Stripe Wants to Buy PayPal — and It's Willing to Pay More This Time
Stripe, a company that helps businesses accept payments online, is teaming up with a private investment firm called Advent International to buy PayPal. They are offering more than the $60.50 per share that PayPal turned down in July, according to the Wall Street Journal (Engadget). A deal could be announced in the coming weeks if both sides agree on a price.
The first offer, made in July and confirmed by CNBC (CNBC), valued PayPal at about $53 billion. That was 28% more than PayPal's stock price the day before the offer. PayPal's board said no, telling Reuters that directors felt the $53 billion figure was too low (Reuters).
The disagreement over price comes after a dramatic fall in PayPal's value. Before the July offer, PayPal was trading at historic lows, with a market value of about $40 billion, down roughly $320 billion from its peak during the pandemic (Engadget). Wall Street analysts have said that Stripe and Advent can afford to pay more and expect them to raise the offer (Reuters). The buyers have already lined up $17 billion in cash for the purchase (Reuters).
According to Reuters, Stripe and Advent would each own an equal share of PayPal if the deal goes through. They have no plans to split the company up, which would make Stripe one of the largest online payment processors in the world (Engadget). Together, the two companies would handle about $3.7 trillion in payments every year. A merger could also reduce Stripe's reliance on Visa and Mastercard, the card networks that process most card payments, and give Stripe direct ownership of Venmo, PayPal's checkout system, and PayPal's cryptocurrency features (Engadget).
The reason Stripe wants Venmo and PayPal's checkout system is fairly simple. Stripe has always helped businesses build payment buttons into their websites and apps, but it has never owned the consumer side, the wallet where a person's money actually sits. Owning both ends of a transaction, from the checkout button to the moment the money moves, is the kind of full-stack control that Visa and Mastercard have protected for decades through their network rules and the fees they charge on each card transaction. A combined Stripe-PayPal would not make those fees disappear, but it would give merchants more ways to route payments around the card networks, especially for direct bank-to-bank transfers and payments made in cryptocurrency. The $3.7 trillion figure, if accurate, puts the combined company in a league that few competitors could match.
The involvement of Advent is worth noting separately. Stripe has always been a private company, known for being careful about how it raises money and who it sells ownership to. Bringing in a private investment firm as an equal partner suggests that buying PayPal for $53 billion or more is simply too expensive for Stripe to handle alone. The $17 billion in cash they have assembled is a lot, but the total purchase price would also require borrowing a significant amount of money, and the cost of borrowing at today's interest rates is something PayPal's board can point to when arguing the offer should be higher.
Separately, Stripe is also in talks to buy OpenRouter, a marketplace for AI models, according to the Wall Street Journal (WSJ). That discussion was reported in late July, before the latest PayPal developments, but it shows that Stripe is pursuing two acquisitions at once: a major consolidation in payments and a smaller move into the business of selling access to artificial intelligence tools.
The bigger picture is what this means for anyone who pays for things online. If Stripe and Advent succeed at a higher price, the combined company would have the scale and pricing power to offer payment processing from start to finish, from a person's wallet to a merchant's bank account. That could squeeze out smaller companies that only handle part of that process. The coming weeks will show whether the two sides can close the gap that has so far kept a deal out of reach.
