PayPal shares jumped after the company announced a partnership with OpenAI that will embed its digital wallet in ChatGPT. The payments firm also raised its earnings guidance, launched new AI commerce tools and declared its first dividend.
BNN Bloomberg spoke with Darrin Peller, managing director at Wolfe Research, who said the deal arrived sooner than expected and marks a key step in connecting PayPal’s merchant network to AI-driven platforms. He said while the move strengthens PayPal’s position, other payment providers are likely to follow.
Key Takeaways
- PayPal struck a partnership with OpenAI to integrate its digital wallet into ChatGPT and link merchants to AI commerce.
- The company introduced agentic commerce tools to help merchants connect with AI platforms and process automated transactions.
- Third-quarter results beat expectations, supported by operating-cost discipline and stronger profit margins.
- PayPal issued its first dividend with a 10 per cent payout ratio and raised its full-year earnings guidance.
- Wolfe Research’s Darrin Peller said the AI deal came earlier than expected and could enhance PayPal’s competitiveness, though rivals are expected to follow.
Read the full transcript below:
MERELLA: PayPal is surging today after announcing a deal with OpenAI to embed its digital wallet into ChatGPT. PayPal also raised its earnings guidance and issued its first dividend. For more on the outlook for PayPal, let’s go to Darrin Peller, managing director at Wolfe Research. Thanks for joining us today.
DARRIN: Thanks for having me.
MERELLA: How important is this OpenAI deal for PayPal?
DARRIN: I think it’s extremely important for PayPal — among any payments company that represents merchants — in what’s going to be a new world over the next several years of agentic commerce. Today, if you want to buy something, you typically go online. But in the future, you might use ChatGPT to execute a transaction. So having PayPal as one of the payment options is extremely important for their durability.
MERELLA: Who are the competitors in this space, and do you expect similar deals from them?
DARRIN: It’s a good question. We’ve already had an announcement from Stripe that was similar, in the sense that they’re creating a protocol to allow merchants to provide OpenAI’s ChatGPT with a catalogue of everything they have to offer, so users can see what’s available. Stripe’s one; we haven’t yet heard from others. So in fairness, PayPal was an early mover here, which is why you’re seeing such a positive reaction in the stock. But we do anticipate competitors such as Adyen, Worldpay and First Data will eventually participate as well. For ChatGPT — or any agent — to be effective, it has to be able to shop everywhere, just like a human user would online.
MERELLA: Could this make some merchants switch to PayPal, since it was among the first to partner with OpenAI?
DARRIN: There’s a possibility that some merchants will, given PayPal’s early innovation and ability to enable agentic commerce sooner. They could do the same with Stripe, but my suspicion is that this advantage will be short-lived once others follow. For now, though, yes — I think you could see some incremental merchants turn to PayPal to help them enter the AI commerce space faster, since it’s already preparing to roll that out next year.
MERELLA: PayPal’s CEO has refocused the company’s strategy to prioritize profitability over revenue growth. How have they managed to do that?
DARRIN: It’s an interesting dynamic. The company went from a strategy a couple of years ago of giving away some services at very low prices, hoping to bundle in others later — and it backfired. The industry became concerned about pricing pressure, and the stock suffered. About a year ago, under the new CEO, they reversed course and decided to charge properly for all types of payment processing, including Braintree. That’s helped transaction profit growth rebound from near zero to the mid- to high-single-digit range.
The big question now is about investment. Given the rise of agentic commerce, AI, Pay with Venmo, and buy now, pay later, PayPal plans to increase investment significantly next year. That could impact earnings and, to some degree, top-line growth.
MERELLA: We’re also seeing major layoff announcements from U.S. tech companies adopting AI for efficiency — Amazon just announced 14,000 job cuts. Could PayPal take similar steps?
DARRIN: Every company we cover has told us that about 10 to 20 per cent of their development work could shift to AI, improving margins. There are definitely opportunities, but PayPal hasn’t specifically called that out in the near term. I think we’ll see them increase investment — engineering costs and user incentives for AI, Venmo and BNPL — before we see cost savings from AI significant enough to offset that spending.
MERELLA: What catalysts and headwinds do you see for PayPal over the next year to 18 months?
DARRIN: Short term, there are cross-currents. Some markets like Germany are softer, and in the U.S. there’s been weaker spending on certain online transactions. That led PayPal to say it expects slower branded volume growth in the fourth quarter — maybe four per cent, down from five per cent in Q3 — even though earlier in the year it expected acceleration.
That’s partly why the stock rose initially but came back down toward the end of the day. Investors are digesting the fourth-quarter outlook and implications for next year. The next catalyst will be PayPal’s 2026 guidance when it reports fourth-quarter results. We expect mid-single-digit revenue growth and modest EPS growth, given elevated expenses. So it’s a balance of good news — the OpenAI deal and the dividend — against questions about 2026 growth.
MERELLA: All right, Darrin, we’ll leave it there. Thanks for your time. Darrin Peller is with Wolfe Research.
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This BNN Bloomberg summary and transcript of the Oct. 28, 2025 interview with Darrin Peller are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.
