The news: PayPal is in negotiations to sell itself to Stripe and Advent International, per an exclusive from The Wall Street Journal.

This is a reversal from PayPal’s position that it was not open to a sale and was actively defending against a potential takeover.

Why this matters: If Stripe acquires PayPal, it could strengthen its position across multiple arms of its business.

• Digital wallet. PayPal and Venmo’s digital wallets have a consumer-facing ecommerce presence that Stripe’s Link does not. Absorbing this wallet technology would give Stripe a huge consumer-facing presence.
• Crypto. Stablecoins are how Stripe wants to convert digital wallets into global money accounts. It could build out PayPal’s PYUSD or incorporate it into its broader crypto infrastructure. 
• Agentic commerce. PayPal has strategic partnerships with Perplexity, OpenAI, Google, and Microsoft. Stripe can use those relationships to boost its own agentic ambitions.
• Buy now, pay later (BNPL). PayPal’s BNPL program would let Stripe offer in-house installments for its merchants. At present, PayPal services the second-largest share of  “Pay in 4” installments behind Afterpay, per the Federal Reserve of New York. We forecast that PayPal will process $30.86 billion in BNPL  volume this year. 

PayPal’s financial media network (FMN) also gives Stripe an opportunity for ad revenues. And PayPal applied for a banking charter, which would give Stripe more room to build out lending products.  

Implications for payment providers: Stripe absorbing PayPal would reshape the landscape of ecommerce payments. The combined companies would command an estimated $3.7 trillion in annual processing volume, per Reuters. 

Acquiring PayPal would flip Stripe from a mostly merchant-providing player to one with a much larger consumer presence:

• Stripe would control a buy button that competes with the likes of Apple and Google Pay at checkout.
• It would gain 439 million global active consumer and merchant accounts.

Stripe could create an online payments ecosystem similar to Block’s in-person network at a much larger scale, where it encourages users to shop at Stripe-backed merchants through personalized rewards systems, driving up spend.

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