Block vs. PayPal: Which Fintech Stock Is Better Positioned for 2026?

Great businesses win by solving problems, and the $2.5 trillion global payments market is a goldmine for companies that can make money move effortlessly.

Two of the firms competing in that space are Block Inc. (NYSE: XYZ) and PayPal Holdings Inc. (NASDAQ: PYPL).

Image source: Getty Images.

As each pushes into new technologies and revenue streams, the next year could define their long-term trajectories.

With this potential turning point, I'll examine which fintech stock may fit best in your portfolio.

PayPal's moves into AI, global payments, and stablecoins

PayPal shares have dipped 37.28% over the last year, but the company has three initiatives that could help reverse that trend: PayPal World, artificial intelligence (AI) agents, and cryptocurrencies and stablecoins. PayPal World and AI agents enhance the current services, while crypto and stablecoins open up entirely new financial terrain for PayPal.

Announced in June 2025, PayPal World will allow customers to pay global merchants using their payment system, or wallet of choice, in their local currency. In essence, you'll start seeing PayPal integrate seamlessly with other payment services.

For AI shopping, PayPal says a customer can tell an AI agent they need a ride to the airport at 4:50 a.m. The agent can both book that appointment and pay for it.

Finally, that brings us to cryptocurrencies and stablecoins. The company enables the buying, selling, and sending of crypto within its wallets. PayPal also offers its own stablecoin pegged to the U.S. dollar called PayPal USD (PYUSD) for fast, global payments. As of this writing, holding PYUSD offers a 4% annual yield.

Its peer-to-peer payment service, Venmo, can also boost revenue over time. As a reference point, in 2021, PayPal said it generated roughly $900 million from Venmo. PayPal expects it to generate $2 billion in revenue by 2027.

Block's next growth chapter

Similar to PayPal, Block shares have stumbled over the last year, dipping 22.48%.

Once again, the key is looking at what lies ahead.

Its flagship Cash App service still has the reputation of friends just sending each other money, but Block is focused on turning it into a complete financial platform. Through banking, savings, direct deposit, bill paying, an AI-powered money assistant, and more, users are gaining fuller control of their financial lives through just one app. In Q3 2025, Block reported $1.62 billion in gross profit from Cash App, a 24% year-over-year increase.

Its global lending products have now surpassed $200 billion in provided credit. Defaults remain low, with 96% of buy now, pay later installments paid on time and 98% of purchases incurring no late fees.

Outside of its consumer products, Block is building out a robust suite of merchant tools to provide businesses with everything they may need, including credit card terminals, payroll services, and loyalty program marketing campaigns. Business owners can also build websites through Block, which could lead sellers to adopt more of its tools over time.

Block has also leaned deeper into cryptocurrencies. In October 2025, it launched Square Bitcoin, which will automatically convert credit card sales into Bitcoin. Block also holds roughly 8,800 BTC, worth nearly $770 million.

The PayPal vs. Block winner

PayPal and Block are both stocks that could rebound in 2026 if their initiatives gain traction.

Block has high-growth segments in cryptocurrencies and lending, and its expanding suite of services and tools for businesses can help it generate more revenue from its current customer base. That high upside potential also comes with a high beta of 2.66, meaning it is more than two and a half times more volatile than the general stock market. Despite those issues, the balance sheet is strong, with $8.7 billion in cash compared to $8.1 billion of debt.

PayPal has steady, transaction-based fees from its global payments platforms and even pays out a dividend of $0.56 per share. Its beta of 1.43 also means it's less volatile than XYZ. This may appeal more to risk-averse investors. The key here will be if PayPal's recent moves can take it beyond being just a steady and mature business. With $12.17 billion in debt and $10.76 billion in cash, PayPal operates with a slight net debt that's reasonable considering its consistent earnings.

Ultimately, the choice comes down to whether you prefer owning PayPal as a dependable revenue machine that could grow meaningfully as it enhances its services and features, or Block's higher-risk path that could deliver outsized returns if its bets pay off.

Jack Delaney has no positions in the stocks mentioned. The Motley Fool has positions in and recommends Block and PayPal. The Motley Fool recommends the following options: long January 2027 $42.50 calls on PayPal and short March 2026 $65 calls on PayPal. The Motley Fool has a disclosure policy.