I'm Harshita Rawat, Bernstein's Senior Analyst covering payments, processors, and IT services, and I'm delighted to be joined today by Alex Chriss, PayPal's President and CEO at Bernstein's 41st Annual Strategic Decisions Conference. Alex, thanks for joining us today.
It's great to be here. Thank you.
So, Alex, PayPal processed $1.7 trillion in volumes last year, and at this scale, PayPal has very unique insights into how e-commerce is doing. To kick off our conversation, can you talk about the current spending trends you're seeing across PayPal?
Yeah, again, thank you for having me here. Obviously, it's a very dynamic time in the market. It feels like every day, every week, we are tracking new decisions and new shifts that are happening. What I'd say is, broadly, we are seeing very consistent trends from what we've reported on over the last couple of quarters.
On a macro scale, there have been, clearly based on different tariffs or different adjustments, some movement across different borders. What we've actually seen is, you could imagine merchants from China actually moving their advertising spend from the US to Europe. Because PayPal is so broad and because we have such merchant coverage on a global scale, we've just seen things move up, move down, and pick up on sort of a week-to-week basis.
Overall, very stable trends, and that includes sort of what we expected from our outlook from Q1 and then what we saw into Q2. Mid-single digit, branded checkout. What we're really focused on is our branded experiences, which sort of continues to be in that high single digit or nearing high single digit range. Very, very consistent trends, even with all the uncertainty in the market.
Fantastic. Alex, it has been one and a half years since you were appointed CEO of PayPal. Tell us about how PayPal has changed in terms of organization, product velocity, and execution.
Yeah, it's been a crazy 18 months, very, very exciting. We've done a lot, and I'm really, really proud of the team. Just to set the stage, I came in just about 18 months ago. We reset the entire leadership team. Everyone on my leadership team is new and came into the organization really with an energy and an enthusiasm to transform the company.
We've reset the way we've organized, and we've organized customer back and really focused on driving innovation. I'm sure we'll talk more about this, but one of the things I'm very, very proud of is I feel like for maybe a good period of time, maybe even three to five years prior, the innovation had really stalled. What we have done in the last 18 months is remake the entire technology organization, remake our platform, and the innovation that we are now driving, I think, is leading the industry.
I am sure we will talk about agentic commerce and all sorts of things where we are really out in front. I am very, very proud there. The other thing that has changed is we have really tried to tackle the most challenging questions that were facing PayPal when I got here. When I arrived, I went on a listening tour, talked to many of you, and asked, what are the things that are sort of the existential questions about PayPal?
This was a company that really had seen flat to negative transaction margin growth for a couple of years. Customers had been declining. Venmo, which is an incredible asset, really was undermonetized and not growing. There were a lot of these questions of, what is going on? I think in 18 months, looking back now and being where we are with the team that we have in place, with the trajectory that we have in place, we really changed the story, and it's very, very exciting.
Transaction margin is now in positive and has been for the last four quarters and growing. Customer growth is continuing to grow both on the PayPal and Venmo side, so we're starting to see great acceleration there. We've turned our unbranded business positive. We had to make some difficult decisions in terms of having conversations with our customers and making sure that we are repricing to be able to price our value-added services and price to value, and that's been well received. Venmo is now growing. We have a monetization strategy that is well received and actually driving growth.
We grew 20% in Venmo last quarter, over 20%. If you just go through the list, our innovation is accelerating. What I'm really excited about is our story takes time for people to recognize. What I focus on is our customers. Our customers, whether it's our consumers, which we're now seeing growth in, or whether it's our merchants that are continuing to vote with us even as we're repricing, they're continuing to keep even more of their processing with us than we even expected.
We have developers that are now coming and working with us. We just held a developer day a month or so ago where we had the largest companies in the world and the best startups in agentic all working and coding off of our platform. Our customers just continue to move towards us. Eighteen months in, really good start. Our team is getting stronger every day, and it's a lot of fun.
That's a lot for 18 months.
Yeah.
Alex, you talked about innovation and accelerating the pace there. You talked about agentic commerce. At your dev days a few weeks ago, you unveiled PayPal's toolkit for the agentic era in commerce. Tell us more about it. What evolving role does PayPal play in a world where agents are shopping on our behalf?
