Users of PayPal's Venmo payments app will be able to make purchases from Amazon.com starting next year on the e-commerce giant's website and mobile app, according to PayPal.
The partnership, announced Monday during PayPal's quarterly earnings report, is a high-profile win for Venmo in the increasingly competitive payments market.
Speaking to Wall Street analysts on an earnings conference call, PayPal Chief Executive Dan Schulman argued that the Amazon alliance will have both short- and long-term benefits for PayPal. Details about the alliance such as when it will start are still being worked out by Amazon and PayPal, according to PayPal.
"We couldn't be more pleased to be able to team with Amazon," Schulman said, noting Amazon's significant U.S. market. The new tie "increases the addressable market for Pay with Venmo. And Pay with Venmo is one of the key revenue drivers for Venmo going forward," Schulman said. "I think about the journey that Venmo has been on — this obviously is a punctuation point for sure."
EBay acquired PayPal at the dawn of the internet era in 2002. The two parted ways in 2015, splitting into two separate companies though they honored an existing agreement that PayPal would continue to be eBay's primary payments processor. Three years later, PayPal and eBay announced that they would not renew their agreement, which has expired.
The agreement with eBay had been holding PayPal's growth potential back, Schulman said during the call.
"This is obviously a very significant moment in our Venmo monetization efforts and marks the beginning of an exciting journey with Amazon, now that we are no longer constrained by the contractual obligations of the eBay operating agreement," he said.
PayPal has also scored some other high-profile wins. Retailer Walmart, for example, now offers PayPal for both its grocery and marketplace. Fundraising site GoFundMe also accepts PayPal. Oil companies Valero and Phillips 66 added PayPal's QR codes to thousands of gas stations.
He also noted that PayPal's buy now, pay later service has been adopted in the U.S., Germany, France, U.K. and Australia. The company will expand buy now, pay later to Italy and Spain in the fourth quarter.
In its third quarter report, PayPal said net income rose to $1.09 billion for the three months ended Sept. 30, from $1.02 billion a year earlier. Revenue rose over 13% to $6.18 billion. Still, the company's stock tumbled after PayPal issued a fourth quarter guidance that fell well short of analysts' forecast.
Schulman also addressed media reports that claimed that PayPal was interested in buying Pinterest.
"The truth is we review hundreds of potential acquisitions every single year and we put every single one of them through a very strict set of strategic financial integration filters," he said. "We've never done a large acquisition so far," Schulman said on the call. "There are very few that we look at, but we look at a couple every year, and they have a much higher hurdle rate than our smaller acquisitions."