvious, but we were not operating as one team, we were operating in silos. And so when you say you’re seeing the change in trajectory, it is because we are now using those same conversations, the same merchant engagements and going to them and saying, hey, by the way, do you want the most valuable demographic in The U. S? Great.

Pretty easy conversation. And Pay with Venmo is now an option in merchants. And we will just see that continue to scale. So again, these are network effects. We have the consumers and the Venmo ecosystem is continuing to grow.

They have the dollars inside of their wallet. We need to have the merchant acceptance and we have a path to do that through the PayPal ubiquity that we already have. Once that flywheel starts, I think the Venmo ecosystem would be off to the races.

James Flossett, Senior Fintech Analyst, Morgan Stanley: That’s amazing. So last few minutes here, Alex. I want to talk about digital wallets and NFC integration. Digital wallets are opening up their NFC capabilities and PayPal is planning to launch its NFC wallet in Germany later this year. Can you tell us more about your plans to expand that and make it available in The U.

S? And what the experience might look like for the user?

Alex, CEO, PayPal: Sure. So first, let’s start with Germany because this is a super exciting launch for us. So Germany is a critical market for us. It’s one where we have a real ubiquity on e commerce. And it’s a heavily bank oriented market.

And so the PayPal app right now for e commerce is really how you connect to your bank to then make a payment in e commerce. But online, there really or in store, there really isn’t a great option right now. So we’ll be launching our PayPal app, where the onboarding is really the most magical onboarding you could imagine, because we already have your bank connected. So you open up the PayPal app, you say, hey, do you want to use your bank to be able to tap to pay in store? Yes.

Great. By the way, we also offer buy now, pay later embedded inside of the app. So when you get to that store, if it’s a $1,000 purchase, we can pre approve you for buy now, pay later and you can actually make that purchase through PayPal in store as well. So our ability to onboard users because we already have their instrument, their bank connected and the ability to now give them a tap to pay NFC experience in store, I think is going to be a huge opportunity for us. It will be a great test bed for us.

We’ll then take that through the rest of Europe where we get NFC access. In The U. S, we’ll see. We have worked through our partnership with Apple Now to provide a PayPal everywhere experience in really what’s available, which is a debit card connected to our PayPal balance. That’s working really well.

We’re seeing we had 3,000,000 through the back half of last year new debit card customers. Those customers are now creating habituation online. That was really the bet for us was not only can we get into the omnichannel experience, but now does it create habituation in the online experience and we’re starting to see that pay off. So look, omni channel is going to be a really important investment for us around the world. Where we have the opportunity to lean in and create a magical NFC experience, we will.

Where we have to play through other wallets to create that experience, we’ll continue to lean in and we’ll learn.

James Flossett, Senior Fintech Analyst, Morgan Stanley: Got it. Just last question and I’d be remiss. And you brought it up your own work with AI and talking about in part how you’re driving cost savings and improved efficiencies. But what about using AI to support some of the new top of funnel or revenue generating initiatives, especially around personalized experiences and ultimately using that to help drive branded growth?

Alex, CEO, PayPal: Yes. I think this might be one of the most underestimated parts of our ecosystem right now is AI is a tool, but you need data to be able to leverage that tool to its full extent. And we have data and the connections between consumers and merchants at a scale that we’re now starting to see really exciting opportunities. So just to give you a few examples. And again, this is setting aside our AI that we’re using for increasing our velocity on engineering, increasing our customer support, increasing some of the ability to remove manual work from some of the risk and fraud work that we do now.

But the ability to leverage AI for consumers and for merchants to be able to say, hey, we’ve seen this customer anywhere within our ecosystem. And our ability to now leverage risk and fraud to be able to convert them, to be able to understand which instrument at which time is going to be the best one for them, to be able to understand from a customer perspective, out of all the instruments they have, which one will put more money back in their pocket, right? If you pull out your wallet right now, whether it’s a physical wallet or a digital wallet and you go make any purchase, my guess is each one of you has multiple reward cards in your wallet. How do you know which one is giving you the best reward at the moment of purchase? We know.

We know and we can leverage AI to be able to optimize that experience for you as a consumer. On the merchant side, how do you know when a customer shows up, whether it’s in store or online, what type of customer they are? Are they a new customer? Are they an existing customer? Are they someone that you should make an offer to because it’s likely to increase basket size?

Or is it somebody that, you know what, you don’t need to give them an offer because they’re pretty reliable and they keep coming back? How do you start to implement and leverage AI to create loyalty experiences for your best customers or for customers you want to create as your best customers. All of those things we’re starting to use AI to leverage. And I think we’re again, we’re just scratching the surface. This is now starting to come out with our commerce API.

But as you think about the combination of that and our ads platform, these things now come together, right? The ability for a consume for a merchant to come to us and say, I want to take my marketing dollars, I want to put them towards PayPal for ads, whether that’s online ads, whether that’s on TV ads, but I want those ads to now be personalized, targeted to the right customer cohort and then have that automatically show up inside of the PayPal app, so that it could be a loyalty or a reward or a purchase inside of the app. These are end to end experiences that we can use AI to leverage and again gets me excited about revolutionizing commerce. Great.

James Flossett, Senior Fintech Analyst, Morgan Stanley: Well, Alex, that’s all the time we have. I think that’s a great place to wrap up. Thank you very much for joining us today. Really exciting way that you’re communicating your vision and excited to see it transform. Great.

Alex, CEO, PayPal: Thank you.

James Flossett, Senior Fintech Analyst, Morgan Stanley: Thank you very much.

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