PayPal Struggles as Apple Pay and Rivals Gain Ground

PayPal, once considered the undisputed leader in online checkout payments, is facing growing pressure as competitors rapidly chip away at its core business.

Nearly three decades after helping pioneer digital payments, the company is now struggling to maintain growth while rivals including Apple Pay, Shopify, Affirm, Klarna, Cash App and Zelle continue expanding their influence across e-commerce and financial technology.

PayPal’s core checkout business slows sharply

PayPal’s biggest challenge remains its branded checkout service — the familiar payment button used across countless online stores.

In the company’s latest quarterly earnings report, branded checkout revenue grew just 2%, alarming investors who expected stronger performance in one of the world’s fastest-growing industries.

The weak growth triggered an almost 8% drop in PayPal’s stock price.

Over the past 12 months, shares have fallen nearly 40%. The stock is also down roughly 80% compared with its pandemic-era highs five years ago, when online shopping surged globally.

Apple Pay becomes PayPal’s biggest threat

Analysts say Apple’s payment ecosystem has become the company’s most serious competitor.

Since launching in 2014, Apple Pay has expanded beyond online purchases by integrating tap-to-pay technology directly into iPhones and Apple Watches.

Consumers can now complete purchases using facial recognition or fingerprints without manually entering payment information.

That convenience has weakened PayPal’s role as a default online payment option.

According to analysts at UBS, PayPal controlled around 9% of global and U.S. e-commerce payments in 2019, while Apple Pay held roughly 3%.

Six years later, Apple Pay has overtaken PayPal as the dominant checkout method, with analysts expecting Apple’s market share to continue rising.

Buy now, pay later firms add more pressure

The rapid growth of buy now, pay later services has created another major challenge for PayPal.

Companies like Affirm and Klarna have gained popularity by allowing shoppers to split purchases into smaller payments.

Although PayPal introduced its own installment payment products, analysts say it still trails competitors in consumer adoption and innovation.

Notably, Affirm was founded by Max Levchin, one of PayPal’s original creators.

Leadership shakeup signals deeper concerns

The company’s struggles have already triggered major leadership changes.

Earlier this year, PayPal’s board removed former CEO Alex Chriss and replaced him with Enrique Lores, the former head of HP Inc..

Lores has introduced a restructuring plan focused on:

• Cost reductions
• Artificial intelligence integration
• Reorganizing PayPal into three divisions

He told shareholders the company’s turnaround strategy will be presented in greater detail later this year.

Investors question PayPal’s future direction

Wall Street concerns are now centered less on profitability and more on whether PayPal can regain long-term growth.

Some analysts have speculated that PayPal could eventually spin off businesses such as Venmo or Braintree to unlock value.

Others have questioned whether the company could become an acquisition target.

Earlier this year, PayPal shares briefly surged following unconfirmed reports that payments giant Stripe was exploring a potential deal involving all or part of PayPal.

Analysts say the company now faces a critical moment as it attempts to modernize its platform and compete in an increasingly crowded digital payments market.