The payments giant announced that it had closed 4.5 million “bad actor” accounts that had taken advantage of PayPal rewards programs. In addition, its payments volume only rose 23% in Q4, the smallest increase in two years.

Why should we care?
PayPal tripped over itself by emphasizing growth over quality. Bold targets may have represented an alluring prospect to investors, driving them to overvalue PayPal’s promise and then react more severely once less dazzling results emerged. Before it uncovered an elaborate network of bot farms scamming its platform for referral and reward bonuses, PayPal openly strategized reaching 750 million active accounts by 2025, dedicating extensive resources to expansion. It’s now scrapped that plan, though it’s uncertain whether impressive growth can be found through other initiatives. In the face of increasingly adverse conditions for many consumers, PayPal’s existing customer base has relied on the giant for fewer and smaller payments. The company now sees little value in pumping resources into courting users with similarly shallow pockets. “Spending money on lower-value net new actives that are not engaged in the base becomes an increasingly expensive proposition over time and does nothing for our revenue growth,” said PayPal CEO Dan Schulman. “There is probably going to be about 20 million incremental one-and-done customers that roll off. That is nothing to our revenue.” Continued supply-chain issues in addition to reopened economies have further placed PayPal in competition with brick-and-mortar retail—a continued reminder that fintech players have to contend with the existence and success of more traditional financial networks.