Is PayPal Stock Halal?

PayPal's core business is payment processing: checkout on merchant websites, the PayPal and Venmo peer-to-peer apps, Braintree's payment infrastructure for larger merchants, and PayPal's Zettle point-of-sale hardware. This transaction revenue, $29.8 billion of PayPal's $33.17 billion in FY2025 net revenue, is a fee charged for moving money and guaranteeing payment, structurally similar to Visa's or Mastercard's network fees, and is uncontroversial from a Shariah perspective. The remaining revenue sits in a segment PayPal calls "Other Value Added Services," which includes subscription and licensing fees, referral fees from partnerships, and, more relevant here, interest and fee income tied to PayPal's own credit products. This is where PayPal's compliance picture gets more complicated than a typical payments company.

Zoya's published screen for PayPal counts $517 million of interest income against $33.17 billion in FY2025 revenue, or 1.56%, comfortably under the 5% AAOIFI threshold. PayPal's own 10-K, however, points to a larger interest-and-credit footprint than that narrow figure suggests: the company discloses that $2.1 billion of FY2025 net revenue, roughly 6.3% of the total, fell outside revenue from contracts with customers, a bucket consisting of interest and fees earned on its loans receivable portfolio, interest earned on assets underlying customer balances, and hedging results. Not all of that is riba in the strict sense (PayPal's merchant working-capital products charge fixed fees rather than interest, several of its consumer installment products are interest-free, and hedging results are not interest at all), but the honest reading is that PayPal's interest-linked revenue sits somewhere between the narrow 1.56% figure and the broader 6.3% one, straddling the 5% AAOIFI line depending on how each component is classified. That ambiguity, before even reaching the PayPal Credit question below, is itself a reason for caution.

The complication is PayPal Credit, a revolving line of credit offered at checkout that charges interest on unpaid balances, and the PayPal and Venmo co-branded credit cards. PayPal does not issue this credit directly in the United States (an independent chartered financial institution does, though PayPal itself is the lender for its U.K. PayPal Credit product), but PayPal earns a contractual revenue share tied to that U.S. lending relationship, recorded within Other Value Added Services revenue alongside the interest figures above. That revenue share is compensation derived from an interest-bearing consumer lending product, a different and arguably more direct concern than simply earning interest on a treasury account. This is the likely reason Musaffa's business-activity screen rates PayPal non-compliant even though the pure interest-income ratio is small, while Zoya, applying a narrower interest-only calculation, lands on "questionable." Separately, PayPal's "Pay in 4" buy-now-pay-later product charges no interest to consumers and does not raise the same concern; the issue is specific to PayPal Credit and the bank revenue-share arrangement, not PayPal's BNPL offering generally.

PayPal sits in genuinely disputed territory between two reasonable screening approaches. Investors who screen strictly on the AAOIFI 5% revenue threshold and treat PayPal Credit's revenue share as immaterial (roughly a few hundred million dollars against $33 billion in revenue) may reasonably treat PayPal as compliant with a modest purification obligation. Investors who follow Musaffa's stricter reading, which counts facilitation of and profit-sharing from interest-based consumer credit as a disqualifying business activity regardless of its size relative to total revenue, should treat PayPal as non-compliant and avoid the stock. PureInvest's default classification is "Questionable," reflecting that this is a real disagreement between two AAOIFI-based screeners rather than a case where one side is simply wrong. Investors should consult a qualified Shariah advisor before holding PYPL and should watch whether PayPal's credit and lending revenue share grows as a proportion of Other Value Added Services in future filings.