The first-generation payment empire PayPal might be acquired.

Author: Supportive and Honest

Around 2006, a group of small foreign trade entrepreneurs in Guangdong and Fujian started exploring opening stores on eBay. They sat in small offices next to factories, doing business with strangers on the other side of the world using broken English.

The hardest part wasn’t language or logistics, but money—how to let an American buyer safely send money to a Chinese seller?

What made this possible was a blue button. That button was called PayPal.

Back then, PayPal represented the forefront of financial democratization and cutting-edge productivity. Following the “Website Payments Standard Integration Guide,” small and medium-sized businesses worldwide only needed to insert a piece of HTML code into their website to accept payments globally.

This technological equality, combined with the only officially recommended payment method during the eBay era, made PayPal an undisputed global payment leader. To this day, whenever you see an overseas checkout page, PayPal is almost always there.

Twenty years have passed. Many of those early small foreign trade entrepreneurs have grown from eBay shop owners into cross-border merchants running independent websites, Amazon stores, TikTok, Temu, and more. China’s cross-border e-commerce exports have surpassed 2 trillion RMB, and payment tools have blossomed from that single blue button into a diverse landscape of Stripe, Wise, LianLian, Wanlihui, and others.

The industry has matured, but PayPal has fallen behind.

Three weeks ago, on February 3rd, PayPal announced its earnings, with its stock price plummeting 20% in a single day and the CEO stepping down in disappointment. The main source of profit—brand checkout—has seen active user growth drop from high-speed to just 1%, and transaction volume among active accounts declined 5% over the past 12 months.

Whether it’s Stripe’s one-click Link payments, biometric verification with Apple Pay, or simply filling in bank card info via Google, these seem more convenient than the somewhat outdated blue icon interface that might still require remembering passwords.

It was once a legend created by Elon Musk, Peter Thiel, Hoffman, and others. Pelosi once held large positions, and Woodie held it as a loyal supporter, but they all chose to cash out.

PayPal’s market value, which peaked at $363 billion during the pandemic, has fallen to a recent low of $38 billion—losing 90% over five years, with its P/E ratio dropping to a low of 7.4. Only today, when Bloomberg broke exclusive news that at least one major competitor is evaluating a full acquisition, and multiple parties expressed interest in some assets, did the stock rise nearly 10%.

This news itself is the most accurate reflection of PayPal’s situation. When a company begins to be seen as prey rather than predator, and its market value rises accordingly, it indicates that market confidence in its independent operation has fallen below expectations of being bought.

The once mighty payment empire, like a declining British Empire, still flies its flag around the world, the sun has not yet set, but those who see it no longer hold the same reverence as before. Everyone knows deep down that the times have changed. But how exactly did it fall so far?

“Seeing a company I love so much reach this point is truly painful.”

On February 3rd, former PayPal president David Marcus posted a lengthy message on X, unusually criticizing the company he once dedicated himself to.

David Marcus’s career has always been associated with radical financial innovation. He is currently CEO of LightSpark, a Bitcoin Lightning Network payment company. During his time at PayPal, he recruited top engineering talent and led acquisitions of Braintree and Venmo; at Facebook, he was one of the leaders of the sensational stablecoin project Libra. Although Libra was derailed by regulatory issues, today’s craze for stablecoins proves David’s foresight and boldness.

Besides the stock plunge, another reason prompted Marcus to post this long critique was the resignation of former CEO Alex Chriss after less than three years, succeeded by HP’s former CEO Enrique Lores.

Lores served as HP’s CEO for seven years, launching the profitable “print-as-a-service” model, initiating large-scale layoffs—undoubtedly a master of cost reduction, efficiency, and restructuring. If PayPal’s board had already considered overall or split sale of the company, this candidate would seem even more fitting.

Marcus subtly expressed his dissatisfaction: “I don’t know Enrique. He might be a great leader, but at least on paper, he’s a hardware executive brought in to a payments company.”

This echoes Marcus’s core criticism. Unlike the market’s reaction to poor financial performance, Marcus believes PayPal’s core issue is—“the company’s leadership style has shifted from ‘product-driven’ to ‘financial-driven.’ Over time, faith in the product has given way to financial optimization.”

Borrowing Benjamin Franklin’s famous saying: any company that sacrifices its product to boost short-term stock performance will eventually fall behind the times and lose its stock value.

Marcus believes PayPal has lost its “mojo”—the spirit of the PayPal gang, the wild energy that dared to overturn the office roof to solve an impossible problem. Today, that energy has been replaced by compliance scrutiny and financial optimization.

Stripe, which conquers developers with simple APIs, still has this mojo. Open Stripe, with its constantly jumping “Global GDP running on Stripe” in the top left corner, exudes a conqueror’s confidence.

Apple Pay, which has vigorously promoted Passkey in recent years, also has this mojo. Relying on secure chips and Face ID, it offers an extremely seamless payment experience—just lift your wrist, scan your face, and done—without even opening an app. This surpasses the old PayPal experience of jumping pages, re-authorization, and waiting for confirmation.

Revolut, a neobank, also has this mojo. With strong execution, this emerging company quickly built a full-stack financial platform covering stocks, currency exchange, and cryptocurrencies across dozens of countries, continuously expanding its territory.

