Paypal released their earnings this week, and I thought I would provide a few interesting notes from the conference call.

I’ll say at the start, I’ve been tough on Paypal, but it appears to me that the new CEO is the best Paypal CEO I’ve seen in the last 15 years. It’s a low bar, but hey they are not working on stupid things or running in circles like they have in the past. That’s something.

First, Paypal sees a resilient consumer. That is an interesting datapoint on its own right? This is based on early Q4 transaction volume data.

Second, Paypal Fastlane is now rolled out to over 1,000 merchants. A majority of those they indicated are tied to BigCommerce. Beyond this point, as we say, Houston we have a problem.

Paypal Fastlane has a distribution problem. Paypal and Shopify are the biggest frenemies at this point. Shopify needs Paypal, and Paypal needs Shopify. But both want to drink the other’s milkshake, which puts a natural limit on their ability to partner. Not only that, Shop Pay has instant penetration for all updates, whereas Paypal's merchants must upgrade on their own. Bad news for Fastlane.

Third, Braintree and Adyen are the biggest flashpoint by far in Enterprise payments for Shopify.

While Stripe is a popular payment platform, their Enterprise penetration is quite limited given their roots and historical focus. Especially for the largest brands, payment processing volume is dominated by offline sales — as even the most optimistic estimates for 2024 indicate about 20% penetration of eCommerce in the United States.

It doesn’t mean Shopify isn’t making some progress, but it’s a knife fight in a phone booth.

Mentioned on the call: Paypal plans to roll out a Adyen and Braintree version of Paypal Fastlane. Braintree obviously they own and control. Adyen not so much. But it is notable that a roadmap was mentioned on the call.

Words I have never heard (yet?) on a Shopify earnings call:

“Adyen version of Shop Pay” or “Braintree version of Shop Pay”.

The latter you would see over Paypal’s dead body, which I’m sure Shopify would be happy to arrange. Adyen, however, seems more possible.

The simple question is, while Stripe and Adyen are clearly competitors, and Stripe is preferred by Shopify, would Shopify partner with Adyen for Shop Pay? It could be a matter of negotiation. Shopify clearly has the distribution advantage, and similar to Amazon Buy With Prime, could be prepared to wait out Adyen, even if it slowed Shopify’s own Enterprise penetration in the short-term.

Finally, in the battle for guest checkout… Shopify’s Shop Pay mentions 200M+ shoppers. Paypal Fastlane mentions 170M+ shoppers. Distribution is king, so you could give the edge to Shopify here given their head start. Bill Gates used to be famously paranoid about competition as you don't want to let a small competitor (what Shopify used to be) become a big one.

Whoops. Too late.