People who “beat” PayPal and want to buy it
A deal that could change the landscape of the global payments industry is quietly brewing.
On February 24, Bloomberg broke the news: private payments giant headed by the Collison Brothersstripe, is considering the acquisition of an established payment pioneerPayPalAll or part of the business. On the day the news broke, PayPal's stock price surged nearly 7% in response.
One is a private unicorn valued at $159 billion, and the other is the former king with a market capitalization of only 43 billion US dollars but a huge user network. Behind this deal, there is not only a decline in market share, but also a deep game about future payment patterns — especially crypto/stablecoin payments.
PayPal's woes and undercards
To understand why this potential deal caused so much shock, let's first look at two sets of numbers.
Over the past 12 months, PayPal's stock price has dropped by nearly 46%, and the market value hovered around 40 billion US dollars. Yet Stripe, which is yet to go public, pushed itself to a valuation of $159 billion in a recent employee share buyback — less than one-third of the latter.
What is behind this inversion is that the PayPal business is being squeezed in multiple dimensions.
The competitive landscape has already been turned upside down. Apple Pay and Google Pay have relied on mobile phone systems to lock down C-side entrances, while new forces such as Adyen and Stripe continue to encroach on B-side technical flexibility. PayPal, which once started as a “third party guarantee,” is gradually losing the scarcity of connectors in today's increasingly diversified payment portals.
User habits are also quietly evolving. After the explosion of social payments and embedded finance, people preferred to complete transactions as soon as they made a purchase rather than redirecting to heavy third-party pages. Whether it's Stripe's one-click payment or Apple Pay's biometrics, it seems to work better than the blue icon interface that requires remembering passwords. Although PayPal has Venmo as a social trump card, it has been faltering in the process of turning it into a business engine.
The most fundamental pain point is the loss of market confidence in its growth. In the old world of fiat payments, PayPal's imagination is close to the ceiling; in terms of testing the waters of cryptography, although it launched the stablecoin PYUSD, it has been criticized for “being compliant but has no endogenous transaction requirements”. It has neither penetrated the DeFi ecosystem nor formed special value in its B2B cross-border scene.
However, PayPal, whose fundamentals have been questioned, still holds several “chips” coveted by tech giants.
The first is Braintree, which processes annual payments of about 700 billion US dollars, and Bernstein's valuation is 10 billion to 15 billion dollars. If successful, Stripe's total payment volume will jump to $2.1 trillion, freeing itself from competition with Adyen and others.
The second is Venmo, a P2P application with over 100 million monthly active users, with a valuation of about 5 billion dollars. For Stripe, which has been “behind the scenes” for a long time, this is a valuable consumer touchpoint: a kind of “last mile visibility.”
The third is a global network that has been established for nearly 30 years: clearing infrastructure spanning more than 200 countries, deeply embedded in cross-border trade, and 438 million active accounts with real credit history. Although it looks old, it is the most stable bridge to the edge of global commerce. PayPal recently launched the PayPal World Program. Through cooperation with Tenpay, UPI, etc., it can potentially reach more than 2 billion users. This “interoperability” connecting Eastern and Western payment systems is a strategic entry ticket that is difficult for any opponent to replicate.
Nearly 30 years of accumulation have not been in vain. Unfortunately, the person who knows how to use this voucher the most is probably not PayPal itself anymore.
Stablecoins become a hidden mainline
However, a phrase repeatedly mentioned by Wall Street analysts reveals the deal's deeper ambition: stablecoins.
“Stripe and PayPal may become an important player in the stablecoin sector after merging, as stablecoins are increasingly becoming a more critical part of global commerce,” Mizuho analyst Dan Dolev said bluntly。
Looking back at the two companies' actions over the past two years, it's easy to see that cryptocurrencies — especially stablecoins — have become the future they are betting on together. However, the strategic paths of the two are quite different.
