PayPal’s new artificial intelligence-driven features and new one-click checkout option fell flat this week, at least in the eyes of Wall Street. It is one of the first major tests for new President and CEO Alex Chriss, who joined the company last September.
The new products are an attempt to latch onto the hot trend of AI, both from a user and investor perspective.
One of the key features is a platform that would use AI to enable merchants to reach new customers based on their previous shopping history. PayPal would be able to leverage that data from the approximately half a trillion dollars’ worth of global merchant transactions it processes. Another AI-based tool, Smart Receipts, allows retailers to recommend personalized items to shoppers through email receipts.
PayPal also announced a one-click checkout feature called Fastlane, which can purportedly accelerate checkout speeds by nearly 40%. “Customers simply save their information with Fastlane to check out in as little as one tap,” PayPal announced in a press release. “No username or password to remember, no personal information to update, and no need to share a credit card with businesses all over the web.”
“The data that we have and our ability to actually see what people have bought and know what merchants are trying to target, that’s where I think AI is the huge opportunity for us,” Chriss told Reuters in an interview.
Watching with a Sense of Caution
While it’s too early to see the effect of the PayPal announcement in the marketplace, observers are yet to be impressed.
“PayPal’s new AI-based features have the potential to offer consumers better personalized recommendations at key touchpoints like receipts and its app,” said Daniel Keyes, Senior Analyst of Merchant Services at Javelin Strategy & Research. “But this effort’s success will come down to if these products can meaningfully increase sales for its merchants, which remains to be seen.”
So far, the early returns from investors are not good either. Wall Street reacted negatively to Chriss’ announcement, sending PayPal’s stock down by 3.67%.
PayPal has struggled to find its footing recently. The company’s stock was down by about 14% in 2023. It has also faced competition from Stripe, a rival payment processor, which has filed paperwork toward an IPO and has been bolstering its relationship with Amazon.
PayPal brought on Chriss with the intention of trying to solidify its relationships with key players in the technology and financial services sectors. In October, PayPal announced it was letting customers add their PayPal or Venmo credit and debit cards to Apple Wallet.