Author: Coconut Shell

A transaction that could rewrite the global payment industry landscape is quietly brewing.

On February 24, Bloomberg reported that private payment giant Stripe, led by the Collison brothers, is considering acquiring all or part of the business of the established payment pioneer PayPal. On the day the news broke, PayPal's stock surged nearly 7%.

One is a private unicorn valued at $159 billion, while the other is a once-dominant player with a market cap of only $43 billion but a vast user network. Behind this transaction lies not only a shift in market share but also a deep-seated game about the future of payment forms—especially crypto/stablecoin payments.

PayPal's Predicament and Trump Cards

To understand why this potential transaction has caused such a stir, let's first look at two sets of numbers.

In the past 12 months, PayPal's stock price has declined nearly 46%, and its market value has hovered around $40 billion. Meanwhile, the yet-to-be-listed Stripe has recently valued itself at $159 billion during an employee stock buyback—less than one-third of the latter’s valuation.

This inversion reflects that PayPal's business is under multi-dimensional pressure.

The competitive landscape has changed dramatically. Apple Pay and Google Pay have locked down the end-user entry points based on mobile systems, while new forces like Adyen and Stripe continuously encroach on territory with their B-end technical flexibility. Once known for its "third-party guarantee" model, PayPal is gradually losing the scarcity of being a connector in a world with increasingly diversified payment entry points.

User habits are also quietly evolving. After the explosion of social payments and embedded finance, people are more inclined to complete transactions at the moment of consumption, rather than redirecting to heavy third-party pages. Whether it’s Stripe’s one-click payment or Apple Pay’s biometric authentication, both seem more convenient than the blue icon interface that requires remembering passwords. PayPal does have Venmo as a social ace, but it has always stumbled in transforming it into a commercial engine.

The fundamental pain point is the market's loss of confidence in its growth potential. In the old world of fiat payments, PayPal's imagination has nearly hit its ceiling; while experimenting with cryptocurrencies, it launched the stablecoin PYUSD, but it has been criticized as "compliant but devoid of internal trading demand," failing to penetrate the DeFi ecosystem or create special value in its own B2B cross-border scenarios.

However, despite having its fundamentals questioned, PayPal still holds several "chips" that tech giants envy.

First, Braintree, which handles about $700 billion in payments annually, is valued between $10 billion to $15 billion by Bernstein. If acquired, Stripe's total payment volume would jump to $2.1 trillion, giving it an advantage over competitors like Adyen.

Second, Venmo, the P2P application with over 100 million monthly active users, is valued at about $5 billion. For the long "invisible" Stripe, this is a valuable consumer touchpoint: a form of "last-mile visibility."

Third, the nearly thirty-year accumulation of a global network: a clearing infrastructure spanning over 200 countries, deeply embedded in cross-border trade, and 438 million real card-linked active accounts with credit histories. While it may seem outdated, it is the most solid bridge to the end of global commerce. Recently, PayPal launched the PayPal World plan, aiming to potentially cover over 2 billion users through partnerships with Tenpay, UPI, and others. This "interoperability," connecting Eastern and Western payment systems, is precisely a strategic ticket that rivals find hard to replicate.

The nearly three decades of accumulation have not been in vain. It’s just unfortunate that the ones who best understand how to utilize this ticket may no longer be PayPal itself.

Stablecoins Become the Hidden Main Line

However, one term repeatedly mentioned by Wall Street analysts reveals the deeper ambition behind this transaction: stablecoins.

"After a merger between Stripe and PayPal, they could become significant players in the stablecoin space, as stablecoins are increasingly becoming a more critical part of global commerce," said Mizuho analyst Dan Dolev.

Looking back at the actions of both companies over the past two years, it's not hard to see that cryptocurrencies—especially stablecoins—have become their shared bet for the future. But their strategic paths are entirely different.

PayPal has chosen the path of "controlling the network with currency,” with its underlying logic inheriting and continuing the centralized thinking of the SWIFT era, aiming to extend the advantages of its payment network into the on-chain world, thereby building a closed-loop ecosystem centered around PYUSD. In April this year, it even launched the "PYUSD Holding Rewards Program," offering users a 3.7% annual yield, hoping to boost cross-border payment growth through stablecoin trade volume.