Yeah, so this is really important. Let's take a minute and unpack sort of the future of what commerce can look like. This to me feels very much like probably the move to e-commerce felt 15 years ago. Obviously, PayPal was at the forefront then and really pioneered the shift from just traditional in-store commerce to e-commerce. I think we're about to go through that next wave, and I think PayPal is incredibly well positioned. Let's just unpack what this looks like.
There will be a day very soon where you are talking to an agent and having the agent start to build, it could be an itinerary for you. I want to go on a trip. I want to go to Barcelona. Where should I stay? What should I bring? What do I need to pack? What kind of luggage do I need? What kind of clothes do I need?
Your agent is going to be incredibly intelligent and is going to be able to know you from a personalized standpoint and help you put together a full itinerary, what you need to buy, what you need to get there. We are not that far away. The next obvious step is, great, buy the luggage, buy the tickets, buy the travel, buy the hotel, book this entire itinerary for me end to end.
That transition from where we are today, which is agents can actually tell you what to go do to actually making that purchase, is a huge leap. It is the thing that we are really focused on prioritizing and pioneering right now. What does that look like? In order to actually, as a consumer or a merchant, be confident that that transaction can happen, there's a lot of things that need to happen underneath the covers. You need to understand that that customer is a real customer. You need to KYC hundreds of millions of consumers to make sure that you know who that customer is.
Ideally, they have a wallet with multiple instruments because you may want to buy now, pay later the plane tickets because they're expensive, but you may want to actually put your hotel on your American Express card because you get certain points. You need to have a smart wallet that understands who you are as a consumer, understands all of your personalized experiences, has your full wallet, and has KYC'd you. On the merchant side, you need to make sure that everyone's KYB and that the merchants are real, so that from a consumer standpoint, you're not booking an Airbnb or something and have no idea where your money is going.
When we take a step back and look at the assets that we have at PayPal, we have the largest two-sided ecosystem in the world. We have the most KYC'd consumers, hundreds of millions of consumers, where we already have billions of instruments already in their wallets. They're authenticated. We have a smart wallet that enables us to understand personalized preferences. We have over 80 million consumers that have opted in to our personalized commerce API so that we can actually provide that to agents and give the agents updated personal information so they do not even have to ask.
They just know what the preferences are of the customer. We have the largest ecosystem of merchants. We have over 80% of e-commerce as a catalog already. If you really think about it, for 25 years, we have been building the largest commerce LLM in the world. We have 30-40 million merchants already KYB'd and able to be able to transact with. You take those two elements together, including then just the ability to make the commerce transaction happen safely, securely, and personalized. We have all the follow-up.
Once you make that purchase, once that agent makes that purchase on your behalf, you are probably going to want to check that it actually worked. You may actually want to know when your goods are going to arrive. You want shipping tracking. You want to know, well, if it was not the right thing, how do I return it? How do I cancel it? All of those things the agent is not prepared to do, but we have a PayPal or a Venmo wallet that is able to follow up for you.
We are really excited about this transformation because we feel like we have the assets on both sides of the ecosystem to be able to make that happen. What is happening is merchants and agents are coming to us because they realize we have those assets as well. I mentioned our developer days at the end of May. We had Microsoft, Google, Amazon, OpenAI, Perplexity, all of the largest players coding on our MCP server.
We launched the first remote MCP server for commerce anywhere in the world. They came to our developer days and were coding against our server. We have since launched a partnership with Perplexity where they will be using our server to actually drive branded PayPal and Venmo checkout. We have Anthropic and OpenAI also using our MCP server to be able to connect. I think we're just scratching the surface of the conversations that we're having and what you'll see going forward.
For me, it will likely take time for consumer behavior to shift to agentic purchasing, but it's inevitable. At some point, this will just be the wave of how it just removes friction from the ecosystem, but you need all the underlying elements that PayPal has. We're really, really excited about this as the future, and we think we're in an incredibly strong position for now the next wave of the next 5, 10, 15 years of commerce as it becomes agentic.
It's so fascinating, Alex, because traditional commerce is designed for humans, and as agents kind of do shopping on our behalf, it's really unique to have a two-sided network to kind of drive that additional security and value-added services. I want to switch gears a little bit and talk about the branded business. A key focus area for investors, there's a lot going on here, right?
