(Reuters) - Shares of U.S. payments processor PayPal Holdings Inc (PYPL.O) rose 10 percent on Friday, a day after the company reported better-than-expected profit as it added new customers and processed a huge amount of payments.
Results were charged by the success of Venmo, its peer-to-peer payment app popular with younger consumers, which processed $17 billion of payments in the third quarter, up 78 percent from last year.
Analysts lauded Venmo, calling it a “meaningful growth driver” especially since PayPal has only recently begun cashing in on the app. Credit Suisse said Venmo had implications beyond its basic payments-transfer and point-of-sales services.
“We believe the Venmo opportunity is much grander than simply increasing point-of-sale acceptance, and includes wide ranging e-commerce opportunities,” Paul Condra, an analyst with Credit Suisse said.
Shares of PayPal rose to $85.35 in early trade and notched their biggest percentage gain in more than two years.
Investors were also encouraged by a spate of deals PayPal struck recently. On Thursday it announced a partnership with credit card giant American Express Co (AXP.N), which gives PayPal users the ability to transfer and use AmEx rewards points at its terminals.
Earlier in October, PayPal inked a deal with Walmart Inc (WMT.N) to allow users to withdraw cash from their PayPal accounts at every Walmart location for a fee.
The partnership came days after a news report said that PayPal had tied up with oil giant Chevron Corp CV.N to allow drivers to pay their bills via a mobile app.
The partnerships are “examples of the many ways in which merchants can benefit from the emerging ‘PayPal-as-a-Service’ platform,” said Credit Suisse’s Condra.
Investors have generally been upbeat about the global payments processing industry, especially as more traditional banks open their doors to financial-technology companies as they look for innovative solutions to connect with their customers.
Companies like Square Inc (SQ.N) and PayPal have also found a strong foothold in the e-commerce industry, where they peddle their payments platforms to small and large-scale businesses by offering competitive pricing and loyalty rewards.
Square’s shares have risen 116 percent year-to-date as of Thursday’s close, while PayPal gained 5.2 percent over the same period.
Reporting By Aparajita Saxena in Bengaluru; Editing by Bernard Orr