These three companies share a common trait: their mojo doesn’t come from scale, user numbers, or even money. It stems from a product belief: believing that what they’re doing will make a difference somewhere in the world.

And this is just the tip of the iceberg. Shop Pay, Klarna, Affirm, Afterpay, Wise, Cash App, Adyen—every corner of the payment track is crowded with players.

PayPal once also had this kind of mojo. That piece of HTML code, that button enabling garage-sale Americans and small Chinese factories in Guangzhou to do cross-border settlements, was itself a declaration of changing the world. But the process of losing it was quiet, almost silent.

When talking about PayPal’s recent development, one cannot ignore Venmo.

Venmo did one thing right: turning transfers into social interactions—splitting bills, paying rent with AA, sending an emoji to friends—much more fun than bank transfers. Its spread among young Americans resembles a social app more than a payment tool. “Venmo me” even became a verb, a synonym for peer-to-peer transfers in the U.S.

PayPal’s acquisition of Venmo was actually a byproduct of acquiring the payment service Braintree. At that time, Braintree was not so prominent, but now it’s a bright spot in PayPal’s dull financial reports: projected revenue of $1.7 billion in 2025, over 100 million active monthly accounts, Pay with Venmo transaction volume up 50% year-over-year, and debit card users up 40%.

But behind these numbers, deeper issues are fermenting: optimists obsess over doubling debit card transaction volume, believing this cash cow is entering a golden phase of monetization; skeptics ask, if this prosperity is just draining the remaining social circle, how long can this glow last?

This split essentially reflects Venmo’s entrapment in an ecological niche: upward, it hits the walls built by Apple Pay and Google Pay; downward, it can’t penetrate the underlying infrastructure of Stripe and Adyen. Venmo’s growth is strong but has a clear ceiling.

First, internal friction in growth models. Behind 20% revenue growth is only 7% active user growth—Venmo is no longer expanding territory but taxing its existing users, squeezing the same group harder, without attracting a new generation.

Second, the dual dilemma of geography and product essence. Venmo is locked in the U.S., capturing American dining tables but far from entering global checkout counters.

Finally, the temporary failure of full-scenario financial imagination. PayPal designed a business loop for Venmo that included Honey, a shopping plugin meant to connect “discovery-checkout” links. But in 2024, Honey nearly collapsed due to a scandal involving altered affiliate links, severing that traffic pipeline and dampening Venmo’s transformation.

How can an independent consumer payment app prove its worth to make users willingly open it? Venmo is working on this question, but the answer remains unknown.

Venmo reflects PayPal’s anxiety on the consumer side. Farther ahead, PayPal has also bet on two other cards—PYUSD and Agent Payments. Both share the trait of a large track but uncertain prospects.

Objectively, PYUSD is doing okay. Since its launch in 2023, the market size has reached $4 billion, ranking in the top ten globally for stablecoins. But compared to Tether’s approximately $180 billion USDT and Circle’s about $70 billion USDC, PYUSD’s scale is negligible.

It instead proves one thing: even if everyone can issue stablecoins, the barriers of distribution channels and user perception remain high. A giant like PayPal cannot expect to win by simply lowering the bar.

In April 2025, PayPal announced a 4% annual interest rate for PYUSD holders. The industry was once stunned, thinking the giant was about to dominate the game. But progress is gradual. The current trillion-dollar usage of stablecoins mainly comes from crypto arbitrage, hedging, market making, cross-border capital transfers, DeFi lending, LP, yield farming—assets that PYUSD isn’t optimized for.

In the future, stablecoin use cases will become more mainstream and daily—cross-border B2B payments, on-chain settlements, retail transactions—but competition is fierce. Besides USDT and USDC, innovative USDe and the USD1 backed by the Trump family are strong rivals. PYUSD has little chance of winning outright.

Beyond stablecoins, PayPal is also eyeing agentic payments. They abandoned error-prone web crawlers and instead integrated APIs with merchant order management systems. Merchants only need to sign agreements, and PayPal can distribute real-time data—inventory, colors, prices—to mainstream AI platforms like Google Gemini, as well as PayPal’s own apps.

The idea is clear, but it’s a market still to be validated. Recently, Qianwen gave out red envelopes and free drinks as a market education for domestic consumers about AI shopping. But changing consumer habits is not a one-day job. Will chatting with AI to shop become mainstream? Or will the main experience still be people leisurely browsing and comparing? That remains uncertain.

Even if in the future people get used to saying, “Help me buy an iced, three-sweet oolong tea,” the platform controlling transaction data will still be the massive AI platforms, which likely have their own payment methods or share the pie. In this new chain, PayPal’s position remains uncertain.

After all this talk of loss and uncertainty, you might think PayPal’s story has reached its end.

But reality is never one-sided. Braintree remains the underlying payment engine for many global platforms. Pay Later processed over $40 billion in transactions in 2025, dominating the US BNPL market. The August 2024 launch of Fastlane, a one-click checkout, is one of its few proactive moves, directly challenging Apple Pay and Shop Pay. With 400 million active accounts and over $6 billion in free cash flow annually—these assets are strategic tickets that any company aiming to compete in the AI agent economy cannot easily replicate from scratch.

Nearly thirty years of accumulation have not been wasted, nor will they vanish into thin air. It’s just a pity that the great river flows eastward, swept away by the waves.

The one who best understands how to use this ticket may no longer be PayPal itself.