Like as you're modernizing checkout experiences, introducing rewards, Buy Now Pay Later offline, but I think at the same time, competition is also intensifying with many different checkout options. Taking a step back, what do you think is misunderstood amongst investors as they think about PayPal's branded business?
Yeah, that's a really good question. It's very complex, but if I were to just simplify it, I think people still think about PayPal, especially in the US, as this single branded button that revolutionized e-commerce 15 years ago and really hasn't changed much since then. In some ways, that's true. In some ways, what PayPal did was remove friction from the ecosystem, made it very simple and secure for a consumer to make an online purchase without having to type in their credit card information again.
If we just sat there, which in all transparency, for far too long, the company did just sit there, then competition says, "That's a great business. We can do a me-too product." Now you have lots of different buttons on a checkout page. I think what's misunderstood is, A, even with the competition, we are still the largest branded product in the world. PayPal in the U.S. is still number one, and outside of the U.S. is by far number one.
You can aggregate everybody else. We are still number one. We are not sitting still. The innovation that we've talked about when it comes to the two-sided network, we are now innovating far above and beyond just removing friction from the ecosystem. We are now starting to build in advantages for consumers to want to choose PayPal. We've never done that before.
The value proposition for PayPal in the past was, "It's just frictionless." There are lots of things that are frictionless now. We are now starting to work with merchants to leverage that personalized API that I talked about, that we know information about this customer to allow merchants to connect directly with the customers that matter the most and actually give them incentives to make the purchase. You're starting to see that.
We did a partnership with Amazon where Buy with Prime will now be shown as a PayPal, if you're a Buy with Prime member, on a PayPal checkout button. We're working with merchants where they can start to give rewards and cashback offers and incentives to choose PayPal at checkout because they're targeting a specific consumer even upstream of the purchase. They can do a buy now offer on the actual checkout page. We're leveraging the data that we have and the access to the merchants that we have at scale to now create differentiated value propositions for the consumers.
This is something PayPal has never done before, but we're now starting to roll this out, and the merchant reception has been incredibly exciting. Consumers are now realizing we are the most rewarding way to pay. We've started to do that with our rewards cards. We're starting to put more cash back into our consumers' pockets. You've seen us on TV.
Hopefully, you've seen some of our Will Ferrell campaigns. We're starting to change the mindset of consumers that PayPal is the most rewarding way to pay, not just the most frictionless, safe, and simple way. In addition, we're playing a bigger game. PayPal had before only ever worked through an e-commerce channel. We're now omnichannel. We are now working on ensuring that we can actually use PayPal anywhere you want to shop, which includes offline.
We launched our offline product inside of stores where we're now working with merchants to give, again, consumers incentives to be able to purchase. What does that look like? We're actually giving cash back for debit card purchases. In the last, since we launched in September, we've had 4 million debit card customers come in, 2 million in Q1, coming in using our debit card to now make offline purchases. What's the advantage of that?
First, offline debit card purchases are the same economics as online branded. We get great economics. Two, it creates a flywheel of habituation. Consumers that are now using us offline transact six times more than users that are just using us online, and their ARPA is 2x. We're starting to get this flywheel of people saying, "I'm going to use PayPal every time, every purchase, everywhere."
That, for us, is incredibly exciting because before we were just taking a fraction of their share of wallet in their purchases. Now we're able to actually penetrate our user base, which is massive, to now take more and more of their share of wallet. Our customer base is continuing to grow. We're speaking to new users as well.
This is happening on the PayPal ecosystem, and it's happening on the Venmo ecosystem as well. We're playing a bigger game. We're playing in an omnichannel world. We're now moving beyond what the competition did. I'll give it to them. They caught up to us when it came to just the consumer experience. We've now leapfrogged them in creating a value proposition that's better, and we've got to continue to innovate. It is a very exciting opportunity for us.
Alex, I want to follow up on your offline comments. You talked about the users, the ARPA, which is very attractive. You're rolling out the NFC wallet in Germany. You talked about the Will Ferrell campaign. Over the last several years, PayPal has had many attempts at gaining share of offline. Why do you think this time could be different?
