(Reuters) - PayPal Holdings Inc PYPL.O offered a subdued outlook on Thursday, as it faced unpredictable currency fluctuations and an increasingly competitive digital payments market.

The PayPal logo is seen during an event at Terra Gallery in San Francisco, California May 21, 2015. REUTERS/Robert Galbraith/File Photo

The payments processor predicted its first-quarter revenue would be roughly in line with analyst expectations, with flat to slightly better operating margins for the full year. PayPal gave the guidance in reporting a 17 percent rise in fourth-quarter revenue that mirrored Wall Street expectations.

Chief Financial Officer John Rainey said fourth-quarter results were hurt by currency movements, and he expected those pressures to continue throughout the year.

Paypal stock fell 2.4 percent in after hours trading to $40.49.

Chief Executive Dan Schulman said competition is heating up in mobile payments, and investing in PayPal’s own offerings has become “increasingly important” to gain an advantage over rivals.

“Payments are rapidly digitizing,” he said. “Mobile is redefining the face of retail.”

The San Jose, California-based company's earnings report came on the same day Ant Financial Services, an affiliate of Chinese e-commerce company Alibaba Group Holding Ltd BABA.N said it would acquire U.S. money-transfer company MoneyGram, in a deal that is expected to shake up the international payments landscape.

Ant, the world’s largest financial-technology company, has been expanding at home and overseas as it prepares for a planned initial public offering later this year.

Meanwhile, in the United States, PayPal is facing rivals such as Zelle, a soon-to-be-launched platform backed by a consortium of large banks. Technology firms such as Apple Inc AAPL.O and Alphabet Inc's GOOGLE.O Google are also looking to capture new customers through payments and money transfer services.

To fend off competition, PayPal has been expanding its network of strategic partnerships and launching or acquiring new services.

In January it announced an agreement with credit-card issuer Discover Financial Services DFS.N to make it easier for PayPal customers to use Discover's product. It also recently partnered with Citigroup Inc. C.N and Fidelity National Information Services (FIS), which represents thousands of financial institutions.

PayPal is also trying to improve its core offering by adding features like One Touch, which allows customers to pay with a single click. It now has more than 5 million active merchant accounts offering the tool.

PayPal has been available since the late-1990s, and for a long time was linked with e-commerce firm eBay Inc EBAY.O - giving it more brand familiarity and a much larger customer base than newcomers. But its growth is slower than startups like Venmo, which first started being used in 2009.

During the quarter, PayPal’s mobile payments rose 53 percent, to $31 billion. Payment volumes at Venmo, a mobile peer-to-peer payment platform popular with younger costumers surged 126 percent to $5.6 billion in the fourth quarter.

PayPal’s total payments volume rose 22 percent to $99 billion. Active customer accounts rose 10 percent to 197 million, beating research firm FactSet StreetAccount’s estimate of 196.5 million.

Schulman said growth in mobile payments and new customer accounts helped boost fourth-quarter revenue to $3 billion, up 17 percent compared with a year earlier, the same as what analysts polled by Thomson Reuters I/B/E/S had expected.

The company expects first-quarter revenue to land in a range of $2.9 billion to $2.95 billion. Analysts were expecting $2.95 billion, on average.

Net income rose to $390 million, or 32 cents per share, from $367 million, or 30 cents per share, a year earlier. On an adjusted basis, the company earned 42 cents per share.

PayPal operates in many geographic markets around the globe, with half of its revenue coming from overseas. It tries to hedge against currency-related losses using financial instruments.

But in the fourth-quarter, declines in the euro and Australian dollar hurt PayPal’s results, Rainey said. The company expects more pain this year as it adjusts its currency positions, especially in the first half, he added.

PayPal is on its second stint as a public company after separating from eBay in 2015.