A giant of payments and a social media company does not look like the most logical partners on paper, but Paypal's offer by Pinterest can be exactly the type of union that both companies need.

PayPal is in advanced conversations to acquire Pinterest in an agreement that would make the paying company pay up to 45.000 million dollars (38.000 million euros) for the social network in which it would be its greatest acquisition of history, as Bloomberg has advanced exclusively.

The possible agreement would be added to the growing arsenal of functions focused on the buyer developed by PayPal with which he hopes to achieve vendors to achieve his goal of having 1.000 million active users.

For Pinterest, the movement can serve as an impulse to its ambitions to expand beyond its origins in the universe of social networks and turn its 454 million users into buyers with the help of one of the world's largest payments in the world.

PayPal seeks, more and more, ways to increase their appeal for sellers and justify their commissions, since their original value proposition - to make online purchases - faces great competition.

PayPal's payment button competes not only with other payment providers such as Stripe and Square, but also with companies of the “Buy now and pay later” model, such as AFFIRM and Klarna, and with payment services with only one click as Apple Pay, Bolt, Fast or Google Pay.

"The value of the PayPal button is increasing.”, Tells Business Insider a source familiar with PayPal's strategy."It is becoming a bloodbath".

Pinterest could serve as a brand discovery channel for buyers on the Internet, and strengthen PayPal in the user's purchase experience.

Pinterest, which began as a social network to share things such as recipes and sources of inspiration around DIY, has gradually gone into electronic commerce and videos based on.Its users now can even be tested makeup and clothing through augmented reality.

The company, which came out in 2019, on Wednesday announced a new set of products for content creators, including rewards and a new characteristic similar to Tiktok called "Takes", where users can bind again to the original publications.

"Pinterest's acquisition is interesting, since it can help PayPal develop a better understanding of customer -aspirational purchase needs and preferences," says Demitry Estrin, founder and CEO of the payment consultant The Futurist Group, BusinessInsider by email.

"Together with transactions data, this can generate added value for PayPal sellers," says Estrin.

When intervening at an earlier phase of the purchase process, PayPal can be presented as a sales partner for retailers.

And it is not the first time that Paypal tries to integrate into the purchase process.

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PayPal acquired Honey, the rewards complement for browsers, in 2019.And he added rewards driven by DOSH for his credit and debit cards venmo.

A PayPal spokesman has declined to comment, and Pinterest has not responded to the request for comments.

An agreement would require "a little execution"

While Pinterest's acquisition could help PayPal boost engagement, he also puts it in competition with his current partners such as Shopify and Electronic Commerce Giants such as Amazon.

"They would be a very interesting competitor potential for Amazon because brands really do not love Amazon, but they have no choice but to sell at Amazon," explains Dan Rosen, a partner of the Commerce Ventures Risk Capital firm, A Business Insider.

External sellers represented 54% of sales on Amazon in 2020, but have faced problems to stand out against competition and be sabotaged by false products of products.

The incorporation of PayPal's electronic commerce capacities (such as payment with a single click and identity verification) in Pinterest could also make it a formidable Shopify competitor when it comes to winning vendors.

"The combination of both platforms would be much more credible for the brand than Shopify," says Rosen, who adds that Shopify has been very successful with small merchants, but the combination of Paypal and Pinterest could be more attractive to larger merchants.

The 'millennials' trust more at Amazon and Paypal than in banks when it comes to personal data

The logistics of the speed with which Paypal and Pinterest could also be integrated has also been raised by some as a potential problem.

For example, PayPal launched the return of money promoted by Honey in October of this year, about 2 years after acquiring the rewards company.

"The possibility of achieving synergies requires a bit of execution, something with which both Paypal and Pinterest have had historically problems," said Allianbernstein analysts in a note to investors on Wednesday.

Some analysts highlighted the price as a reason to take a pause, given the difficulty of merging 2 large public companies.

"The opportunity cost of this type of investment is high, since it could limit PayPal's ability to invest aggressively in other areas of high priority," said Lisa Ellis, partner and principal analyst of Variable Income of Moffettnathanson, in aNote to investors Thursday.

The price of 45.000 million dollars (about 38.000 million euros) is about 8 times the annual free cash flow of PayPal.And PayPal has other areas in which he could invest without less risk of execution, such as international expansion, store payments and "buy now and pay later," Ellis said.

"The fact that Paypal's address is considering such a large bet in the area outside its main franchise of Paypal Checkout could be a reflection that they feel greater urgency to diversify its portfolio outside the online payment," Ellis established.

The agreement could also be seen as a change of strategy for PayPal, which was previously linked to another electronic commerce market.

In his day, PayPal was owned by EBAY and was the exclusive way to pay at the auction site.The giant of the payments was split as an independent company in 2015, and the operating agreement of the companies ended in 2020.

PayPal has manifested himself about his ability to compensate for possible losses in the volume of eBay payments, and the advantage of having the freedom to work with multiple markets.