Founded in the late 1990s, PayPal was an early player in digital payments, but has faced increasing competition as consumers have embraced alternative payment methods and rivals such as Apple Pay and Google Pay have gained market share.
It has spent the past several years grappling with slowing growth and intensifying competition in digital payments, wiping out much of the value it gained during the pandemic.
The company's market capitalization peaked at about $360 billion in 2021 and fell to as low as roughly $36 billion this year. It has lost more than 40% of its market value over the past 12 months.
After taking over in March, PayPal CEO Enrique Lores started a sweeping turnaround exercise to simplify the payments provider and sharpen its focus on growth.
In April, the company split its operations into three units covering checkout, consumer financial services Venmo, and payments and crypto, while making a series of management changes.
The potential PayPal transaction, if completed, will add to the recent M&A activity in the global payments sector, where buyers have pursued targets amid rapid changes in financial technology and the rise of artificial intelligence.
Payment companies are also increasingly seeking scale through M&A as well as exposure to faster-growing segments such as cross-border and business-to-business payments amid slower growth for traditional payment processing.
In 2025, Global Payments agreed to acquire rival Worldpay from FIS and private equity firm GTCR for $24.25 billion in a complex three-way deal. As part of that deal, GTCR sold its 55% stake and FIS exited its remaining 45% holding.
The sector has also seen a steady stream of smaller deals, including the acquisition of Payoneer Global by Canadian payments firm Nuvei for $2.75 billion. Nuvei is backed by Advent International and other private equity firms.
Mastercard is exploring the sale of a majority stake in its UK payments subsidiary Vocalink back to British banks as it responds to concerns about a critical asset being under U.S. ownership, the Financial Times reported this week.
PayPal's revenue rose 7% to $8.35 billion in the first quarter, beating analysts' average estimate of $8.05 billion. On a currency-neutral basis, total payment volumes jumped 8% over a year ago to about $464 billion.
Lores outlined plans in May to leverage artificial intelligence to streamline operations across the company and eliminate duplication in workforce layers, but did not provide additional details.
The company has said these initiatives would save about $1.5 billion over the next two to three years, adding it will reinvest that amount to drive new growth.
Stripe, which is privately held, is among the industry's most valuable companies. It was valued at $159 billion in a tender offer for employees and shareholders in February, a more than 70% jump from a similar share sale a year earlier.
The company, with headquarters in San Francisco and Dublin, allows companies to accept payments, make payouts and automate financial processes.
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