Stripe teaming up with a major investment firm to buy PayPal Holdings could create a major digital payments processor with muscle for future plays in stablecoins and artificial intelligence.

Stripe has reportedly locked arms with Advent International to buy PayPal for $53 billion, Reuters reported late Tuesday. The companies apparently made the bid for PayPal earlier this month, after an initial approach in April, Reuters reported.

Spokespeople for Stripe and PayPal declined to comment Wednesday.

Analysts who follow the payments industry consider the bid a credible one, given Stripe’s $159-billion valuation and the private equity firm’s $100 billion in assets under management. While Stripe has some overlap with PayPal, Advent would allow for investments to expand the combined company, or break off some parts of the business.

Media reports earlier this year that there were a wide variety of potential suitors for PayPal, including Stripe, Block, Apple or even big banks. Those reports followed a fourth-quarter financial report that disappointed investment analysts and preceded the February exit of the company’s former chief executive, Alex Chriss, who was replaced by Enrique Lores.

“A joint offer from a leading payments operator in Stripe and active payments sector investor in Advent seems more credible,” analysts at the investment firm TD Cowen said in a note to clients on Wednesday.

Advent bought the Canadian payments player Nuvei in 2024 in a $6.3 billion deal, providing support for Nuvei’s purchase last month of the cross-border payments company Payoneer for $2.75 billion. Advent also has invested in other fintech businesses.

Stripe and PayPal, both with main offices in California, have much in common with the payments processing universe, but they’ve grown up in different eras, resulting in divergent prospects for their businesses now.

While San Jose-based PayPal, which also owns the peer-to-peer digital service Venmo, was an early innovator in digital payments in the 20th century, it has struggled with merchant and consumer adoption in recent years through a series of CEOs seeking to jump-start growth for its trademark branded PayPal button.

By contrast, Stripe, founded in 2010, has become an international digital juggernaut, with bases in South San Francisco and Dublin, delivering processing as well as other e-commerce and finance software services to smaller and midsize businesses. Its consumer offering, Link, is lesser known than PayPal’s brand in that adjacent market.

The deal would take PayPal private with Stripe and Advent owning equal shares of the business, according to Reuters.

Stripe would likely benefit from PayPal’s prominent brand, but in light of its own arguably more modern digital operations in merchant processing it’s not clear it would be a benefit, especially given PayPal recently losing share to younger competitors in the market.

“We are not entirely sure why Stripe would want to own 50% of PayPal. It is already the clear leader in e-commerce processing, with a superior tech stack and leading customers,” analysts at the investment firm William Blair said in a note to clients Wednesday.

“PayPal could offer scale, a branded button, and new customers. However, Stripe will probably process about 40% more volume than PayPal this year despite exposure to generally smaller merchants,” they added.

While PayPal and Stripe might benefit from bringing their stablecoin interests together – PayPal has issued its own currency and Stripe bought the platform Bridge – it’s not clear that Stripe needs the relatively low-volume PayPal coin to further its ambitions, the analysts said.

With PayPal’s larger consumer following, including via Venmo, it might contribute more wherewithal to the companies’ shared merchant base in creating a two-sided platform for pursuing agentic commerce, the TD Cowen analysts noted. Prospects for payments processing driven by artificial intelligence have captured the industry’s attention.

PayPal, which has been in play to some degree since Lores became CEO, might get a serious shot in the arm from being part of the younger upstart rival.

“Several of PYPL's businesses, such as Venmo, have been undermonetized and a possible combination with Stripe could help unlock this potential value,” RBC Capital Markets analyst Daniel Perlin said in a report to that investment firm’s clients on Wednesday.

Some earlier reports have suggested that PayPal might divest Venmo, or other businesses, continuing a string of such sales that have been part of attempts to reduce costs and streamline a business that grew through acquisitions in earlier years.