The Total Economic Impact™ Of PayPal Checkout

Increased Cart Conversion With PayPal Checkout And Fastlane

Evidence and data. By reducing checkout friction, aligning with customer payment preferences, and improving recognizability at the point of purchase, interviewees noted that PayPal Checkout increased conversion. They also said PayPal helped ensure that customers with intent to buy were less likely to abandon transactions due to payment-related barriers.

• The senior vice president of technology in retail and e-commerce observed that checkout abandonment decreased 6 percentage points after their organization expanded its use of PayPal Checkout payment options. PayPal simplified the checkout experience for domestic and international customers by offering a familiar, trusted payment flow that reduced friction at the final step of purchase. The interviewee further emphasized that improved checkout experiences translated into preserved and incremental revenue, saying, “The reduced abandonment rate has driven extra revenue because it’s removed friction.”

• The vice president of technology in cosmetics retail and e-commerce also associated PayPal Checkout with a measurable reduction in cart abandonment following adoption: “Our cart abandonment rate has definitely reduced with PayPal Checkout. There’s been about a 4-percentage-point drop.” By streamlining the checkout experience and keeping customers within a single, cohesive flow, PayPal Checkout helped ensure that more transactions reached completion.

Interviewees also reported higher conversion rates when deploying Fastlane for guest checkout. By reducing checkout friction, such as manual data entry, repeated form completion, and payment errors, Fastlane enabled more customers who had already expressed purchase intent to complete transactions successfully.

• The vice president of finance and accounting in furniture retail and e-commerce explained that guest checkout conversion rates were materially higher for transactions accelerated by Fastlane compared with traditional guest checkout flows. While overall guest checkout conversion averaged in the mid-50% range, Fastlane-assisted guest checkouts converted at close to 70%, with performance improving further over time to 74%.

• The CIO/CTO in technology retail and e-commerce noted that Fastlane’s impact on conversion varied by customer persona, with the strongest gains observed among returning customers who had previously used Fastlane. The organization analyzed performance across multiple customer segments and found they all had conversion improvements. The largest uplift occurred among returning customers who were already recognized by Fastlane, although conversion also improved for first-time or unrecognized customers: “For returning [customers] who used Fastlane, we saw a double-digit increase of over 20 percentage points. … [For first-time customers], we saw an improvement of 8 to 10 percentage points.”

• The CEO/COO in home goods e-commerce reported that baseline checkout conversion increased substantially when customers used Fastlane. They said: “Our average general checkout conversion runs 60% to 65%. The accelerated checkouts, those for which a person went through with Fastlane, end up in the 82% range.”

Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:

• The composite has a cart opportunity of $2 billion with a baseline cart conversion rate of 30%.

• Fifteen percent of transactions use PayPal Checkout.

• With PayPal Checkout, including Fastlane, the conversion rate for the portion of PayPal Checkout transactions increases. The weighted conversion rate across PayPal transactions, including with Fastlane for a portion of guest checkout, is 45% (a 150% increase).

• The operating profit margin is 10%.

Risks. The impact of this benefit will vary among organizations based on the following factors:

• Baseline checkout performance before PayPal Checkout.

• The mix of payment methods and customer preferences.

• Geographic and market variability.

• Customer trust and brand familiarity effects.

• Availability of Fastlane to customers who use PayPal.

• Percentage of returning Fastlane customers who are likely to use Fastlane again.

Results. To account for these risks, Forrester adjusted this benefit downward by 20%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $9.0 million.

Increased Customer Retention Rate

Evidence and data. Interviewees said that PayPal Checkout contributed to increased customer retention by improving payment reliability, reinforcing customer trust, and reducing repeat purchase and recurring transaction friction. The impact was most pronounced in business models where renewal authorization and trust at checkout directly influenced whether customers continued their relationship with an organization, as discussed by the senior director of global payments and fraud in the software industry.

• The senior director of global payments and fraud in software also noted a 25% higher retention rate with PayPal compared to card due to higher subscription approval rates, which increased customer lifetime value.

• The senior vice president of technology in retail and e-commerce said, “We’ve seen a repeated use of PayPal with the integrated PayPal Checkout experience compared to previously.”

• The vice president of technology in cosmetics retail and e-commerce described improved customer experience for returns and refunds with PayPal Checkout, which contributed to higher satisfaction scores and influenced loyalty over time. They also said that customers who completed their transactions online and picked up in-store were more likely to purchase again while in-store.

Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:

• The composite organization’s customer retention rate before PayPal Checkout is 65%.

• The composite organization experiences an uplift of 20% in customer retention with PayPal Checkout.

• The operating profit margin is 10%.

Risks. The impact of this benefit will vary among organizations based on the following factors:

• Business model dependence on recurring payments.

• Existing customer loyalty and brand strength.

Results. To account for these risks, Forrester adjusted this benefit downward by 15%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $7.3 million.

Incremental Revenue From Expanded International PayPal Checkout Adoption

Evidence and data. Interviewees noted PayPal Checkout helped preserve international revenue that would otherwise have been at risk due to misalignment with local payment preferences, limited trust in card‑only checkout, and higher abandonment among cross‑border shoppers.

