News of an upcoming coronavirus vaccine has caused a precipitous sell-off of pandemic-related tech stocks, and online payment platform PayPal (NASDAQ:PYPL) is no exception. However, even if a vaccine is just around the corner and life may go "back to normal," there is no reason that demand for digital payments will decrease. On the contrary, PayPal is positioned to take off even further.

Record revenue and earnings

PayPal reported record revenue and earnings for its third quarter of 2020. Year-over-year total payment volume climbed 38%, leading to a corresponding increase of 25% in total revenue and a 42% jump in adjusted net income. Most importantly, though, is that even after strict lockdowns were eased and consumers returned to in-person shopping, PayPal still saw sequential growth. 

Total Payment Volume graph in billions of dollars

Image source: PayPal.

While some of the increase is likely due to the appeal of contactless shopping, thereby increasing consumer reliance on digital payment processors like PayPal, more and more people are shifting to online shopping over time anyway. 

PayPal was a forerunner of the digital payment movement, and now, rolling out new features and options for credit-worried shoppers, the company is more relevant than ever before. 

New features increase engagement

In the third quarter alone, PayPal added 15.2 million new active accounts to bring total active accounts to 361 million. Given that PayPal's business is wholly reliant on consumer engagement with its different payment units, a steady increase in activity over time spells great news for its future. 

Indeed, the company's management has been very proactive in developing a strategy to keep customers engaged within the PayPal ecosphere, given alternative digital wallet options. 

For example, the company recently rolled out a Pay in 4 feature, where consumers are offered the option to pay for purchases in four interest-free installments. The product is included in merchant pricing, eliminating additional fees, and it increases consumer willingness to buy during potentially credit-conscious moments. This helps drive PayPal customer growth and retention. 

Further catering to those worried by the pandemic, the company also announced a new contactless credit card offered by its mobile payment subsidiary Venmo. Instead of following a normal credit card process, Venmo users apply via the app, receive approval, and use a specially created QR code to pay. According to the company's market research, 57% of survey respondents stated that they would not make a purchase at a physical store if they could not pay through contactless payment options, and 34% said they preferred to use a QR code to pay. Venmo users are generally younger, and by catering to their needs, PayPal creates an environment conducive to longer-term retention and benefits.

Person paying at a coffee shop using a QR code on a mobile phone.

Image source: Getty Images.

Lastly, PayPal launched a new service that enables customers to buy, hold, and sell cryptocurrencies directly within the PayPal digital wallet. In early 2021, customers will also be able to use those cryptocurrency holdings as a funding source to pay with PayPal, eliminating the cryptocurrency risk from the merchant side and allowing consumers the freedom to pay with the currency of their choice. 

The future is now

The "How We Shop Report" from PYMNTS and PayPal indicated that 50% of its 16,000 participants originally intended to return to in-person shopping but have ultimately decided to continue shopping online, even once the pandemic is over. Given the evolution of PayPal's growth the past three quarters, it seems possible that the pandemic has accelerated the digital transformation in the payment sector, in addition to the other parts of the economy. 

PayPal is still growing at a strong rate, and the company is well-equipped to acquire and maintain more customers as shoppers around the globe turn to digital commerce and solutions. Savvy investors would be wise to take advantage of the recent coronavirus vaccine sell-off and buy this stock before its price shoots up further.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.