Yeah. You know, my background is a product leader. I have built products my whole career. And one of the tenets of building great products is really understanding your customer, really diving deep and working customer back. It's one of the things I've tried to bring to PayPal, some of the new leaders that I brought in, and just the way that I look at products. In order to do that really well, you have to meet your customers where they are.
Changing their behavior is very, very difficult to do. Meeting them where they are and creating delightful products is what starts to drive growth. In the past, we had thought about offline. I mean, it's sort of an obvious idea. You have half a billion users at any given time that are coming in. Why not take more of their share of wallet? We tried to force them to change behavior into different areas.
Now we have launched with PayPal Everywhere. We've launched leveraging NFC. We're launching on the devices using the technology that they know and love and expect. We also are starting to leverage some of the advantages that we have. We just launched in Germany. Germany is a unique market. It's a very exciting one for us because we have incredible penetration.
80% of e-commerce runs through PayPal. We're the number one brand in Germany. Of all brands, we're the number one brand in Germany. We have bank connected because it's not a credit market. We have banks connected to all of these consumers across Germany. We have now launched a wallet that is just as easy as any NFC wallet that you have here in the US on any device that you have, any mobile device that you have in Germany, where you are one click able to take your bank account, say, "Is this the account that you want to now use for offline purchases?"
We also are accelerating our Buy Now Pay Later product. We now have a Buy Now Pay Later card connected to your offline purchases. You can walk into a store. The previous version was you either paid with having to fill out a form for bank, or if you were buying a TV and you wanted some sort of credit, you were manually filling out a form to be able to get credit. Now you can walk in with an always-on Buy Now Pay Later credit available on your PayPal app, and you can tap to pay to either buy connected to your bank or buy with Buy Now Pay Later.
That is meeting the customer where they are. It's actually making it a delightful experience for them. We are very, very excited about starting to see that accelerate. We've done that in the U.S. That's why we're starting to see the debit card penetration that we've seen in the U.S.
Again, meeting them where they are. We're doing that in Germany. We'll start to launch that throughout the rest of Europe. In general, this is just a mindset that we've shifted across the entire company, which is we're going to innovate. We're going to innovate with velocity, and we're going to delight customers by really obsessing about their needs and how we can differentiate.
Alex, you also talked about the ability to personalize as also a differentiated aspect of what PayPal could do. How big do you think adjacent opportunities, for example, ads and offers and personalization could be for the branded business?
Yeah. So, look, at our scale, we have a couple of big advantages. We have data that merchants really, really want. We have your purchase data across the ecosystem. And this is consumers' data, but we've actually asked consumers, and they've opted in. Over 80 million have opted in to be part of our commerce API, which means they're allowing us to now create an anonymized, personalized fingerprint of them and be able to share that with merchants so that merchants can actually create a personalized experience.
So, what does that look like? If you go to a website now, there is a dance that happens between the merchant and the consumer. The consumer is there trying to shop and find something, and the merchant is trying desperately to figure out who this consumer is and get them to the right product as fast as possible before they lose the attention span or they just give up. The bounce rate on merchant sites is incredibly high, and people give up all the time.
We are now providing an API that merchants can use upfront to personalize the experience. Instead of going to a generic website, they are able to ping the PayPal Commerce API upfront and understand a few things. Where have you shopped before? What journey might you be on? Did you just come from buying a tent? We sell shoes, so now you are likely maybe going camping.
Maybe instead of showing tennis rackets upfront, we should show you hiking boots. We know your shoe size because you've made shoe purchases before. We know your favorite colors, and we know that you're a PayPal or a Venmo user, so we can put a buy now button upfront. If they're a new user to this merchant, we can even have that button say, "Hey, you get 5% off by making a purchase today." We are giving merchants tremendous insight and information to be able to personalize that experience far upstream of what they're able to do today.
We see that as a tremendous opportunity to start to narrow in the focus and allow merchants to create a much, much more seamless, frictionless, personalized journey for consumers. Obviously, it's better for consumers as well. They get to the product they want. It's a personalized experience for them. If you then take that to the next iteration, which is what we talked about before in agentic commerce, that is a huge advantage because you're not going to want to be telling your agent every time, "Hey, this is my shoe size.
This is what I'm doing. This is why this Q&A back and forth, back and forth, back and forth. When they can ping our API and the agent is suddenly incredibly intelligent, personalized based on you, they can get you right to the right product at the right time. We think we're playing the future game here, and we're leveraging the data to be able to make it happen.