• The senior vice president of technology in retail and e-commerce observed that after expanding PayPal Checkout capabilities, the mix of PayPal transactions shifted meaningfully toward international customers without cannibalizing domestic revenue, indicating preserved and expanded cross‑border participation: “Previously, it was very US‑centric. Probably 96% to 97% of customers were in the US, with 4% to 5% non‑US. We’ve seen that mix now become 12% non‑US.” This shift reflected the role of PayPal Checkout in removing friction for international shoppers, enabling the interviewee’s organization to retain revenue from customers outside the US who may otherwise have abandoned checkout due to limited payment options or distrust in card entry. PayPal Checkout functioned to preserve the revenue mechanism, ensuring the interviewee’s organization did not lose international customers simply by failing to meet expected payment norms.

• The payment omnichannel manager in apparel retail and e-commerce noted that PayPal Checkout was required to avoid losing international customers, particularly across Europe, where wallet‑based payments are deeply embedded in consumer behavior. The interviewee also highlighted the extreme variability in payment behavior across countries, reinforcing that a globally trusted wallet was essential to sustaining international sales: “If you look at Germany, the customers will use the Pay Later option. [Approximately] 80% to 90% of our business is done with PayPal or other installment plan providers. If you look at Spain, it’s around 10% to 15%.” In this environment, relying on card‑only checkout or inconsistent local solutions would have exposed the interviewee’s organization to country‑specific revenue leakage. PayPal’s broad acceptance allowed the organization to preserve revenue across markets without redesigning checkout flows by country.

• PayPal Checkout served as a mechanism for maintaining conversion outside domestic markets by retaining international customers who expect PayPal as a payment option and prefer installment options, maintaining conversion in markets with strong adoption, and protecting international order value relative to card‑only checkout. The vice president of technology at a US-based cosmetics retail and e-commerce organization discussed reentering the UK market, where PayPal was treated as a table‑stakes requirement: “We went straight back in [to reopen in the UK] with PayPal. We couldn’t really open in the UK without PayPal.” Approximately half of the US-headquartered retailer’s sales are generated outside of the US.

Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:

• Twenty-five percent of the composite organization’s baseline PayPal revenue is domestic and 75% is international.

• As the composite organization expands its deployment of PayPal Checkout to international markets, the share of nondomestic revenue reaches 30% by Year 1, 40% by Year 2, and 50% by Year 3. The domestic revenue is not cannibalized.

• The operating profit margin is 10%.

Risks. The impact of this benefit will vary among organizations based on the following factors:

• An organization’s international customer mix.

• Operations in markets where customers expect PayPal as a payment option.

• Variability of payment behavior by country.

• Sensitivity of conversion to checkout friction in cross‑border flows.

• Exposure to higher‑value international purchases.

• Brand trust dependency for cross‑border shoppers.

Results. To account for these risks, Forrester adjusted this benefit downward by 20%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $4.7 million.

AOV Lift With PayPal Checkout And Pay Later

Evidence and data. Interviewees described higher AOVs when customers completed purchases using PayPal Checkout compared with traditional card‑only checkout or fragmented experiences. The primary driver of this lift was the support of PayPal Checkout for wallet‑based payments and Pay Later installment options, which reduced purchase hesitation and enabled customers, particularly those outside the US, to complete higher‑value transactions.

• The payment omnichannel manager in apparel retail and e-commerce noted a clear and consistent increase in AOV when customers paid with PayPal Checkout compared with credit cards, particularly in international markets where installment payments are common. The interviewee explained: “When you use PayPal, you can pay with installments, so the customer can buy more product or they can buy a more expensive product. For the credit card, the AOV is €130. And with PayPal, it’s €150, €160, €180. With PayPal, I can see that the value is higher than 20 percentage points.”

• The vice president of technology in cosmetics retail and e-commerce also noted an increase in AOV for PayPal transactions after migrating to the newer PayPal Checkout experience. They said: “Our average order for PayPal then was around $62. Today, it is around $68.”

• The senior vice president of technology at a retail and e-commerce organization noted that although several factors influenced their AOV (such as higher product prices), it still increased slightly after enabling PayPal Checkout, from $51.20 to $51.25.

Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:

• The composite organization’s baseline AOV is $150. Thirty percent of its addressable transactions are installment payments made with Pay Later. The AOV uplift for Pay Later transactions is 15%.

• The composite experiences an AOV uplift of 5% for the remaining transactions.

• The operating profit margin is 10%.

Risks. The impact of this benefit will vary among organizations based on the following factors:

• The organization’s product mix and business model.

• The market reliance on installment payments to drive basket expansion.

• Geographic variability in payment behavior.

• Baseline order value and pricing dynamics.

• Fluctuations in price over time.

Results. To account for these risks, Forrester adjusted this benefit downward by 20%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $3.9 million.

Incremental Revenue From Increased Venmo Adoption

Evidence and data. Interviewees reported that PayPal Checkout with Venmo helped preserve access to younger, mobile‑first customer segments that increasingly prefer peer‑to‑peer wallets over traditional card entry. Interviewees described Venmo as protecting reach among demographics that may otherwise abandon checkout when their preferred payment method is unavailable.

