PayPal helped shape the way people pay online, but nearly three decades after becoming one of the most recognizable names in digital payments, the company is now fighting to protect the business that made it famous. As rivals like Apple Pay, Shopify, Klarna, Affirm, Cash App and Zelle expand their reach, PayPal’s core checkout business is showing signs of weakness, raising questions about how the company can regain momentum in a market it once helped define.
A Digital Payments Pioneer Under Pressure
PayPal was one of the biggest success stories of the original dot-com era. For years, its branded checkout button became a familiar sight across online stores, giving shoppers a fast and trusted way to pay without entering card details again and again.
But that advantage is no longer as powerful as it once was. PayPal’s core business, where customers use the app to check out while shopping online, is barely growing. New management has already warned investors that “significant changes” will be needed to address the company’s challenges.
The pressure is showing clearly on Wall Street. PayPal’s stock has fallen nearly 40% in the past 12 months and has dropped roughly 80% over the past five years. That decline marks a sharp reversal from the pandemic era, when online shopping surged and PayPal appeared to be in a strong position to benefit.
Growth Slows Where PayPal Needs It Most
Investor concern is not mainly about whether PayPal can make money. The company remains profitable, although it has warned that 2026 profits will be down from the previous year. The bigger concern is whether PayPal can grow while competitors continue taking share in digital payments.
In its first-quarter earnings report, PayPal said branded checkout, its most profitable business by margin, grew only 2%. The company pointed to weakness in Europe and softer discretionary spending, but investors were still alarmed by such slow growth in an industry that continues to expand quickly.
The reaction was immediate. PayPal shares dropped nearly 8%, reflecting concern that the company’s most important business line may be losing relevance with consumers and merchants.
Apple Pay Changes the Checkout Habit
One of the biggest threats to PayPal’s dominance has been Apple Pay. Apple launched the service in 2014, allowing users to store virtual credit and debit cards on their devices and pay online or in stores using iPhones and Apple Watches.
That changed consumer behavior. PayPal had long benefited from being a trusted checkout option on merchant websites, but Apple made payment feel even more seamless by linking it directly to devices people already use every day.
When shoppers can pay with a fingerprint, face scan or stored card on their phone, the traditional PayPal checkout button becomes less necessary. Analysts say this shift has slowly pulled customers away from PayPal as their default payment option.
According to UBS analysts, PayPal controlled roughly 9% of e-commerce in the U.S. and globally in 2019, while Apple Pay held about 3%. Six years later, Apple has overtaken PayPal as the dominant checkout option, and its share is expected to grow further as Apple expands Apple Pay to non-iOS users.
Buy Now, Pay Later Adds More Competition
PayPal is also under pressure from buy now, pay later companies such as Klarna and Affirm. These services have become especially popular with younger shoppers and consumers looking for flexible payment options.
PayPal now offers its own buy now, pay later products, including pay-in-four and longer-term monthly payment plans. Still, it trails larger competitors in that category, including Affirm, which was founded by Max Levchin, one of PayPal’s original founders.
The challenge is that PayPal is no longer competing only against payment buttons. It is competing against payment ecosystems, mobile wallets, installment plans, merchant tools and peer-to-peer apps that have carved away pieces of its once-dominant position.
A Leadership Shake-Up Signals a Turnaround Push
The growing pressure has already triggered major changes at the top. PayPal’s board ousted CEO Alex Chriss in February and replaced him with Enrique Lores, the former president and CEO of HP Inc. and a member of PayPal’s board.
Lores has announced a cost-cutting plan that includes reorganizing PayPal into three divisions and relying more heavily on artificial intelligence. At May’s shareholder meeting, he told investors he expects to update them on the company’s turnaround plan “in a few months.”
That message suggests PayPal is preparing for a deeper reset, not just small adjustments. Investors are now waiting to see whether Lores can cut costs, sharpen the company’s focus and find a stronger growth path.
Analysts Question PayPal’s Next Move
Some analysts believe PayPal’s problem is that it did not evolve fast enough as shopping and payments moved from desktop computers to mobile devices.
“PayPal has had a lot of trouble evolving from being just a way to pay on your desktop computer,” said Sanjay Sakhrani, an analyst who covers credit cards and payment methods at investment bank Keefe Bruyette & Woods.
That view captures the broader concern around the company. PayPal still has a well-known brand, a large user base and major payment assets, but the market has moved quickly. Apple Pay owns more of the mobile checkout experience. Shopify has become a major force in merchant payments. Cash App and Zelle have grown in peer-to-peer transfers. Klarna and Affirm have built stronger identities around flexible payments.
Could PayPal Break Itself Apart?
As PayPal’s branded checkout business struggles, Wall Street has begun asking whether the company may need to make more dramatic moves. Analysts have questioned whether Venmo or Braintree could eventually be spun off.
That speculation has gained attention because Lores previously helped split HP into two separate companies. Investors are watching closely to see whether he may consider a similar strategy at PayPal if the company’s parts are seen as more valuable separately than together.
There has also been takeover speculation. Earlier this year, PayPal’s stock briefly jumped after unconfirmed reports suggested that Stripe was interested in acquiring all or parts of the company.
PayPal’s Future Depends on Reinvention
PayPal remains one of the best-known names in online payments, but name recognition alone may not be enough to protect its empire. The company is now facing stronger rivals, changing consumer habits and investor pressure to prove it can still grow.
Its next chapter will depend on whether Enrique Lores can turn PayPal from a legacy checkout giant into a more modern payments platform. For now, the company that helped invent online checkout is being forced to defend its place in the very market it helped create.