Let's bring it all together to what you said at the investor day, where you guided to branded experiences, acceleration from 6% to 8% to 10% in the medium term. Maybe zoom in on what drives that acceleration in terms of the new checkout, US versus international, enterprise, SMBs, and different products.
Yeah. Let me simplify it. Our PayPal base is an incredibly loyal base. They have used us for years. They continue to use us. I would argue they use us even with an experience, especially on mobile, that in the past was not ideal.
We have been in that mid-single digits branded experience pretty consistently. What is changing? First, we are dramatically improving that core branded experience. This goes back to innovation. We have remade the core branded checkout experience for the consumer. We are using the best of breed technology to now seamlessly get you through login.
No more enter your username and password and figure all that. There is much better technology now. There is Face ID. There is biometrics. There is the ability to just know who you are. We are now implementing all of that. We have built those experiences.
We know that those experiences are now driving 100 basis points of uplift when they're rolled out. We are in a huge acceleration mode to get those experiences rolled out to as many merchants as possible. We started a couple of quarters ago. We now have over 45% of US volume on the new experiences. We just this month started rolling this out to Europe and beyond.
Just to give you a sense as to the scale of that, because our business is so international, even at the 45% of US volume, we're still low double digits in terms of our overall volume on the new experiences. Our Europe expansion should accelerate even faster than we did in the US. Over the next few quarters, we're going to really be looking to take that low double digits on the new experiences and start to really ramp that up.
We think right there, that's, call it, 100 basis points of improvement. Second, we're really leaning into Buy Now Pay Later. We think this is a tremendous opportunity for us. We have best-in-class risk models. Even in uncertain times, we're really able to make sure that we understand our consumers in a very nuanced way and be able to provide a very exciting, seamless Buy Now Pay Later experience. And it's built into the core elements of PayPal. You don't have, it's a brand that you trust.
It's a brand that you know and love. Actually, we're hearing from merchants more and more that they are asking for PayPal Buy Now Pay Later to be part of their experience. We think that's a point or two of growth as well. Lastly, something that I'm really excited about is Venmo. We have an incredible and growing consumer base with Venmo. We have $18 billion of money that moves into the Venmo ecosystem every month.
What is the Venmo ecosystem? It is teams. We have a team product through to, call it 29, early 30s, affluent, incredibly valuable demographic that merchants want. In the past, we had these $18 billion of money flowing in from mostly peer-to-peer transactions, or think of your college student that's off to school and their parents sending them money through Venmo. We had failed as an organization to give those users the ability to spend that money.
The money would hit the accounts, and then it would leave. We have now changed that. First, Pay with Venmo is an easy and obvious way for us to create a Pay with Venmo button on the merchants that we already have penetration with with PayPal. We are now going to market as a single organization. We are now taking our go-to-market teams to be able to put a Pay with Venmo button on our merchant sites that are relevant for this demographic.
We are starting to see tremendous growth in Pay with Venmo. We grew over 50% last quarter in Pay with Venmo volume. We are just scratching the surface of Pay with Venmo volume. That is another point of growth right there with Pay with Venmo.
For me, the whole Venmo ecosystem feels like we are just at the start of this flywheel that probably is what PayPal felt like 15 years ago. Very loyal, dramatically popular base with a lot of money flowing in. We have to just create incredible experiences, whether it is Pay with Venmo or our debit card, to be able to allow our customers to be able to use that money within the ecosystem.
Alex, I know we've chatted about this, but Venmo is quite undermonitized, especially compared to your peers. It is kind of nice to hear about the kind of leadership at Venmo and bringing Venmo more into the PayPal ecosystem. Let's talk about Braintree.
Can I finish on Venmo before you move on? Because I talked about Pay with Venmo, which is the button, right? Imagine, great, we now have a, and you will see it now, and you will start to see it more. As I said, 50% growth in just volume coming through this Pay with Venmo button. The other side of monetization is the debit card, giving our consumers the ability to have an omnichannel experience and actually use their offline purchases as well.
The classic use case is, and my son does this at college. He takes his volleyball team out for pizza. They all Venmo him $5 for the pizza. In the past, he could not use Venmo to actually buy the pizza. It makes no sense. It is insane.