• By enabling Venmo through PayPal Checkout, the senior vice president of technology in retail and e-commerce reported removing prior friction and preserving participation from a younger demographic. Following implementation, their organization observed adoption growth of Venmo.

• The vice president of technology in cosmetics retail and e-commerce stated, “About 25% of our PayPal customers are Venmo customers.”

Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:

• The composite’s online retail revenue is $600 million.

• With PayPal Checkout, the percentage of revenue from Venmo users increases from 5% to 11%.

• The operating profit margin is 10%.

Risks. The impact of this benefit will vary among organizations based on the following factors:

• The age mix of an organization’s customers.

• Prior Venmo support limitations before using Venmo with PayPal Checkout.

• Venmo’s share of checkout for an organization.

Results. To account for these risks, Forrester adjusted this benefit downward by 15%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $7.6 million.

Unquantified Benefits

Interviewees mentioned the following additional benefits that their organizations experienced but were not able to quantify:

• Decreased operational friction during disputes. Interviewees noted that the streamlined dispute resolution process with PayPal Checkout reduced time and complexity compared to other payment methods. The vice president of technology in cosmetics retail and e-commerce said: “Our average chargeback time with [a competitive installment payment option] was about 12 days. With PayPal, it’s around four to five days.”
  Interviewees also mentioned reduced customer service escalations due to PayPal’s dispute flow. The payment omnichannel manager in apparel e-commerce and retail said: “With [a competitor we use], the customer with a simple click can open a dispute. With PayPal, the customer needs to contact the merchant first.”
  The senior director of global payments and fraud in software mentioned: “Subscribers are reluctant to convert because they don’t want to get locked into a subscription. They trust PayPal and know that they can cancel [a subscription] with PayPal.”

• Reduced chargeback rates. Some interviewees reported fewer chargebacks and reduced postpurchase friction as a result of more efficient dispute handling with PayPal Checkout. The senior vice president of technology in retail and e-commerce observed: “With PayPal Checkout, the chargeback rate is about 0.45%. Previously, it hovered around 0.5%. With [a competitor that enables installment payments], the chargeback rate was about 0.63%.” The vice president of technology in cosmetics retail and e-commerce reported, “The chargeback rate was previously around 1.8%, and it’s now about 1.1%.”⁴

• Improved authorization rates with Fastlane. Interviewees reported that PayPal Fastlane improved authorization rates by reducing manual data entry errors and leveraging PayPal’s existing network intelligence during guest checkout. The vice president of finance and accounting in furniture retail and e-commerce observed improvements in authorization performance after enabling Fastlane, noting that while authorization rates naturally fluctuated, their organization saw a low‑ to mid‑single‑digit lift following implementation. The interviewee estimated that overall authorization performance improved by approximately 5% to 8% and further indicated that a significant portion of that improvement could be attributed to Fastlane specifically, due to its more consistent and stabilized authorization behavior compared with the pre‑Fastlane experience.
  Similarly, the CIO/CTO in technology retail and e-commerce described higher authorization rates as a direct outcome of eliminating common checkout errors, such as incorrect card numbers, expiration dates, or billing information, which frequently interrupted guest checkout flows. The interviewee emphasized that authorization improvements were inherent to Fastlane’s design, stating, “[Fastlane] is designed to avoid declined transactions caused by input errors.” The interviewee estimated that as many as one in 10 customers encountered some form of input error during traditional guest checkout, and that Fastlane effectively eliminated those errors for customers who proceeded through the accelerated flow.
  The CEO/COO in home goods e-commerce noted that Fastlane transactions carried a higher likelihood of success because the payment method is already verified within PayPal’s ecosystem. They stated, “The inherent understanding is that your authorization is going to be higher on Fastlane.”

• Simplified PCI and security posture. Beyond speed and convenience, interviewees remarked on PayPal Checkout’s security posture, particularly multi-factor authentication. The vice president of technology in cosmetics retail and e-commerce said, “There is a level of security out of the box because PayPal uses two-factor authentication, so that makes the transactions quite a lot more secure.” The interviewee also mentioned PayPal supports compliance efforts and reduces internal risk: “We don’t touch card details now. The information sits outside of our website in the PayPal transaction. From that point of view, it just makes auditing and the compliance piece a lot quicker and easier.”

Flexibility

The value of flexibility is unique to each customer. There are multiple scenarios in which a customer might implement PayPal Checkout and later realize additional uses and business opportunities, including:

• Faster enablement of payment options on a global scale. Interviewees described PayPal Checkout as easy to deploy, especially when it aligned with broader commerce platform changes, reducing the implementation burden and rendering payment expansion more repeatable. The vice president of technology in cosmetics e-commerce and retail noted, “The integration of PayPal Checkout to [a major customer relationship management platform] was almost out of the box and very quick, easy, and simple.” This interviewee also described the ease of enabling capabilities without heavy incremental effort when expanding into international markets: “We had a PayPal integration already built, so it was just something we were able to turn on. We didn’t really have to do any other work.”

Flexibility would also be quantified when evaluated as part of a specific project (described in more detail in Total Economic Impact Approach).