Stripe's layout is more systematic. In 2024, it acquired stablecoin infrastructure company Bridge for $1.1 billion, its largest acquisition to date. But the true ambition only fully emerged with the launch of its "Open Issuance" platform—it doesn't fully bet on issuing its own stablecoin, but aims to become the "arsenal" in the stablecoin payment space, empowering other companies to issue, manage, and use stablecoins by building robust infrastructure and developer tools.

The core of "Open Issuance" is that any enterprise can issue its own stablecoin through Stripe and enjoy reserve interest income. This "issuance-as-a-service" model cleverly shifts the value capture: while other traditional stablecoin issuers are still calculating spreads of a few basis points, Stripe abandons its dependence on reserve interest and instead builds a new profit model based on service fees. It shifts the focus of value from "issuance" to "distribution."

The most critical piece is Tempo. Stripe is collaborating with Paradigm to create this payment-focused Layer 1 public chain, directly targeting traditional clearing networks like SWIFT. Overlaying these two strategic maps, the logic for Stripe to acquire PayPal becomes increasingly clear: Stripe possesses future-oriented on-chain payment infrastructure (Tempo, Open Issuance), while PayPal has an existing user network (400 million accounts) and a market-validated stablecoin product (PYUSD).

Connecting PYUSD to the Tempo chain, leveraging its sub-second confirmations and low-cost characteristics, and then reaching hundreds of millions of consumers through Venmo, a "Web3 payment closed loop" outside of traditional banking clearing systems will come to fruition for the first time. This is not only a product-level complement but also a dimension-reducing strike against the existing global financial infrastructure.

An even more imaginative scenario is AI Agent payments. Unlike the traditional banking system, AI Agents can have their own crypto wallet addresses, to receive, store, and send funds through these addresses. This makes automatic clearing between AIs very convenient and efficient, especially suitable for small, transaction-backed micro-payment scenarios. Stripe's recently launched x402 payment protocol is paving the way for this future—allowing developers to automatically settle between machines using USDC via the Base chain, expanding payment scenarios from "person to person" to "machine to machine." PayPal's 400 million accounts are precisely the ideal "withdrawal outlet" for these AI Agents.

Regulatory and Integration Challenges

Of course, the ultimate realization of this transaction still faces great uncertainty. Insiders emphasize that discussions are still in the early stages, and whether an agreement can be reached remains undecided.

The acquisition of a publicly listed company by a private company and its subsequent privatization is not uncommon in business history. A typical recent case is Elon Musk, who quickly took Twitter private after acquiring it for $44 billion through his entity, delisting it from Nasdaq. Acquiring parties usually buy out the target company's shareholders through cash offers or mergers at a premium (which may range from 30% to 50%), to take the company private and turn it into a subsidiary or fully integrate it. Stripe has sufficient cash reserves, plus support from top VCs like a16z and Thrive Capital, and financing channels including debt leverage, a new round of private placement, or existing reserves, making it entirely feasible to swallow PayPal.

However, regulation is the Damocles' sword hanging overhead. The combination of these two payment giants (with a combined TPV of nearly $3.7 trillion) will undoubtedly attract attention from antitrust authorities. Analysts at Raymond James believe that potential acquirers could include large tech companies like Alphabet, Meta, Microsoft, Amazon, and Apple, but the limited financial information of private company Stripe raises doubts about the viability of the transaction.

Additionally, 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 stated that the company "is not in a hurry to go public"; while PayPal is a publicly listed company with 400 million C-end users. Harmonizing these two vastly different genes will be a challenge that the Collison brothers must face.

Nevertheless, the rumors alone are already symbolically significant. They signify that the global payment industry is undergoing a profound value reassessment: the scale of the old era is no longer a moat; future-oriented infrastructure capabilities are becoming key weights in determining discourse power.

For Stripe, if acquiring PayPal goes through, it will be a "snake swallowing an elephant" across generations; if it does not, at least the market has seen its ambitions: it not only wants to be the payment foundation of the internet but also aims to become the rule-maker of the next generation of the financial world.

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