Now he has his Venmo Debit Card embedded in his NFC chip. He double-clicks, taps to pay, and he's now bought the pizza. It is all seamless. We are innovating like crazy on Venmo, especially on experiences and group buying opportunities, which is where Venmo really shines. We have offline experiences, our debit card experiences, and Pay with Venmo.
Just to give you just a little bit of an understanding of how fast we are moving on the innovation on Venmo, Venmo has been around for over a decade. In that decade, we had 4% penetration of our debit card into our base. That is too low. That is way too low. We have remade the experience over the last couple of quarters. We have now built it into the onboarding experience.
The new cohorts of customers coming in, in the first 30 days of them joining Venmo, we have a 10% attach of the debit card. That is the first 30 days. As we continue to see those cohorts mature over 60 days, 90 days, into six months, I expect that 10% to start to really scale up. We've already brought our 4% penetration up to 6%, and we expect to see that continue to grow.
Now this sort of theory of, well, Venmo is this incredible base continuing to grow, tons of money moving through the ecosystem, but not monetized, we are changing that narrative. Our debit card penetration, our Pay with Venmo are both huge monetization levers, and we're not going to stop there. There's a lot of innovation coming down the pipe with Venmo. Super, super exciting product.
That's what's driving your optimism around more than $2 billion in Venmo revenue.
Absolutely. And so again, just to...
By 2027.
By 2027. Just to give you that, just to finish on your first question, this is our, how do we go from mid-single digit branded checkout growth to 8%-10% over the next few years? We have a very clear stepping stone of where we need to get to. That does not include new innovations. Just from a perspective on the company standpoint, we are not going to put out any outlook that we do not have real confidence and line of sight to get to. We feel very confident in those levers of three different levers to drive growth to get to that 8%-10%.
Alex, I want to switch gears now and want to ask about Braintree. A year ago, you led a strategic focus shift for Braintree towards profitable growth away from volume growth or market share. As we sit here today, beyond now positively contributing to transaction margin dollars, how is Braintree positioned relative to, say, its peers in terms of capabilities?
Yeah. Unbranded processing, which is really the Braintree business, is a very important part of the business. In the past, just to level set, we had been really thinking about how do we just drive volume growth. I think a few years ago, that made a lot of sense as Braintree was small and really trying to establish a beachhead. As I came in and was able to really take a fresh look from a strategic standpoint, we were just undervaluing our own products.
One, our core processing is actually best in class. Our auth rates, our conversion rates are really best in class. Our merchants would tell us that. We hadn't invested and weren't monetizing our value-added services. We brought in an entire new leadership team there. We are moving incredibly fast with our value-added services, whether it's risk as a service, FX as a service, some of the tokenization that we're now putting out that's really unique. We've launched new partnerships with Verifone to be able to now move into omnichannel from a processing standpoint.
We are just playing a bigger game and able to interact with merchants. Now, we made a strategic shift to say, okay, we are actually going to price our services to value. And what does that really mean? It means we're going to start charging for our value-added services. It means we're going to extract a fair price, which for most people was a higher price for the unbranded processing.
We expected volume to go down. What has happened is a couple of things. One, we've had very constructive conversations with our existing merchants. We have not lost merchants. Some volume has gone down, as you would imagine, because we were taking almost an unbelievable share of processing. It is right-sized, something that is more reasonable.
We have actually lost less share. We have retained more of our processing share than we expected. That is because of the value of our services, even at a higher price. We are starting to see, obviously, transaction margin. Unbranded processing has now turned profitable and is contributing to transaction margin growth. Our processing has reduced. We think we are pretty close to being at the end of that.
We will start to see overall volume start to inflect and start to grow again. We have healthy relationships as we start to now have our value-added services really start to come to bear. We think we have set up a really strong position for our merchant relationships. The last thing I'd say is we also want to create differentiated products in the market.
The biggest differentiator that we have versus anybody else that's doing unbranded processing is we have the largest consumer ecosystem in the world. All the things we just talked about, about personalization, commerce APIs, those are the conversations we're now having with these merchants. When I go and sit down with the CEO of a merchant and I ask him, hey, what is the biggest challenge you're facing? Not a single one has said to me, basis points on processing volume.
