PayPal’s Checkout Empire Under Siege as Rivals Close In
PayPal, the pioneering online payments company that helped invent digital checkout nearly three decades ago, is fighting for its survival. Its core branded checkout business grew just 2% in the first quarter of 2026, while rivals including Apple Pay, Shopify, Affirm, and Klarna steadily erode its market share. The company’s stock has plunged roughly 80% from its July 2021 peak of $308.53, and the board ousted CEO Alex Chriss in February, replacing him with former HP Inc. chief Enrique Lores.
The Core Problem: Stagnant Checkout Growth
PayPal’s branded checkout — its highest-margin business — has seen growth collapse from 6% to just 1-2% over the past year. According to AP News, the company’s checkout button has become less relevant as consumers increasingly store payment information on their mobile devices, using biometric authentication like Face ID and Touch ID rather than PayPal’s password-based login.
Market share data from UBS analysts paints a stark picture: In 2019, PayPal controlled roughly 9% of e-commerce in the U.S. and globally, with Apple Pay holding 3%. By 2025, Apple had overtaken PayPal as the dominant checkout option, and its market share is expected to grow further as Apple rolls out Apple Pay to non-iOS users.
“PayPal has had a lot of trouble evolving from being just a way to pay on your desktop computer,” said Sanjay Sakhrani, an analyst at investment bank Keefe Bruyette & Woods, in comments reported by AP News.
A New CEO and a Radical Restructuring
PayPal’s board lost patience with former CEO Alex Chriss after just 2.5 years, stating that “the pace of change and execution was not in line with the board’s expectations,” according to CNBC. Enrique Lores, a PayPal board member since July 2024 and former CEO of HP Inc., took over on March 1, 2026.
Lores has moved swiftly. In late April, PayPal announced a reorganization into three business units: Checkout Solutions and PayPal, Consumer Financial Services and Venmo, and Payment Services and Crypto. The company also revealed plans to cut approximately 20% of its global workforce — more than 4,500 positions — over the next two to three years, targeting at least $1.5 billion in gross run-rate savings, as reported by Colitco.
“We need to recommit to the fundamentals, becoming a technology company again, sharpening our focus on consumers, aligning the company around three strong businesses, and simplifying how we work,” Lores said on the Q1 earnings call.
Earnings Beat, but Bleak Outlook
PayPal reported Q1 2026 revenue of $8.35 billion, a 7% year-over-year increase that beat the $8.05 billion consensus estimate. Non-GAAP earnings per share of $1.34 also topped expectations. However, GAAP net income dropped 14% to $1.11 billion, and operating margin contracted 182 basis points to 17.8%.
More troubling for investors was the Q2 guidance. PayPal expects adjusted EPS to decline approximately 9% year over year, worse than the roughly 4% decline analysts had anticipated. The stock fell roughly 10% following the report, according to Colitco.
Total payment volume rose 11% to $464 billion, and payment transactions increased 7% to 6.5 billion. But active accounts grew just 1% to 439 million, decreasing by 200,000 sequentially from the prior quarter — a sign that user growth has stalled.
The Competitive Landscape
The threats to PayPal’s dominance are multiplying. Apple Pay, launched in 2014, has integrated tap-to-pay into iPhones and Apple Watches, creating a seamless experience that PayPal cannot match. Buy now, pay later companies like Klarna and Affirm — the latter founded by PayPal co-founder Max Levchin — have captured significant consumer mindshare. Shopify’s Shop Pay offers merchants higher conversion rates, and peer-to-peer services like Cash App and Zelle continue to expand.
Forbes contributor Peter Cohan wrote that “the root cause of the bad forecast is PayPal’s competitively inferior branded checkout service,” noting that rivals offer pre-installed mobile wallet advantages and biometric authentication that PayPal lacks.
Bright Spots and Uncertain Future
Not all is bleak. Venmo, with 97 million projected users, saw revenue grow 20% to $1.7 billion. PayPal’s buy now, pay later business has surpassed $40 billion in total purchase volume, growing at a 20% annual rate. Lores has emphasized that the three business units are “mutually reinforcing” and that the company is stronger together than apart.
However, analysts remain cautious. Morgan Stanley’s James Faucette said PayPal moved “too slowly” on branded checkout and that the window for Venmo monetization has “largely passed,” as reported by Forbes. Of 44 analysts covering PayPal, only 2 rate it a Strong Buy, while 30 rate it a Hold and 4 rate it a Sell.
Evercore ISI analysts captured the prevailing uncertainty: “The big question is whether he will bring in a formidable payments team to attempt yet another multi-year turnaround or look to start reviewing options for strategic assets.”
What to Watch
The next 12 to 24 months will be critical for PayPal. Lores has promised to update investors on his turnaround plan “in a few months.” Key questions include whether branded checkout growth can recover against Apple’s ecosystem advantages, whether Venmo or Braintree could be spun off, and whether a cost-cutting CEO from the hardware world can successfully navigate the fast-moving fintech landscape. For a company that once defined online payments, the stakes could not be higher.