PayPal's Unbundling
What comes after you forget to turn your portfolio into a platform.
In July 2021, PayPal was worth about $360 billion.
By early February 2026, it was worth less than $40 billion, and for a few days it was worth less than eBay, the company that had spun it off six years earlier.
Nothing in the business collapsed.
Volume kept climbing. So did transactions. PayPal moved $486 billion in the second quarter of 2026 alone, $1.88 trillion over the trailing year, and still counts 439 million active accounts.
Venmo is growing in the mid-teens. Braintree is accelerating. Buy now, pay later volume rose 26%.
Then, in mid-July, Stripe and Advent International offered $53 billion to take the whole company private. The board declined their offer, saying it wasn’t good enough.
So this isn’t the story of a company that shrank. It’s the story of a company that kept nearly everything except the one thing that made the rest of it worth owning.
Let me break it down.
What PayPal actually owned in 2015
When eBay let PayPal go in July 2015, the market valued the parent at roughly $35 billion and the spinoff at roughly $49 billion. PayPal arrived with about 179 million active accounts and one genuinely scarce asset.
Not rails. Not a network in the Visa sense. What PayPal owned was consumer intent at the exact moment of payment.
A shopper who saw the PayPal button clicked it because, in 2015, typing a card number on an unfamiliar website was a small act of faith, and PayPal was the alternative to faith.
Merchants paid a premium for that button over raw card processing, and they did so willingly because the button converted browsers into buyers. That premium was the entire franchise. Everything else was infrastructure.
Two other things came in the box. Braintree, bought in 2013 for around $800 million, brought a developer-friendly gateway that already powered Uber and Airbnb. Braintree also brought Venmo, which it had picked up in 2012 for $26.2 million.
And one liability dressed as revenue: the eBay operating agreement, high margin, sitting on a clock that everyone could read.
Three assets, one franchise, and a known expiry date on part of the income. What PayPal is the crux of the matter.
The shopping years
Between 2015 and 2021, PayPal bought adjacencies at pace.
Xoom for remittances in 2015, around $890 million. Paydiant the same year. TIO Networks in 2017, later shut down after a breach. Hyperwallet in 2018 for around $400 million.
Then the big ones: iZettle in 2018 for $2.2 billion, closed that September. Honey in November 2019 for roughly $4 billion, PayPal's largest acquisition to date. Paidy in 2021 for about $2.7 billion. Curv for crypto custody, and Happy Returns, which was sold on to UPS in 2024 for around $465 million.
Most of these had a decent thesis on paper. Two of them show the pattern rather than the price.
Honey cost $4 billion and bought a browser extension that hunts discount codes. The logic was to move upstream, to be present when shopping starts rather than when it ends.
What PayPal got was a coupon tool with a loyal following, an awkward relationship with the creators whose affiliate links it sat atop, and litigation over attribution that ran from 2024 into this year.
It never became the front door. Nobody opens Honey and then decides to buy something.
Zettle is the sharper tell. PayPal closed the $2.2 billion purchase in September 2018 to get a physical presence in shops. Zettle launched in the United States on 30 June 2021. Just under three years to bring an existing, working product to the largest card market on earth.
Square didn’t spend those three years waiting.
Here’s the red lining running through all of it. PayPal bought capabilities and then ran them as separate brands. Braintree, Venmo, Xoom, Honey, Zettle, Hyperwallet: each kept its own product surface, its own login, its own risk logic, its own place in the org chart. The company assembled a portfolio and called it a platform.
Alex Chriss, PayPal’s former CEO, put it more bluntly than any outside analyst did when he arrived in 2023, telling investors he was working out which acquired units were core and which were, in his words, boat anchors. That is a striking thing for a chief executive to have to say about assets his own company chose and paid for.
The asset it owned and never priced
Venmo is the clearest case of the same habit, and the most expensive.
Venmo cost Braintree $26.2 million in 2012. By 2021 it was moving $230 billion a year. Its growth was never the problem. Its growth was extraordinary, viral, and essentially free, the kind of adoption curve companies spend billions trying to buy.
Look at when PayPal actually built a business on top of it. Pay with Venmo, the Venmo debit card, the Venmo credit card, business profiles: those arrived in a cluster around 2020 and 2021. Amazon acceptance came in 2022. Venmo has existed since 2009.
So the monetization machinery showed up roughly a decade after the product found its audience, and only once PayPal’s own growth had started to wobble.