They all say, I need more customers. I need to convert more. I need loyalty. I need returning customers. I say, great. We have hundreds of millions.
Tell us exactly where you want. Do you want the Venmo population? Do you want PayPal? Do you want global? Do you want to personalize it? Do you want to create offers?
What do you want to do? Now the relationships that we're building across the PayPal ecosystem is incredibly end-to-end. That is also, again, the way we've changed our go-to-market, where we're now having conversations that are holistic with our merchants instead of siloed conversations about, do you want Venmo, or do you want unbranded, or do you want PayPal, or do you want Buy Now Pay Later?
Eighteen months ago, those were four different teams having those conversations. Today, it's one go-to-market team having a holistic customer-backed conversation that fits the merchant's needs. We're just starting to see that momentum start to grow.
Alex, we talked about the branded business, Venmo, enterprise business. Let's talk about SMBs, which in a way is PayPal's bread and butter and something, I guess, very special for you because of your background. As you discussed at the Investor Day, it's been a struggling business for PayPal over the last several years.
I know you stabilized it. Tell us more about the dynamics within the SMBs business. You're bringing more product here, unified under the PayPal One offering and overhauling the go-to-market. At the same time, you have market forces such as consolidation, for example, with Shopify. Let's talk more about the dynamics here.
Yeah. You are right. Small business is a passion of mine and a very, very exciting business for us. Let me just level set on just the small business market in general and where I think we've got tremendous advantage. Over the last 5 or 10 years or so, I will be transparent.
I think PayPal took its eye off the ball of small business, which was, as you said, our bread and butter and where we started. We really focused on enterprise, which was good and had some tailwinds in enterprise growth, but really created a little bit of a vacuum in small business. As you said, we've stabilized that now. We're turning small business back into growth. It really is, I think, our birthright to be able to own the small business market.
A couple of things to think about. First, small business is a vast market. It is one that is very hard to penetrate. These are businesses that are spread and very disaggregated. Being able to have a brand that can aggregate small businesses is very difficult. When we talk about having 30 million plus merchants, that is incredible.
We are the first place that small businesses turn to when they are looking for a partner. That's the first important thing. Second, small businesses are split between services and product-based businesses, and we serve both. If you look at the overall small business market, it's actually about 70-30 service-based businesses to product-based businesses. We have competitors, as you've mentioned, that really focus on product-based businesses, which we are strong in. Retail is a great example of that. Small businesses that are service-based businesses still need to send invoices.
They still need to get paid. They still need to make payments. They turn to PayPal. We, again, I think, are creating vertical solutions to be able to serve them. Now, if you look at what are the needs of small businesses, there are two things to really understand about them. One, they struggle every day with using too many different services. Most small businesses are using 17 different applications to be able to run their business.
These are businesses with just a handful of employees at best. Being able to manage the data infrastructure and the data that moves between 17 different solutions to be able to run their business is a nightmare. They are looking for consolidation. That is why we have moved everything under one platform. We have rearchitected our infrastructure under PayPal Open. Now they can have one place to get their unbranded processing, every branded mark that they want, their PayPal and Venmo marks, Buy Now Pay Later, all of the different global services.
This is the same platform that they can start with and scale all the way through to an enterprise. Same platform, custom fit for them. Consolidation of services into one platform is a huge advantage. The second thing to know about small businesses is they are very simple, but they are always at risk of going out of business. What do they think about every day? It's all about cash flow. Money in, money out, and access to capital.
We are best in class at money in. We help you get paid, whether it's your store, whether it's invoicing. We help you get paid. What we've not been great at is money out, which is the ability to do things like bill pay, which we foreshadowed at our Investor Day. We will now be able to allow you to do money in and money out. What we are great at is access to capital. We've continued to scale our merchant lending, our working capital loans. Again, with our unique data set, we're able to see a 360-degree view of the merchant, of the small business, and are able to actually give them access to capital when they need it the most.
Especially in times like now, where times are difficult and many of them are looking to grow or looking to just stay afloat, we're able to be a very, very safe place for them where we have enough data to be thoughtful about how we want to manage our lending business, but do it in a very intelligent way. I have a clear passion for small businesses, and I think we are turning the ship around there. Very, very excited about the opportunity there.
