Last week the rumor mill was turning rapidly with news that PayPal was in talks to purchase visual bookmarking tool Pinterest. The purchase would have been a big one, as PayPal was said to have offered $45 billion for Pinterest.
PayPal has been quick to quash the gossip, however. The company issued a release on Sunday stating, “In response to market rumors regarding a potential acquisition of Pinterest by PayPal, PayPal stated that it is not pursuing an acquisition of Pinterest at this time.”
But there are a few arguments why acquiring Pinterest would actually be good for PayPal. Let’s take a look.
Bolster online shopping
Integrating Pinterest into its own app would give PayPal the potential to be an online shopping powerhouse. The curated nature of the images on Pinterest makes the social media company, in effect, a staged showroom for potential ecommerce purchases.
This is thanks to Pinterest’s Product Pins, a tool that essentially helps users purchase items they see in a pin without leaving the Pinterest app, and Shoppable Pins, affiliate links that content creators can add to pins to receive a commission from purchases.
PayPal is already known for offering payments, loyalty programs, money transfer capabilities, and a high-yield savings account. If the company integrated Pinterest within its own app, it could serve as a shopping inspiration app. Pinterest users already spend hours browsing to get ideas for everything from clothing to gifts to vacations. If PayPal could insert these habits into its own app, it could become the app where consumers go before they even think about the transaction.
Compete with Amazon
Buying Pinterest would help PayPal compete even with the likes of Amazon and eBay, PayPal’s own former parent company. While the transaction volume wouldn’t come near that of Amazon’s, PayPal would have a small leg up on the online retail giant.
That’s because Pinterest would bring an addictive, continuous scroll interface with a built-in client base. What’s more, users can plan and purchase almost anything from Pinterest– even travel tickets and experiences. For example, users planning their trip to the Maldives can purchase their hotel stay from within the Pinterest app. In contrast, when an Amazon customer searches “Maldives,” they are directed to purchase a book or a t-shirt.
Bolster its reputation as a superapp
The new release inches PayPal closer toward becoming the first super app in the U.S. Last month, the company launched a new version of its mobile app.
However, the app lacks some elements of more traditional super apps. Even though PayPal has a wide variety of financial tools and capabilities– including a high-yield savings account, loyalty and rewards tools, billpay management tools, a direct deposit feature, gift card management, credit access, buy now, pay later services, and crypto transactions– the app lacks breadth.
As we reported earlier this year, there are 10 key elements to a super app. And even if PayPal successfully integrated Pinterest, it would be missing most of the elements, including food delivery, transportation services, travel services, health services, insurance, and government services.
What’s holding PayPal back?
Why might PayPal be hesitant to acquire Pinterest? A lot of it likely has to do with the price tag. Pinterest has a current market capitalization of around $32.7 billion. The rumored $45 billion acquisition represents about 15% of PayPal’s own market capitalization of $290 billion.
An acquisition of this size wouldn’t be out of the ordinary in the fintech industry. However, the deal would be sizable enough that PayPal would need a very clear value proposition with the integration of Pinterest.