AI: PayPal’s $200M Wake-Up Call in AI Commerce
Stripe and PayPal race to Power AI Transactions
Hi Fintech Futurists —
Today’s agenda is below.
AI: PayPal’s acquisition of Cymbio signals a structural shift in e-commerce as AI agents collapse discovery, checkout, and fulfilment into a single machine-driven flow, pushing payments upstream into commerce orchestration.
LONG TAKE: Erebor secured OCC and FDIC approvals in just 9 months, without a public product
PODCAST: YieldBasis targets a $50B market by turning impermanent loss into impermanent gain
CURATED UPDATES: Machine Models, AI Applications in Finance & Investment Outlook
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Thanks for your time and attention,
Lex Sokolin
AI: PayPal Enters Agentic Commerce
Last week, PayPal acquired Cymbio — a platform that enables merchants to sell across AI interfaces, including Microsoft Copilot and Perplexity. Market sources estimate the deal at $150-200MM, which is seen as a strategic move, crucial for PayPal to compete in agentic commerce.
As a result, PayPal is shifting from a Web2 payment enabler into product discovery, catalogue distribution, and order orchestration as AI agents collapse the traditional e-commerce funnel. This move highlights everything we discussed in our January analysis of exponential growth, power laws, and returns to scale in agentic commerce. Google and Shopify are launching the Universal Commerce Protocol (UCP), OpenAI and Stripe are pushing the Agentic Commerce Protocol (ACP), and Microsoft is embedding checkout directly inside Copilot.
The infrastructure for shopping is being rewritten around machines quicker than ever. Agentic commerce is reflecting expectations of exponential growth in action. The projections are staggering and converging:
McKinsey: Agentic commerce could generate $1T in US retail revenue by the end of the decade, representing roughly one-third of all online sales.
Morgan Stanley: $190B to $385B in US e-commerce spending by 2030, capturing 10-20% market share
Bain: $300N to $500B by 2030, representing 15-25% of total online retail sales
Current adoption data suggests we’re at the inflexion point of the exponential curve, with 23% of Americans making a purchase using AI in November 2025.
Cymbio could be the middle layer in AI commerce for PayPal. Their core value proposition is the following:
Synchronising product catalogues across marketplaces and channels
Managing inventory availability in real time
Routing orders into merchants’ existing OMS and fulfilment systems
Allowing merchants to remain merchant of record
The Store Sync product allows merchants’ catalogues to become discoverable inside AI agents such as Microsoft Copilot and Perplexity, with ChatGPT and Google Gemini expected next. AI agents can only transact if product data, pricing, inventory, and fulfilment are machine-readable and reliable.
From Checkout to Agentic Commerce Workflow
PayPal processes over $1.7T in annual payment volume and serves 142MM+ monthly active accounts. Historically, PayPal’s leverage sat at the moment of payment. Agentic commerce allows AI systems to “discover products, compare options, and even make purchases on their behalf,” with PayPal handling authentication and payment approval.
With Cymbio integrated, PayPal spans:
Discovery: products surfaced inside AI agents
Decisioning: conversational refinement of options
Checkout: PayPal authentication and payment
Fulfilment: order injection into merchant systems
While PayPal is shipping a service, Google and Shopify are building a standardised protocol for cross-functional agentic commerce. Crucially, Google is wiring UCP directly into Search and Gemini, while Shopify ensures its millions of merchants can integrate once and reach many agents.
UCP is a bid to manage the routing layer of AI commerce, without owning the commerce itself. This is more of a defensive play to ensure no rivals can control the systems of AI commerce by making it “free” and full of lock-in network effects.
PayPal is not competing with UCP so much as positioning itself inside it. Google has explicitly stated that UCP-powered checkout will support multiple payment providers, including Google Pay and PayPal.
OpenAI and Stripe are the main competitors. Back in September, Stripe and OpenAI announced Instant Checkout in ChatGPT, powered by the Agentic Commerce Protocol (ACP). ACP allows agents to initiate purchases via structured APIs, with Stripe issuing shared payment tokens for delegated authorisation.
Stripe followed this by launching an Agentic Commerce Suite in December 2025, allowing merchants to:
Publish catalogues for agent access
Select which AI agents they sell through
Handle payments, fraud, and disputes via Stripe
Receive order events back into existing systems
Stripe processed $1T+ in payment volume in 2024 and supports millions of businesses globally. The company is competing as the default wallet and action layer for AI agents, as it did in becoming the default API for developers of Internet businesses. PayPal and Stripe are obviously going head-to-head.
Comparing the three systems together:
Key Takeaways
Three implications stand out:
Commerce becomes conversational and delegated
Merchants integrate once, distribute everywhere
Payments become embedded infrastructure, not endpoints
As an aside, Mastercard’s January 2026 announcement that it is working on “rules for AI commerce” tries to get ahead of this shift. The payment networks want to define governance before agents ultimately transact at scale. In our January analysis, we concluded, “What banks, Fintechs, and crypto must do is make sure they have a seat at the table.” Financial companies must integrate into these platforms before their financial functions are internalised by Big Tech.
