The COVID-19 outbreak is driving big shifts in how consumers think about payments, and that’s affecting PayPal Holdings Inc. and Square Inc. differently.
Both companies highlighted March weakness in their earnings reports, but only one of the two had an April for the record books.
PayPal Chief Executive Dan Schulman told MarketWatch that April “was probably the strongest month for PayPal” since it became a standalone public company in mid-2015. The company added 7.4 million net new active accounts in April, a monthly record. And the momentum has carried over to May thus far, as PayPal had its largest single day of transactions on May 1, topping previous Black Friday and Cyber Monday records.
For Square, the story is more complicated. The company benefited from digitally oriented services like the consumer-focused Cash App in the first quarter, but it’s taking time for Square to help transition merchants that traditionally relied on in-store sales over to online tools that can drive business during lockdowns.
Seller gross payment volume dropped 39% in April from a year earlier, though the company has seen “improving growth rates” since the middle of the month, according to Chief Financial Officer Amrita Ahuja. Weekly volume for Square’s online stores is up more than five times since the middle of March, and sellers in the retail and food verticals have been driving the greatest adoption of that service.
Square is also seeing momentum in its Cash App, which bundles peer-to-peer payments, bitcoin and equities trading, and other consumer-facing services. Like PayPal, Square encouraged people to get their stimulus checks direct deposited into the app, which helped grow direct deposit volumes by three times from March to April.