PYPL · Forward model · Revenues from other value added services · Lores case
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Revenues from other value added services
The other ten per cent, and the part that is not a payments business: partnership and referral fees, subscription and gateway fees, interest and fees on the loan book, and interest earned on the assets underlying customer balances. That last component alone was $281M of the $850M basis quarter and carries essentially no volume cost, which is why PayPal now reports transaction margin dollars both with and without it. It has turned from tailwind to headwind - the line grew 15-17% year over year through 2025 and grew 0.4% in the basis quarter, entirely because interest on balances fell from $318M to $281M while the rest grew about 8%. No operational unit exists to drive it, so it runs on a sequential growth rate.
Latest: $1.03B (2031Q2E)
| Period | Value |
|---|---|
| 2021Q2 | $441M |
| 2021Q3 | $575M |
| 2021Q4 | $541M |
| 2022Q1 | $485M |
| 2022Q2 | $534M |
| 2022Q3 | $612M |
| 2022Q4 | $681M |
| 2023Q1 | $676M |
| 2023Q2 | $731M |
| 2023Q3 | $764M |
| 2023Q4 | $743M |
| 2024Q1 | $665M |
| 2024Q2 | $732M |
| 2024Q3 | $780M |
| 2024Q4 | $778M |
| 2025Q1 | $775M |
| 2025Q2 | $847M |
| 2025Q3 | $895M |
| 2025Q4 | $857M |
| 2026Q1 | $852M |
| 2026Q2 | $850M |
| 2026Q3E | $857M |
| 2026Q4E | $864M |
| 2027Q1E | $871M |
| 2027Q2E | $879M |
| 2027Q3E | $887M |
| 2027Q4E | $895M |
| 2028Q1E | $903M |
| 2028Q2E | $911M |
| 2028Q3E | $920M |
| 2028Q4E | $929M |
| 2029Q1E | $938M |
| 2029Q2E | $948M |
| 2029Q3E | $957M |
| 2029Q4E | $967M |
| 2030Q1E | $977M |
| 2030Q2E | $987M |
| 2030Q3E | $998M |
| 2030Q4E | $1.01B |
| 2031Q1E | $1.02B |
| 2031Q2E | $1.03B |
Assumptions & reasoning
- This line is left ASEASONAL on evidence, not for want of looking. The same centred-moving-average method run over the same 21 quarters gives factors whose within-quarter spread reaches 0.073 against a largest mean deviation of 0.061, and the two windows disagree by 0.015 in Q4 - ten times the disagreement on the transaction line. A shape fitted across a period when the interest component swung from tailwind to headwind is fitting a rate cycle and calling it a season.
- Interest on customer balances was $281M of the $850M basis quarter, derived as transaction margin dollars $3,900M less the $3,619M reported ex-interest. It is a rates position with no operational driver in PayPal's disclosure, so it is left inside this line's growth rate rather than modelled as a separate rate path.
- The 91.3% margin is $850M less the $74M credit loss the deck reports separately, and is ASSUMED. Interest on balances carries no volume cost at all, which is what puts the margin this high; the terminal 88% assumes credit and BNPL grow faster than the fee lines and pull allocated credit loss up.
- $589M of basis-quarter revenue sits outside ASC 606 - interest and fees on loans, hedging gains and losses, and interest and gains on assets underlying customer balances - and most of it is in this line. PayPal also originated $12.5B of loans receivable held for sale in the quarter and sells them on, which is what adjusted free cash flow exists to strip out.