For Banks: Traditional banks lack the technology infrastructure to compete directly with Google, OpenAI, or Microsoft in agentic commerce. But they control payment rails, credit relationships, and regulatory compliance expertise.
For Fintechs: Companies like PayPal, Stripe, and Adyen recognised early that payments alone won’t secure their position. They’re moving upstream into commerce orchestration, merchant services, and infrastructure.
For Crypto: The agentic commerce protocols announced so far are conspicuously traditional through credit cards, Google Pay, PayPal, Stripe, etc. Cryptocurrency and stablecoins remain absent from UCP, ACP, and Store Sync, other than the occasional experiments by Stripe and Coinbase. This represents either a massive oversight or a deliberate exclusion. Crypto companies that build agent-native payment rails (instant settlement, programmable money, global reach) could leapfrog traditional finance, but only if they integrate into AI platforms before the protocols exclude them.
Fundamentally, PayPal is trying to match Stripe and keep up with changing consumer habits. As people turn to AI platforms for more and more of their daily lives, these platforms will become the de facto virtual shop windows for brands.
PayPal’s share price has been performing poorly for a while, declining 37% lower than its 52-week peak. Investors have been questioning the long-term relevance of the company, and Crypto+AI seems to have exacerbated these thoughts. A diversification strategy based on agentic commerce is a price they have to pay to stay relevant.
👑Related Coverage👑
Analysis: A $4.4B Bank for the New Military–Tech Stack (link here)
We examine Erebor, a newly chartered U.S. digital bank founded by Palmer Luckey and Joe Lonsdale, which has raised $350 million at a $4.35 billion valuation despite having no product or website. Erebor secured both OCC and FDIC approvals in record time, and is positioning itself as a digital-first bank for AI, crypto, and defense companies, with plans to offer stablecoin integration, crypto-collateralized loans, and traditional banking services via API.
The bank emerges amidst a broader trend in 2025, where elite founder teams are raising enormous first rounds, often exceeding $100MM, without needing traditional traction.
This is 2025, and it looks ridiculous!
🎙️ Podcast: Building DeFi’s $25B Liquidity Engine, with Curve Founder Michael Egorov (link here)
In this episode, Lex speaks with Michael Egorov - Founder of Curve Finance and YieldBasis. Kicking things off about his journey from experimental physicist to founder of Curve Finance and YieldBasis, highlighting how theoretical physics concepts influenced his creation of financial invariants in DeFi protocols.
Curve pioneered fully automated concentrated liquidity for stablecoins and introduced veTokenomics, a governance model rewarding long-term commitment with voting power and protocol fees. Egorov defends veTokenomics against criticisms of unlock-driven volatility, citing that most CRV locks average over 3 years and behave like permanent commitments. YieldBasis expands Curve’s approach by offering impermanent gain strategies to counter impermanent loss in volatile markets like Bitcoin, aiming to scale toward a $50B market ceiling.
The discussion closes with reflections on DeFi token market structure challenges and Egorov’s call for protocols to connect token value to real economic flows by activating fee-sharing mechanisms.
Curated Updates
Here are the rest of the updates hitting our radar.
Machine Models
Ethical and Bias Considerations in Artificial Intelligence/Machine Learning - Matthew G. Hanna & Liron Pantanowitz & Brian Jackson & Octavia Palmer & Shyam Visweswaran & Joshua Pantanowitz & Mustafa Deebajah & Hooman H. Rashidi
A Critical Field Guide for Working with Machine Learning Datasets - Sarah Ciston & Mike Ananny & Kate Crawford
AI Applications in Finance
⭐ AI-Driven Payment Systems: From Innovation To Market Success - Merve Ozkurt Bas
The Rise Of Generative Ai Agents In Finance: Operational Disruption And Strategic Evolution - Inesh Hettiarachchi
Financial Modeling in Corporate Strategy: A Review of AI Applications For Investment Optimization - Olufunmilayo Ogunwole & Ekene Cynthia Onukwulu & Micah Oghale Joel & Ejuma Martha Adaga & Augustine Ifeanyi Ibeh
Investment Outlook
⭐ Private Equity Outlook 2025: Is a Recovery Starting to Take Shape? - Bain & Company
⭐ Global Venture Capital Outlook: The Latest Trends - Bain & Company
⭐ Global Private Markets Report 2025: Braced for shifting weather - McKinsey & Company
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One underdiscussed implication: when AI agents initiate and authorize payments, the attribution of liability and counterparty risk becomes nontrivial. If an agent procures from an unauthorized supplier or exceeds spending limits, who bears the loss? Platforms that control authentication and tokenization (PayPal, Stripe, Google) will also control the liability frameworks. This is as much a governance and underwriting problem as a technical one.