In July, according to a Reuters report not yet confirmed by the companies, Stripe and the private equity firm Advent International offered approximately US$53 billion for PayPal . In 2021, the same company was valued at around US$360 billion. The natural question is what was lost along the way.
The answer I propose here is less obvious than it seems: before market value, what was lost was the connection with the customer that made PayPal necessary. And the lesson applies to any manager, in any sector: when a company distances itself from its main customer, the market, sooner or later, calculates and presents the bill.
When I read "The PayPal Wars" by Eric M. Jackson in 2006, I learned that PayPal's success came less from innovation and more from the constant advocacy its own customers offered: users who wouldn't accept the idea of using another solution.
Originally, it was an easy company to understand. It solved a very clear human problem: how to build trust between two people who didn't know each other online. The buyer didn't want to pay before receiving the item. The seller didn't want to ship before receiving payment.
PayPal entered precisely that space of distrust and transformed it into a transaction. It wasn't just technological simplicity; it was simplicity of value proposition.
The best proof of the strength of this connection appeared within eBay. At the end of 2001, according to documents that PayPal itself filed with the SEC, approximately 71% of eBay auctions accepted PayPal, compared to approximately 25% that accepted Billpoint, eBay's own payment solution. It's worth pausing at this point.
The platform owner, with its brand, scale, distribution, and direct economic interest, was pushing its in-house solution. And users continued to choose the external one. Sellers wanted to be paid for it; buyers wanted to pay for it.
A few months later, eBay gave up the fight: it bought PayPal for US$1.5 billion and discontinued Billpoint. PayPal grew, and won, because the customer defended it. This is what management literature today calls customer advocacy : the stage in which the customer ceases to be just a user and becomes a spontaneous advocate for the brand.
What happened in the following two decades is well known: the company diversified. And diversification was necessary; reducing dependence on eBay was part of the natural maturation of the business. The problem doesn't seem to lie in diversification itself, but in what didn't come along with it.
While PayPal entered new verticals, expanded its portfolio, and sought new revenue streams, the heart of the business, the PayPal-branded checkout, lost traction—growing by only 1% in the fourth quarter of 2025. A recent study conducted at INSEAD by Renata Câmara Santos, which I had access to, suggests that the weight of the organizational legacy helped to hinder the renewal of the original value proposition. The company that was once championed by the customer began to compete, button by button, for a place on the payment screen.
The harshest interpretation of this decline suggests there was no organizational failure: the root problem simply ceased to exist. That's not what happened. Distrust among strangers online persists, and e-commerce fraud continues to grow.
What happened was the emergence of alternatives across multiple layers of the ecosystem: the protection of payment networks, biometrics, and the operating system button, like Apple Pay, always a touch closer than any third-party button. The customer didn't stop having problems; they simply gained more people to expect solutions from. And what they expect from a payment solution became more sophisticated: convenience, security, speed, and invisibility.
Renewing the connection was never about repeating the original formula. It was about continuing to respond, before competitors, to what the customer had come to expect. That's what Stripe itself did in the following decade, choosing another customer to serve with the same obsession: the developer.
Accepting payments online used to require weeks of integration, contracts, and bureaucracy; Stripe reduced all of that to a few lines of code and built, with developers, the same kind of loyalty that PayPal had built with eBay sellers.
The current offering makes this interpretation difficult to ignore. In terms of processed volume, Stripe and PayPal are now almost equivalent: US$1.9 trillion and US$1.79 trillion in 2025, respectively. Volume is not what the buyer lacks. What it lacks is what PayPal created from the start and Stripe never built: a brand that consumers trust when paying, currently with 439 million active accounts in about 200 markets.
The trust built up over two decades hasn't disappeared; what has weakened is the active defense that sustained it. Trust without defense is stock, not flow—and it's this stock that Stripe wants to buy while it still exists. With it, it completes the ecosystem, serves both sides of the transaction, buyer and seller, and gains the chance to renew the value proposition that PayPal has been letting slip away.
Therefore, I continue to believe that the best summary is this: a company's true mission is not what it writes on its website or hangs on the wall. It's the one that customers defend when someone tries to take it away from them, as eBay sellers did in the 2000s, continuing to display the PayPal button even when the platform owner was pushing its own solution.
PayPal, in its origins, was exactly that. Today the button remains on the screen; what has disappeared is the differentiation. With plenty of alternatives, the customer still pays through PayPal, but would no longer fight for it. The market value has merely reflected this change.
The PayPal case suggests a test that any manager can apply to their own business, and that almost none actually do. Call it the Billpoint test: if tomorrow a competitor with a bigger brand, greater scale, and control of the channel were to push their solution onto your customers, how many would still stick with you?
The answer separates the companies that customers use from the companies that customers defend. If your business were put to that test tomorrow, which side would it be on—and would you have the courage to find out?
* Edson Santos is the founder and partner of Colink, a consultant, advisor, and angel investor with over 26 years of experience in payment methods and financial services. He is the author of *From Barter to Financial Inclusion* and co-author of *Payments 4.0 — The Forces Transforming the Brazilian Market*. His new book, *Invisible Tracks*, is in press.
