People who want to "beat" PayPal are trying to buy it.

Written by: Coconut Shell

A transaction capable of reshaping the global payments industry is quietly brewing.

On February 24, Bloomberg reported: Private payments giant Stripe, led by the Collison brothers, is considering acquiring all or part of the veteran payment pioneer PayPal. On the same day, PayPal’s stock price surged nearly 7%.

One is a private unicorn valued at $159 billion; the other is a former leader with a market cap of only $43 billion but a vast user network. Behind this deal, it’s not just about market share shifts but also a deep strategic contest over the future of payments—especially crypto/stablecoin payments.

PayPal’s Dilemma and Hidden Cards

To understand why this potential deal causes such a stir, let’s look at two sets of numbers.

Over the past 12 months, PayPal’s stock has fallen nearly 46%, with a market cap hovering around $40 billion. Meanwhile, Stripe, which has not yet gone public, recently reached a $159 billion valuation through employee stock buybacks—less than a third of the valuation of the former.

This inversion reflects multiple pressures on PayPal’s business.

The competitive landscape has been completely transformed. Apple Pay and Google Pay leverage mobile OS ecosystems to lock in consumer access, while new entrants like Adyen and Stripe continue to chip away at B2B opportunities with flexible technology. Once positioned as a “third-party guarantor,” PayPal is gradually losing its uniqueness as a connector amid increasingly diversified payment entry points.

User habits are also quietly evolving. With the rise of social payments and embedded finance, consumers prefer to complete transactions instantly rather than redirect to heavy third-party pages. Whether it’s Stripe’s one-click payments or Apple Pay’s biometric authentication, these seem more convenient than the blue icon interface that requires recalling passwords. Although PayPal owns Venmo, a social payment app, it has struggled to turn it into a robust business engine.

The core issue is a loss of confidence in its growth potential. In the old fiat world, PayPal’s imagination has hit a ceiling; in crypto, despite launching the stablecoin PYUSD, it’s been criticized as “compliant but lacking endogenous transaction demand,” neither penetrating DeFi ecosystems nor creating unique value in its B2B cross-border scenarios.

However, despite doubts about its fundamentals, PayPal still holds some “chips” that tech giants covet.

First is Braintree, processing about $700 billion annually, valued by Bernstein at $10–15 billion. Acquiring it would boost Stripe’s total processing volume to $2.1 trillion, giving it an edge over competitors like Adyen.

Second is Venmo, a P2P app with over 100 million active users, valued at around $5 billion. For Stripe, which has long operated behind the scenes, Venmo offers a valuable consumer touchpoint—a “last-mile visibility.”

Third is its nearly three decades of global infrastructure: a settlement network spanning over 200 countries, deeply embedded in cross-border trade, with 438 million active accounts linked to real credit cards and credit histories. Though aging, it remains the most solid bridge to global commerce. Recently, PayPal launched the PayPal World initiative, partnering with Tenpay and UPI, potentially reaching over 2 billion users. This “interoperability” connecting Eastern and Western payment systems is a strategic advantage that’s hard for competitors to replicate.

Decades of accumulation have not been wasted. Unfortunately, the ones who understand how to leverage this “chip” may no longer be PayPal itself.

Stablecoins as the Hidden Main Thread

However, Wall Street analysts repeatedly mention one word that reveals a deeper ambition behind this deal: stablecoins.

“After the merger, Stripe and PayPal could become key players in the stablecoin space, as stablecoins are increasingly becoming a critical part of global commerce,” said Mizuho analyst Dan Dolev.

Reviewing their recent actions over the past two years, it’s clear that both see crypto—especially stablecoins—as the future they are betting on. But their strategic paths are quite different.

PayPal is pursuing a “control the network with tokens” approach, continuing the centralized thinking rooted in the SWIFT era, aiming to extend its payment network’s advantages into the on-chain world, building a closed-loop ecosystem centered on PYUSD. In April, it even launched the “PYUSD Holding Rewards Program,” offering a 3.7% annual yield to encourage stablecoin trading volume and boost cross-border payments.

Stripe’s approach is more systematic. In 2024, it acquired stablecoin infrastructure company Bridge for $1.1 billion—its largest acquisition ever. But its true ambition only fully reveals with the launch of the “Open Issuance” platform—it’s not solely betting on issuing its own stablecoin but aims to become a “arsenal” of stablecoin payment infrastructure. By building robust infrastructure and developer tools, it empowers other companies to issue, manage, and use stablecoins.

The core of “Open Issuance” is that each enterprise can issue its own stablecoin via Stripe and earn reserve interest income. This “issuance-as-a-service” model cleverly shifts value capture: while traditional stablecoin issuers rely on small interest margins, Stripe abandons dependence on reserve interest, instead creating a new revenue model based on service fees. It shifts the focus from “issuing” to “distributing.”

The most critical piece is Tempo. Stripe is partnering with Paradigm to develop this Layer 1 blockchain focused on payments, targeting traditional clearing networks like SWIFT. Combining these strategies makes Stripe’s potential acquisition of PayPal even clearer: Stripe has future-oriented on-chain payment infrastructure (Tempo, Open Issuance), while PayPal has an existing user base (400 million accounts) and proven stablecoin products (PYUSD).

Connecting PYUSD to the Tempo chain, leveraging its sub-second confirmation and low costs, and reaching hundreds of millions of consumers via Venmo could finally realize a “Web3 payment loop” outside traditional banking and clearing systems. This is not just product synergy but a significant disruption to existing global financial infrastructure.

A more imaginative scenario involves AI agent payments. Unlike traditional banking, AI agents could have their own crypto wallets, receiving, storing, and sending funds through these addresses. This makes automatic clearing between AI entities highly efficient, especially for micro-payments. Stripe’s recent launch of the x402 payment protocol is paving the way for this future—allowing developers to perform machine-to-machine settlements using USDC on the Base chain, expanding payment scenarios from “people-to-people” to “machine-to-machine.” PayPal’s 400 million accounts could serve as ideal “cash-out” points for these AI agents.

Regulatory and Integration Challenges

Of course, the final realization of this deal faces significant uncertainties. Insiders emphasize that discussions are still in early stages, and no agreement is guaranteed.

Private companies acquiring and privatizing public companies is not uncommon. In 2022, Elon Musk’s $44 billion acquisition of Twitter and subsequent delisting from Nasdaq is a recent example. Buyers typically pay a premium (30–50%) over market price to buy out shareholders, then delist and integrate or spin off the company. Stripe’s ample cash reserves, supported by top VC firms like a16z and Thrive Capital, along with debt leverage and new private funding, make it fully capable of acquiring PayPal.

But regulatory hurdles are a looming threat. The combined payment giants’ total TPV of nearly $3.7 trillion will attract antitrust scrutiny. Raymond James analysts suggest potential acquirers could include Alphabet, Meta, Microsoft, Amazon, or Apple, but Stripe’s limited financial disclosures make the deal’s feasibility uncertain.

Additionally, cultural integration is no small challenge. Stripe is known for its geek culture and developer friendliness; co-founder John Collison recently said the company is “not in a rush to go public.” PayPal, on the other hand, is a publicly traded company with 400 million consumer accounts. Harmonizing these very different cultures will be a key challenge for the Collison brothers.

Nevertheless, the very rumor is symbolic. It signals a profound reevaluation of the payments industry: scale alone is no longer a moat; future infrastructure capabilities are becoming the decisive factor in shaping influence.

For Stripe, acquiring PayPal would be a generational “snake swallowing an elephant” event; if not, the market has already seen its ambition: it aims not only to be the backbone of internet payments but also to become the rule-maker in the next generation of finance.