The news: PayPal and Stripe will integrate their merchant inventory with Microsoft’s Copilot Checkout and process payments for the AI-powered shopping platform.

Customers will be able to ask Copilot to find products for them and complete transactions within the chat interface. 

How we got here: PayPal has been bullish on AI integrations. 

• It netted a conversational commerce tie-up with Perplexity last May. 
• It integrated Mastercard’s Agent Pay protocol into its wallet to let AI bots process purchases on behalf of PayPal users.
• PayPal partnered with ChatGPT, bringing its buy button inside the chat interface with Instant Checkout.
• It inked a multiyear partnership with Google to research AI-powered shopping solutions.
• And PayPal merchants became discoverable within Perplexity ahead of Cyber Five.

Stripe has also pursued agentic solutions aggressively, launching its Agentic Commerce Suite this December. It also helped develop the agentic protocol that powers ChatGPT’s Instant Checkout.

Why this matters: Payment providers are betting big on agentic commerce to shift how consumers shop. Our new AI platform-driven retail ecommerce sales forecast anticipates $20.26 billion in US AI-platform-driven sales for 2026—but we expect that number to more than triple by 2029, accounting for 8.8% of all retail ecommerce sales.

PayPal and Stripe merchants’ visibility on Copilot sets them up to be early beneficiaries of this anticipated windfall. 

Implications for payment providers: Integrations with AI-driven retail ecommerce will become more critical for capturing sales from Gen Z and millennials, who are more open to using the tech to streamline their shopping experiences. 

Securing multiple AI partnerships could lead young shoppers to make PayPal their default payment method for AI platform-based transactions. 

As this loyalty solidifies, PayPal stands to pick up buy now, pay later (BNPL) spend, as its Pay Later product gets an early mover advantage on AI interfaces—increasing the possibility PayPal could overtake Klarna as the US’s No. 1 BNPL lender.