PayPal chose the “currency control network” path. Its underlying logic undertakes and continues the centralized thinking of the SWIFT era. It aims to extend the advantages of its payment network to the on-chain world, thus building a closed loop ecosystem with PYUSD as the core. In April of this year, it even launched the “PYUSD Holding Rewards Program”, which relinquishes 3.7% of annualized earnings to users, hoping to drive the growth of the cross-border payment business through stablecoin trading volume。
Stripe's layout is more systematic. In 2024, it bought stablecoin infrastructure company Bridge for $1.1 billion, the largest acquisition in its history. But the real ambition wasn't fully revealed until it launched the “Open Debts” platform — it wasn't fully committed to issuing its own stablecoin, but was committed to becoming an “arsenal” for stablecoin payments, empowering other companies to issue, manage, and use stablecoins by building strong infrastructure and developer tools。
The core of “Open Investments” is that every business can issue its own stablecoin through Stripe and enjoy interest income from reserves. This “issue-as-a-service” model cleverly transfers value capture: while other traditional stablecoin issuers are still deducing and calculating interest spreads of a few basis points, Stripe abandons its dependence on reserve interest and instead constructs a new profit model based on service fees. It shifts the focus of value from “distribution” to “distribution.”
The most important piece of chess is Tempo. Stripe is teaming up with Paradigm to build this payments-focused Layer 1 public chain. The goal is to target traditional clearing networks such as SWIFT. By superimposing these two strategic maps, the logic behind Stripe's acquisition of PayPal is becoming more and more clear: Stripe has a future-oriented on-chain payment infrastructure (Tempo, Open Payments), while PayPal has an existing user network (400 million accounts) and market-proven stablecoin products (PYUSD).
If PyUSD is connected to the Tempo chain, using its sub-second confirmation and low cost characteristics, and reaching hundreds of millions of consumers through Venmo, a “closed Web3 payment loop” outside of traditional bank clearing systems will become a reality for the first time. This is not only complementarity at the product level, but also a downsizing attack on the existing global financial infrastructure.
A more imaginative scenario is AI agent payments. Unlike traditional banking systems, AI agents can have their own encrypted wallet address, and receive, store, and send funds through this address. This makes automatic settlement between AIs very convenient and efficient. It is particularly suitable for micropayment scenarios with small amounts and a background in transactions. The x402 payment protocol launched by Stripe this year is paving the way for this future — allowing developers to use USDC for automatic machine-to-machine settlement through the base chain, expanding the payment scenario from “man to person” to “machine to machine.” And PayPal's 400 million account just happens to be the ideal “withdrawal export” for these AI agents.
Regulatory and integration challenges
Of course, the final execution of this deal still faces huge uncertainty. People familiar with the matter stressed that discussions are still in the early stages, and it is still uncertain whether an agreement can be reached。
It is not unusual in commercial history for private companies to acquire listed companies and privatize them. In 2022, Elon Musk bought Twitter for 44 billion US dollars through its entities and then quickly delisted it from the NASDAQ. This is the most typical case in recent years. The acquirer usually uses a cash offer or merger to pay a premium (possibly between 30% to 50%) to the shareholders of the target company to buy out the shares and then delist the company, turn it into a subsidiary or fully integrate it. Stripe has plenty of cash reservesIn addition to top VC support such as a16z and Thrive Capital, financing channels include debt leverage, a new round of private placement, or existing reserves, and can completely swallow PayPal。
But regulation is the sword of Damocles hanging over the head. The combination of the two payment giants (a total TPV of nearly 3.7 trillion US dollars) is bound to attract great attention from antitrust agencies. Analyst Raymond James believes that potential acquirers may include large technology companies such as Alphabet, Meta, Microsoft, Amazon, and Apple, but the private company Stripe has limited financial information, and the viability of the transaction is questionable。
Furthermore, the difficulty of cultural integration should not be underestimated. Stripe is known for its geek culture and developer friendliness, and co-founder John Collison recently said the company is “not in a hurry to go public”; PayPal, on the other hand, is a listed company with 400 million C-side users. How to reconcile the two very different genes will be a challenge the Collison brothers will have to face.
Even so, the rumor itself is symbolic enough. It marks a profound revaluation of the global payments industry: the scale of the old days is no longer a moat, and future-oriented infrastructure capabilities are becoming a key deciding factor.
For Stripe, the acquisition of PayPal will be an intergenerational “devouring of snakes”; if not, at least the market has clearly seen its ambition: it must not only become the internet's payment base, but also the next generation of rule-makers in the financial world.
Author: Coconut Shell
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