Here's What to Expect From PayPal's Transaction Revenues in Q3

As PayPal Holdings PYPL prepares to announce its Q3 2025 earnings, all eyes will be on the company’s transaction revenues, which form the backbone of PayPal’s business model. Transaction revenues come primarily from fees charged to merchants and consumers on payments processed through PayPal's platforms. These fees are based on the Total Payment Volume processed by the company.

Transaction revenues accounted for approximately 90% of its total revenues in the second quarter of 2025. In this quarter, PayPal reported transaction revenues of $7.44 billion, up 4% year over year.

Looking ahead to the third quarter of 2025, expectations are optimistic for another quarter of solid transaction revenue growth. This optimism is driven by a few key factors. Firstly, management expects an increase in transaction margin dollars between 3% and 5% in the third quarter of 2025. Secondly, PayPal is actively working to enhance its payment ecosystem and introduce new features. Lastly, the growing popularity of Venmo as a peer-to-peer platform, along with its increasing merchant transactions, continues to contribute meaningfully to transaction revenues.

The Zacks Consensus Estimate for its third quarter transaction revenues is pinned at $7.45 billion, indicating a rise from $7.07 billion in the prior-year quarter. Investors will be keen to know how much transaction revenues are reported in the third quarter, when the company announces results on Oct. 28.

PayPal’s business closely follows overall digital commerce trends. The continued rise in online shopping and mobile payments will help boost transaction volume, leading to better third-quarter results.

How Are Block & Payoneer Earning Their Transaction Revenues.

Block’s XYZ transaction revenues in Q2 2025 were $1.82 billion, up 6.1% YoY and representing 30% of its net revenues. XYZ earns most of its transaction revenue from Square by charging merchant fees for payment processing. Cash App also plays big role, earning from peer-to-peer payments, Bitcoin trading and other financial services.

Payoneer Global’s PAYO Q2 2025 total revenue was $261 million, up 9% YoY, with revenue excluding interest income growing 16% YoY. The increase in transaction volume and improved customer take rates were important for this growth. PAYO generates transaction revenue by charging fees on cross-border payments, currency conversions and fund withdrawals.

PYPL’s Price Performance, Valuation & Estimates

Shares of PayPal have declined 22.3% year to date, underperforming both the broader industry and the S&P 500 Index.

From a valuation standpoint, PayPal shares are trading cheaply, as suggested by the Value Score of A. In terms of forward 12-month P/E, PYPL stock is trading at 12.26X, which is at a significant discount to the Zacks Financial Transaction Services industry’s 21.53X.

PayPal’s estimate revisions reflect a positive trend. The Zacks Consensus Estimate for full-year 2025 EPS has been revised upward over the past week. The Zacks Consensus Estimate for 2025 EPS suggests 12.5% growth year over year.

PayPal currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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