PayPal Bets on AI Ecom Transactions as User Engagement Falters in Choppy Q3

PayPal posted strong Q3 profits but revealed a worrying slowdown in user spending and engagement. The company is now betting on a new partnership with OpenAI and its Gen Z-favorite Venmo to counter the slide.

• The paradox in the numbers: The Q3 results show a company with a split personality. While revenue grew 7% to over $8.4 billion and net income jumped 24%, total payment transactions fell 5%. Executives pointed to “cautious shoppers,” with CFO Jamie Miller noting that "basket sizes or average order value has decreased."

• Chasing new growth: PayPal’s answer is to chase new revenue streams. Its push into "agentic shopping" via the OpenAI integration will let users pay directly within ChatGPT. The company is also doubling down on its Buy Now, Pay Later service, projecting nearly $40 billion in volume this year, while its Venmo growth engine posted a 20% jump in revenue.

Despite the new bets on AI and strong performance from Venmo, CEO Alex Chriss admitted the company is fighting fierce “competitive intensity online” and struggling to keep pace with overall e-commerce growth.