The results now are genuinely good. Venmo TPV hit $93.8 billion in the second quarter, up 14% currency-neutral, the second straight quarter in the mid-teens. Venmo debit card monthly actives grew more than 50%. Pay with Venmo monthly active users grew by around 30%.
That’s a well-run asset. It’s also one that showed up about eight years late, into a market where Zelle, Cash App and Apple Cash had all had time to settle. PayPal owned the best consumer payments brand of the smartphone era and treated it as a feature for most of a decade.
What replaced the eBay revenue
The eBay agreement wound down from 2018 to 2023. PayPal knew the date. The interesting question is what it built to replace that revenue.
The answer, mostly, was volume. Braintree scaled hard into large enterprise processing, winning the kind of accounts that move enormous sums at thin, annually renegotiated margins.
That was a real commercial achievement. It also quietly changed what PayPal is.
Where the growth actually is
This is the part that explains the valuation, and it comes straight out of PayPal’s own second-quarter deck, published on July 28th, 2026.
Branded checkout online, the high-margin business the company was built on, grew 2% currency-neutral. It is now 28% of total volume.
Unbranded payment service provider volume, mostly from Braintree, grew 13%. It is 45% of total volume.
Venmo grew 14%. Branded experiences, including in-store, grew 6%. International volume grew 0% currency-neutral, and international revenue actually fell 3%.
Now put the two headline numbers side by side. Total payment volume grew 10%. Transaction margin dollars grew 1%.
That’s the argument, in two figures. PayPal moved 10% more money and kept 1% more of it.
The take rate shows the same thing from another angle. Total take rate went from 1.87% in the second quarter of 2025 to 1.78% a year later. Transaction take rate went from 1.68% to 1.61%. Transaction margin fell from 46.4% to 44.9%, and from 47.7% in early 2025.
None of that is a demand problem. Demand is fine. It’s a mix problem, and not the good kind of mix. A bad mix is what’s left behind by years of decisions about where to compete and what to defend.
PayPal is growing fastest precisely where it earns the least, and the business it earns most from has stopped growing in any meaningful way. Active accounts have sat at 439 million for five consecutive quarters, roughly four million above where they stood at the end of 2022. That’s four years of essentially flat user growth, over a stretch when global e-commerce was adding buyers by the hundred million.
Who took the button
Bernstein’s estimate is the number to hold on to. PayPal’s share of US digital wallets has fallen from roughly 90% in 2017 to about 50% in 2023, and is now around 40%. Apple Pay sits near 20%. Shop Pay is in the high teens and compounding at about 30% per year, with an estimated $110 billion in volume last year.
Losing half your share of a market you effectively invented takes real competitive pressure. Look at where it came from.
Apple had the device, and the button that lives behind a fingerprint doesn’t need to be trusted; it just needs to be there. Shopify had the merchant relationship, so Shop Pay arrived pre-installed across millions of storefronts. Stripe had the developer and built Link on top of that access. PayPal had the habit.
Habit is the most perishable of those four. It survives only as long as it stays the easiest option, and it stopped being the easiest option somewhere around the time Face ID became standard.
The structure of e-commerce moved too. Amazon, Walmart and Shopify now account for around 55% of US retail e-commerce volume, up from 49% in 2023, and they are growing faster than the market. Not one of them has a reason to hand a third party the checkout experience. The open web, where a trusted third-party button was worth a premium, is the part of e-commerce that stopped growing.
PayPal’s answer was Fastlane, launched in January 2024. It’s a good product. One-click guest checkout, strong conversion data, exactly the right idea.
It also arrived years after Shop Pay and Link had established the behavior, and PayPal chose to distribute it through Fiserv and Adyen, announcing both partnerships in August 2024.
There’s a real argument for that. Reach beats purity, and Fastlane inside somebody else’s stack still touches merchants PayPal would never sign directly.
But look at what it means. PayPal now earns a licensing return on its checkout technology by shipping it through firms that compete for the same checkout, at a moment when its own branded checkout is growing 2%. That is monetizing the technology and conceding the position in the same transaction.
The easier problem
In August 2022, Elliott Investment Management confirmed a stake of more than $2 billion. PayPal responded the same day with cost cuts, a $15 billion buyback authorization, and a new chief financial officer.
Elliott had a case. PayPal had overhired into a pandemic that ended, then spent early 2022 abandoning its own 750 million-account target.
But look at what Elliott diagnosed. Cost, not position.