Fantastic. I had not appreciated the diversity of your SMB base in terms of services and product. Alex, let's talk about Fastlane. You rolled it out last year and announced a bunch of partnerships with other acquirers.
Guest checkout is still quite friction-prone. You have talked about engaging new customers for PayPal and also dormant PayPal users. Tell us about the merchant piece of it. What are you hearing from merchants, also considering the fact that there are other solutions in the market?
Fastlane, just as a refresher, is our guest checkout experience. Just to make it very simple, because we've seen so many consumers, if you go into a guest checkout experience and you've now bypassed all branded options and you just type in your email address as an example, we can prefill the checkout form. That has a dramatic increase in conversion rate for merchants. We have the best guest checkout experience on the market now.
We were not first. Our competitors in guest checkout have actually been in the market for almost a decade now. What we're hearing from merchants is you are the best converting one, and the demand is high. The challenge, our focus has been on moving and rolling this out to large enterprises first. What they need is because most large enterprises are using multiple processors to be able to manage their processing.
They need to make sure that our Fastlane experience works through not just Braintree, but also other processors. That's why when we launched, we had other processors, including competitors. So, we had Adyen and Chase and Fiserv and others adopt and market our Fastlane product. Those are just now rolling out now. Now that we have multi-processor adoption of Fastlane, we expect this to continue to scale. This is not going to be an overnight scale.
This is going to take time for adoption. Guest checkout is not something that most merchants even have engineers working on because it just hasn't changed in a long time. What I'm excited about is, A, it's the best product in the market. B, we have a strategy that is multi-processor, which gives us an advantage as we start to roll it out. If you go back to Agentic commerce and you think about what is going to be the checkout experience with agents, it is going—I do not believe we're going to be in a world where you're going to go through this magical agent-to-agent or consumer-to-agent experience, and then a guest checkout form is going to pop up, and you're going to type in all of your information.
The player that has access to the consumer, that has wallets, that has vaulted instruments, and that has removed friction is going to win that game. That is what gets me so excited. I think between Fastlane and our branded experience, we're going to be the leader today and into the future.
Alex, we only have a few minutes left. My last question for you. At the Investor Day, you talked about your long-term ambition of 10%+ transaction margin dollar growth and 20%+ EPS growth.
The stock is really mispriced if one has conviction in the long-term ambition. What are the key milestones or areas investors should be monitoring, in your view, to get greater confidence in the underlying growth outlook for PayPal and that is improving?
Yeah. First, again, I'll go back to just how I think about running the company. We have been very prudent in any time that we've given either a short-term or a longer-term outlook. We have line of sight, and we have a lot of confidence internally on what that outlook looks like. We would not have said 10%+ long-term transaction margin or 20%+ EPS if we didn't have conviction ourselves. Just want to start there.
Second, I appreciate that it takes time for the stories of what the story of PayPal to evolve. I've only been in the seat for 18 months, but what I would encourage you to look at is the momentum that we have and who is voting with their wallets or their business in the innovation that we've put out in the last 18 months. Our consumers are now coming to the platform. Our consumer growth is growing. I would look at that. We've turned around the unbranded business.
We have now turned that from unprofitable to profitable, and it continues to grow. Our Venmo business is now growing and growing at a healthy clip, 20%+ in the last quarter. Our branded business, we now have line of sight to what we talked about before, both the branded experiences as well as Buy Now Pay Later, and then Pay with Venmo on top of that. I would just look at the underlying elements, and then I would look at who are the other partners that are coming in.
Developers are now coming to us. This is not just a today game. This is into the future as well. We were the first. I don't think people would have guessed 18 months ago that PayPal would be the first MCP server leading agent to commerce. We were.
We had the largest players coming to us to be able to say, "Hey, we want to actually use your two-sided ecosystem to lean into what the future of commerce is going to look like." I would look at those input metrics. I would look at the continued execution that our team has. I would also recognize that we're 18 months in with an entirely new team.
I can tell you now we are better this week than we were last week, than we were last quarter, and than we were six months ago. We keep getting stronger as our team starts to really settle in and really start to execute. We had a lot of conviction in the numbers that we put out at Investor Day. I think we're just getting stronger as we continue to move forward.
Thanks, Alex. Such a great conversation. Thank you for joining us today.
Thank you.