PayPal is putting more emphasis on Venmo, credit and Buy Now Pay Later as its core online checkout business grows slowly. In the second quarter of 2026, online branded checkout volume rose 2% before currency effects, while Pay with Venmo volume increased 44% and Buy Now Pay Later volume grew 26%.
The growth gap explains the strategic shift
Branded checkout remains important because it carries PayPal's name at the point of purchase and has historically supported attractive economics. The 2% growth rate shows stabilization, not a strong recovery. Faster growth in Venmo and installment products gives PayPal another route to increase engagement and transaction-margin dollars.
Financial services revenue includes credit products and interest-related income across PayPal and Venmo. Management expects that category to grow at least twice as fast as the company in 2026. Yet other value-added services revenue, which includes consumer and merchant credit, was roughly flat at about $850 million in the quarter because lower interest earned on customer balances offset credit strength.
The economics are different
Credit and Buy Now Pay Later can deepen customer relationships and increase payment volume, but they introduce underwriting, funding and loss risk. Growth is valuable only if PayPal prices that risk correctly and can fund receivables efficiently. The company's adjusted free-cash-flow measure excludes the timing difference between originating BNPL receivables held for sale and selling them, so investors should read the reconciliation rather than treating the headline as cash with no qualifications.
Transaction-margin dollars excluding interest on customer balances grew 3%, down from 8% a year earlier. That slowdown shows why the new products matter, while also setting a higher burden of proof. PayPal must show that Venmo and credit growth improves total margin dollars rather than merely replacing slower checkout economics.
Capital returns buy time, not growth
PayPal returned $1.5 billion through second-quarter share repurchases and declared a $0.14 quarterly dividend. Buybacks can increase per-share value when shares are inexpensive, but they cannot repair weak product growth by themselves.
BTI's conclusion is that PayPal is becoming a broader financial-services platform while checkout remains under repair. The next signals are branded checkout growth above 2%, credit losses, BNPL funding economics and sustained transaction-margin growth.