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PayPal Buying Pinterest: How a Fintech Company Benefits from Buying a Social Media Martech Company

The PayPal-Pinterest deal is expected to be the biggest technology-related acquisition in the modern era. Fintech is riding an all-time high with the kind of innovations and investments acquired in 2021, despite second wave COVID-19 striking down major business opportunities. Modern e-commerce trends suggest that the global economy is converging around technologies that relate to Digital Marketing and Sales (Martech and Salestech), Advertising (Adtech), Retail (Retail Tech), and Financial Services (Fintech). The global Fintech market is witnessing a massive rebound in 2021, and PayPal is taking the opportunity by marching forward with a speculative deal that would make it a leading martech player as well. Yes, sources state PayPal is in talks to buy Pinterest, a leading social media marketing that allows users to pin creative visual content in the form of images on its app. This has become the biggest news of the fintech market in 2021 since Plaid managed to avoid Visa’s attempt to acquire it last year.

Fintech News of 2021: Visa Confirms it Has Called Off Merger Agreement Involving Plaid

BTW, the speculations related to PayPal started fluttering within hours of the announcement related to the launching of the Truth Social app. According to Google search data for 21 October 2021, Truth Social led the keyword search trends in the social media domain, registering 600% higher search rates compared to Snapchat and 10x times more than WhatsApp. Truth Social app is owned by former POTUS Donald Trump.

Making the Martech Dive

It’s new for a marketing technology company to dive into payments ecosystems. Amazon, Facebook, WhatsApp and Twitter have all tried doing it. But, PayPal has decided to reverse the engineering and acquire a martech firm and explore Fintech growth opportunities and disrupt social media networking landscape.

This could prove to be a deciding factor for Fintech-martech integration, especially when PayPal is involved. For a majority of online shoppers and merchants, PayPal is favored as the easiest and most reliable medium to make digital payments. There are three main reasons that make PayPal a go-to choice for digital payments in 2021.

  • Unmatched user experience and seamless navigation
  • Extremely nimble and real-time notifications on payments tracking
  • Extremely strong user data security and compliance

We spoke to leading martech leaders from the industry who mentioned why this Fintech-Martech combo will become a regular phenomenon in the coming year, courtesy of the speculative PayPal-Pinterest deal.

Justin Biddle, UK Lead at Shopware, said: “PayPal’s bid for Pinterest has the potential to disrupt the e-commerce world and this tie-up could see PayPal transform its business model into an e-commerce platform. PayPal sees a lot of potential in Pinterest’s model, which has 454 million monthly active users worldwide – meaning PayPal values each user at $100 – this is pretty extraordinary, as conversion rates to traditional wallet/financial products would traditionally be seen as pretty low. E-commerce has been looking at how to tie up content and commerce for well over a decade and Pinterest is one of the few mass-market platforms that would still be available for a “transaction” company like PayPal to acquire.”

Pinterest has been testing its digital capabilities for its users for some time now. And, it firmly tasted success by announcing the launch of Idea Pins for the creators that allow users to monetize their content. But, that’s not the only reason why PayPal could be eyeing Pinterest for its biggest martech acquisition in fintech history. Almost a month ago, it was reported that Pinterest shares were trading “lower by 5.7% at $51.67. Pinterest has a 52-week high of $89.90 and a 52-week low of $35.77.”

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Pinterest has a massive user base, along with equally potent social media following across all leading Social Media Marketing channels.

Did you know that PayPal has 63 active online social media profiles?

Source- Unmetric

Justin continued, “The tie up with PayPal would therefore herald a much more transactional Pinterest, away from what has until now been essentially an affiliate-type relationship with e-commerce. It has the potential to become a powerful hub for multiple brands and retailers to engage with shoppers and boost sales. Pinterest’s strength is that it has always been at the “curator” end – its flexible model is used first and foremost to inspire consumers who can then go on to make purchases. This is essentially what most retailers are trying to be these days, so it makes sense for it to evolve to be the whole package, especially with a transaction engine like PayPal behind it. Pinterest has built a strong community of users on its platform and allowed those who want to simply be curators to thrive. It’s therefore important that this is not lost if an acquisition goes ahead and is developed into an e-commerce platform, allowing both e-commerce professionals and curators to collaborate and exist in harmony.”

Making the AI Connection in PayPal-Pinterest Deal

Both PayPal and Pinterest use Artificial Intelligence and Machine Learning capabilities within their respective product development roadmap.

PayPal, for instance, uses NLP as an AI capability for fintech user data labeling and financial fraud detection purposes. The fintech leader has also developed its own ingenious chatbot using procured labeled data. More work in this AI field is expected, and with Pinterest coming on board, things will only become faster. Pinterest’s content discovery and recommnendation engine work on AI NLP and image analytics techniques, which could be used to analyze billions of financial data points that are involved in data points,. From fingerprint detection to facial recognition systems to user personalization on the app, this unique partnership could transform the way technology investors might start looking at the way fintech and martech (both) could take digital transformation in e-commerce to new heights.

[To share your insights with us, please write to sghosh@martechseries.com]

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