PayPal officially enters e-commerce space, becoming ChatGPT's first payment wallet

Author: Zhang Yaqi, Wall Street Insights

PayPal has entered a landmark partnership with OpenAI to integrate its digital wallet into ChatGPT, marking the payment giant's official entry into the AI-driven e-commerce arena.

According to a joint statement from both parties, starting next year, ChatGPT—used by hundreds of millions—will for the first time embed a full-featured payment wallet. When users search for and discover products via this leading generative AI tool, PayPal will provide the underlying payment technology to turn their search intent directly into purchases.

The news significantly boosted investor confidence, sending PayPal’s stock surging as much as 14% in pre-market trading, reversing nearly an 18% decline it had seen year-to-date.

If sustained, this would be the largest intraday gain recorded since the stock began trading in July 2015.

This collaboration marks a key step for OpenAI's expansion into e-commerce. Previously, the AI giant announced partnerships with Shopify, Etsy, and Walmart, enabling users to discover products on these platforms through ChatGPT. In addition to becoming the first payments partner, PayPal will also leverage OpenAI’s enterprise-grade AI offerings to accelerate its internal product development cycles.

Emphasizing Security and Convenience to Build a Two-Way Trust Network

Under the agreement, PayPal will do more than just provide a payment button. The company will deploy the Agentic Commerce Protocol (ACP) to deliver comprehensive backend infrastructure support for transactions within ChatGPT. This means PayPal will handle merchant routing, payment verification, and global transaction coordination, without requiring merchants to integrate separately with OpenAI.

PayPal CEO Alex Chriss emphasized that the company’s strength lies in its vast network of verified users and merchants. He stated:

"This isn’t just about making transactions happen. It’s about combining the world’s largest network of trusted merchants, verified by PayPal, with the world’s largest network of verified consumer wallets."

When shopping within ChatGPT, users can pay using bank accounts, credit cards, or balances linked to their PayPal wallet. They will also benefit from post-purchase services such as buyer and seller protection, package tracking, and dispute resolution, ensuring secure and reliable transactions.

In addition, as part of the collaboration, PayPal will more broadly adopt OpenAI’s technology internally. The company will roll out the enterprise version of ChatGPT to its 24,000 employees and integrate the Codex tool for engineers to accelerate product development and improve customer experience.

AI Ushers in a New Shopping Paradigm, PayPal Seizes the Payment Gateway

The partnership is seen as launching a new shopping model driven by agentic AI. In this model, AI acts similarly to a human personal shopping assistant. According to the official announcement, hundreds of millions of ChatGPT’s over 700 million weekly users are already using the tool to find products.

Starting in 2026, PayPal will bring product information from millions of small and medium-sized businesses and global brands on its platform—covering categories such as apparel, beauty, and electronics—into ChatGPT, allowing users to complete discovery and purchase seamlessly within conversations. Alex Chriss said:

"It’s hard to imagine agentic commerce not becoming a major part of the future."

For PayPal, this deal is part of a broader AI strategy. Recently, the company has announced similar collaborations with Google and another AI firm, Perplexity, aiming to position itself advantageously as AI reshapes the commercial landscape.

Strong Earnings Combined with AI Tailwinds Reverse Year-to-Date Slump

Alongside the major positive news of its OpenAI partnership, PayPal also released strong third-quarter results and an optimistic full-year outlook, providing solid fundamental support for the stock surge.

The earnings report showed PayPal raised its full-year adjusted EPS guidance to $5.35–$5.39, above prior expectations and market estimates of $5.25. The company achieved net revenue of $8.42 billion in Q3, with adjusted EPS of $1.34 and adjusted free cash flow of $2.3 billion, all exceeding market expectations.

However, the report also revealed growth challenges. Payment transaction volume declined 4.5% year-on-year to 6.33 billion in Q3, falling short of expectations. Active user accounts grew only 1.4% year-on-year to 440 million, reflecting a slowdown in growth. Against this backdrop, the OpenAI partnership is seen as a critical strategic move for PayPal to break through growth bottlenecks and inject new vitality into its core payments business.