Cost is the easier of the two. It’s measurable, responds to instruction, and shows progress next quarter.
Losing the button was slower, harder, and invisible on any dashboard. PayPal executed the diagnosis it was given and never looked for the one underneath.
Read the preference straight off this year’s guidance: roughly $6 billion of share repurchases against about $1 billion of capital expenditure. Six to one, at a company whose leadership has publicly concluded it underinvested in its own technology platform.
That ratio is a strategy whether anyone calls it one or not. A buyback says the best available use of a dollar is to have fewer owners.
Fair enough when the shares are cheap. An admission when the alternative was fixing whatever made them cheap.
To be fair, the mechanics work, and technology spend did rise 10% in the quarter. Second-quarter profit fell 12% while per-share profit fell only 3%, because roughly a tenth of the company was retired over the year.
But PayPal has spent around $36 billion on its own stock since 2015, and the company now trades at around $50 billion. Eleven years of returning capital, and the market has priced almost all of it back out.
Three plans in three years
Dan Schulman’s PayPal was going to be a super app, then after Elliott it became a cost story. When Alex Chriss arrived in September 2023, his goal was to turn a payments company into a commerce platform, and he shipped Fastlane, PayPal Ads, the PayPal Everywhere debit push and a set of agentic commerce partnerships. He left on 2 February 2026.
Enrique Lores took over on 1 March 2026. By the end of April, he had split the company into three units: Checkout Solutions & PayPal, Consumer Financial Services & Venmo, and Payment Services and Crypto.
In May came the restructuring, targeting roughly 4,760 roles, or about 20% of the workforce, and aiming to deliver at least $1.5 billion in gross run-rate savings, phased out to 2029. The plan runs in three stages: strengthen the fundamentals through 2027, build momentum through 2028, then accelerate and disrupt thereafter.
Judge the plan on its merits, and it holds up. The diagnosis is honest, the reorganization maps to real customer groups, and about $400 million of savings should land by year-end.
The problem isn’t the plan. The problem is that it’s the third one.
The verdict arrived from outside
With so many changes in such a short time, without any tangible results, others start to take notice and form their own plans. Bloomberg reported Stripe had been looking at PayPal in February.
On 15 July, Stripe and Advent submitted an offer: $60.50 per share, more than $53 billion, roughly $50 billion in committed bank financing, an ownership split evenly, and no stated intention to break the company up. That was about a 28% premium.
On 20 July, the board met and rejected it as inadequate, without closing the door. During their Q2 results call, Lores said he would consider any path that offers shareholders “superior value.”
That sounds great, but what does that mean strategically?
Stripe processed $1.9 trillion last year, up 34%, and was valued at $159 billion in a February employee tender. Stripe does not need volume. It has more than PayPal does, and it’s growing at three times PayPal's rate.
What Stripe cannot build quickly is the consumer side. A brand that hundreds of millions of people already have accounts with, a peer-to-peer network with genuine social gravity, and a wallet consumers will actually load money into. That takes fifteen years or an acquisition.
Which answers the question this piece opened with. The assets are worth considerably more than the company that owns them, and the bid is someone saying so out loud with $50 billion of committed financing behind it.
In other words, PayPal’s board is making a specific bet. It’s betting that a plan running to 2028 and beyond, in the hands of a chief executive who started in March, will pay shareholders better than cash on the table today. That’s a defensible bet. It also has to be re-earned every ninety days.
Here’s what each outcome would prove. None of this is a prediction.
If a higher offer arrives and the board takes it, the rejection was competent price discovery, and the assets were always worth more than the plan.
If a higher offer arrives and the board refuses again, the board is claiming it can beat a control premium organically, and every future quarter becomes a referendum on that claim.
If talks end with no deal, PayPal gets measured against its own numbers with no bid to flatter the share price, and the number that decides it is branded checkout growth, currently 2%.
Waiting costs Stripe and Advent almost nothing. The money is committed, the strategic case doesn’t expire, and every quarter that looks like the last one moves the argument their way.
PayPal has spent eleven years learning that a portfolio and a position are not the same thing. The market cap was only ever the receipt. The click was the business.
Thank you for reading.
P.S. If you’re reading this and are looking for the insights to help you improve your own strategy, that’s exactly what I help payments companies figure out.
20+ years in payments data and strategy. From being the First Data Scientist at Adyen, to being the First VP of Data Science & Analytics at Checkout.com, to helping over 50 of the top 150 acquirers and issuers globally through my consultancy.
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