PayPal is cutting about 4,500 jobs, roughly 20% of its workforce, as part of a $1.5 billion cost-reduction plan that new chief executive Enrique Lores unveiled on his first earnings call. The company is pitching the move as an AI-led restructuring rather than a routine round of cost cuts.
Lores told investors PayPal will run what he described as an "AI turnaround" over the next two to three years, with the savings funding a shift in how the payments company builds and runs its platform. The framing is striking for a business that helped define online checkout in the early 2000s.
On the podcast, Jaeden Schafer flagged the symbolism of the language coming from PayPal's own chief executive. He said PayPal's leadership is signaling that the company "needs to become a quote, a technology company again, which is kind of brutal when you talk about a company that, you know, literally invented modern online payments."
Key facts
- 01PayPal unveiled a $1.5 billion cost-cutting plan that includes laying off roughly 4,500 employees, about 20% of its workforce.
- 02New chief executive Enrique Lores announced the cuts on his first earnings call and framed them as a two-to-three-year 'AI turnaround.'
- 03PayPal is forming a new AI transformation and simplification team to move its platform to cloud native and embed AI in developer workflows.
- 04The cuts come as Snap, Meta, Microsoft and Amazon also tie large workforce reductions to AI automation.
PayPal has been losing momentum to faster-moving rivals, particularly Stripe, which has built deep traction with developers and is preparing for an IPO. Schafer, who said he still uses PayPal across several online businesses, argued the incumbent had "gotten, I don't know, kind of lazy and slow compared to other more hungry competitors," leaving room for Stripe and others to take share in the developer-facing parts of the market PayPal once owned.
“PayPal needs to become a quote, a technology company again, which is kind of brutal when you talk about a company that, you know, literally invented modern online payments.”— Jaeden Schafer
According to reporting from Bloomberg's Madeline Speed cited on the show, the restructuring is more than a headcount exercise. PayPal is planning to spin up a new AI transformation and simplification team that will move the platform to cloud native and aggressively adopt AI inside its developer workflow. That points to a re-architecting of internal engineering rather than only customer-facing product changes.
The scale of the cut, one in five employees, is unusually deep for a profitable, publicly traded payments company, and it lands at a moment when investors are pressing fintechs on margins as well as growth. Lores is essentially betting that AI tooling can let a smaller engineering and operations base ship faster than the current organisation, while paying for the transition with the $1.5 billion in savings.
PayPal is not moving in isolation. Schafer noted that Snap, Meta, Microsoft and Amazon have all announced similar AI-linked layoffs in recent months, turning 2025 into a stress test for the technology's productivity claims. "AI is really getting put to the test right now to see if it can actually push automate and grow companies," Schafer said, summarising the wider corporate experiment now underway.
For PayPal, the stakes are sharper than for the megacap peers running parallel cuts. The company has to prove it can rebuild developer credibility against Stripe, hold its merchant base through a multi-year platform migration, and convert the headcount reduction into faster product velocity rather than just lower operating expenses. The next several earnings calls will show whether Lores's AI turnaround is a genuine technology reset or an expensive cost cut wearing AI branding.
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