Stripe is in talks with Paypal about a potential $53 billion acquisition deal. Reuters reports that the payments company, together with private equity firm Advent International, has offered Paypal $60.50 per share and said the deal is backed by about $50 billion in committed financing from banks.
Stripe and Paypal are the two most widely used platforms for internet retailers, with Paypal holding around 43% of the global payment processing market share, and Stripe holding approximately 21%. Combining them would create one of the world’s largest global online payment companies, processing some $3.7 trillion of annual payment volume, according to reporting by Business Insider.
What could this mean for online retailers?
Paypal and Stripe are currently used in different ways: Paypal is recognised for consumer trust, and is often used by small businesses, or as an additional payment option for larger retailers. Stripe is the preferred choice for custom online-first, developer-oriented websites, and is used more by scalable, high-growth businesses. Retailers often use the two together, with Stripe as the backend payment gateway to process direct credit cards, and PayPal as a one-click digital wallet option.
Any impact from combining the two companies would depend on how Stripe chose to integrate Paypal’s product and networks. While integration between the two could reduce complexity for merchants – and potentially add additional tools, as Paypal owns Venmo, a US tool for sending money, and Honey, a shopping a cashback tool – some retailers might be wary of such major consolidation, which could reduce their leverage in negotiations over fees and contract terms. However, this would likely be assessed by regulators, should the acquisition move forward.
Payments giant in the making
If the deal progresses, it could create a payments giant at the heart of global ecommerce, bringing together the trusted consumer reach of PayPal and the developer-first infrastructure of Stripe. For retailers, the prospect of simpler payment operations and access to a broader suite of tools may be attractive, but any benefits will need to be weighed against concerns over reduced competition and supplier choice in a market already dominated by a handful of major players.
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