PayPal’s consumer scale, including peer-to-peer app Venmo, would strengthen Stripe’s expansion beyond its core merchant business, Mizuho analysts said Tuesday after reports that a deal could be in the works.

Mizuho analysts Dan Dolev and Alexander Jenkins issued the note after Bloomberg reported Stripe expressed interest in acquiring all or part of PayPal. The privately held payments firm recently marked its valuation at $159 billion, compared with PayPal’s roughly $43 billion market capitalization.

“Stripe’s recent valuation of $159 billion dwarfs PayPal’s $43 billion market cap, making a transaction feasible from a size standpoint,” the analysts wrote.

On potential upside, Mizuho said Stripe, long viewed primarily as a business-to-business payments provider, would gain a scaled consumer brand through PayPal and Venmo, which the analysts described as the “ultimate” peer-to-peer franchise.

Additionally, the analysts suggested PayPal's Braintree merchant infrastructure could help Stripe compete with its payments processor rival Adyen. "Braintree would add about ~$700 billion of total payment volume (TPV), which is material," they said, adding that Stripe's annual TPV is roughly $1.4 trillion.

Both PayPal and Stripe are already active in the stablecoin sector. Combined, Stripe and PayPal could become a stronger player in the space, the analysts said.

Stripe acquired stablecoin platform Bridge last year, while PayPal launched its own dollar-pegged token in 2023 through a partnership with Paxos.