PayPal shares surge 14% after becoming ‘first payment wallet' in ChatGPT

PayPal has made one of the most significant strategic decisions in its history, a landmark partnership with OpenAI to integrate its digital wallet into ChatGPT to become the base payments provider of the next wave of AI-based agentic commerce.

The news that caused PayPal stock to skyrocket up to 14% in premarket trading is the indication that one of the largest financial services platform integrations into a general AI tool has been made.

The collaboration, which became a reality over the weekend, will enable the hundreds of millions of PayPal users on both ends of its ecosystem to conduct transactions within the ChatGPT interface within the next year. 

Consumers can use their PayPal wallets to check out safely, and merchants registered in PayPal's global network will have their inventory displayed and sold on the AI itself.

The PayPal CEO Alex Chriss described this as a new paradigm in shopping in an exclusive interview with CNBC. 

"We’ve got hundreds of millions of loyal PayPal wallet holders who now will be able to click the ‘Buy with PayPal button’ on ChatGPT and have a safe and secure checkout experience," Chriss stated. 

The acquisition turns PayPal into an initial foundation to the ambitious expansion of OpenAI into e-commerce. 

The 700 million plus weekly users of ChatGPT are envisioned to use the AI as their own personal shopping assistant that can not just find them a product but also do the rest of the transaction in the chat.

The combination will take advantage of the OpenAI capability of checkout instantly and its recently developed Agentic Commerce Protocol (ACP).

For merchants, PayPal will take care of the complicated backend infrastructure, such as payment authorization, delivery, and redirecting, and merchants do not need to implement any further integration.

Security is one of the advantages that Chriss has highlighted, and both consumers and merchants are authenticated by PayPal, which reduces the chances of fraud. 

Customers will be fully guaranteed on transactions, such as package tracking and dispute resolution.

The alliance was one of three announcements of PayPal that strengthened the trust of investors. 

The company also increased its full-year profit outlook as well as reannounced its initial quarterly dividend of 14 cents per share, a historical advancement in the 27-year history of the company.

It is the most recent and high-profile acquisition by PayPal to establish its place in the new sphere of agentic commerce, following recent alliances with Google and AI search company Perplexity. 

With PayPal being the major payments partner to the largest AI platform in the world, the company believes that the future of online shopping will be conversational, AI-oriented and based on its own trusted wallet.