Sep. 17 at 6:33 PM
$PYPL Interest rate increase is GOOD 👍
PayPal holds customer balances in bank deposits, time deposits and debt securities, while generally not paying interest to customers on those PayPal balances. Therefore, when short-term rates rise, the return PayPal can earn on those assets can rise while its cost on the customer balances remains essentially zero. PayPal explicitly says interest-rate movements affect the interest income it earns on these assets.
This is meaningful to the business. PayPal reported
$1.3 billion of transaction-margin dollars from interest on customer balances in 2025 (
$15.5B total TM dollars versus
$14.2B excluding customer-balance interest).
PayPal's value-added-services revenue also includes interest and fees from consumer/merchant loans and interest earned on assets backing customer balances.