PayPal’s Wallet Share Drops to 40% as Shop Pay Hits $110B Volume
PayPal’s checkout wallet share fell from 90% in 2017 to about 40% today, while Shop Pay reached $110 billion volume and Apple Pay holds 20%. Bernstein warns competitive pressure, guest checkout down from 44% to 16% and slower growth will weaken PayPal’s pricing power and checkout gross profit.
1. Declining Market Share
PayPal’s share in digital wallet checkouts plummeted to 40% today from 90% in 2017 and 50% in 2023. Its U.S. branded volumes have risen at only a low-to-mid single-digit pace since 2023, excluding Pay with Venmo.
2. Competitive Landscape
Apple Pay holds about 20% of digital wallets, while Shop Pay expanded to a high-teens share with $110 billion in volume for 2025 and a 30% annual growth rate. Buy now, pay later providers like Affirm and Klarna have also captured market share.
3. Financial Implications and Outlook
Digital wallets are growing at roughly twice the e-commerce rate, and guest checkouts have shrunk from 44% to 16%, pressuring PayPal’s pricing power and branded checkout gross profit. The stock’s valuation already reflects these structural challenges, potentially opening paths for asset spin-offs or activist involvement.