Alphabet Inc. (GOOGsubsidiary Google and PayPal Holdings, Inc. (PYPL) have inked a partnership that enables Android Pay users to make payments using PayPal's app. According to a Bloomberg report, the partnership broadens "PayPal’s reach into coffee stores, which [PayPal CEO Dan] Schulman sees as key to getting customers to use PayPal more frequently than the current average of two to three transactions per month."

PayPal, which started life as an online payments solution, is attempting to transform itself into a finance tool that can be used in a variety of circumstances, including transfers across borders and daily purchases. However, the deal might not result in a significant transaction uptick for PayPal. According to estimates,  7 percent of Android phone users had used the Android Pay app as of 2015. On the other hand, competitor Apple Inc.'s (AAPL) Apple Pay had 17 percent of its users using its payments app. (See also: Can Paypal Stock Still Pay in 2017?)

The Bloomberg report has another take on the partnership. It states that the partnership could "rekindle" talk about a Google acquisition of PayPal, and the director of a research firm is cited as saying that the more closely both companies work together, the "more potential there is for a future combination." Google's cloud services already count PayPal as a customer. (See also: Alphabet Is Top PayPal Choice for Cloud Hosting.

Activist investor Carl Icahn first sparked this conversation in 2014, when he suggested that a merger between Google and eBay Inc. (EBAY), PayPal's owner at that time, would benefit the Mountain View, California-based company's foray into e-commerce and payments. Much has changed since then, and eBay and PayPal are now separate, publicly traded companies. To be sure, a PayPal acquisition would certainly help Google strengthen its Android ecosystem. PayPal reported revenue of $10.8 billion, up 21 percent on a yearly basis, last quarter. More importantly, the number of active transactions per account increased to 31, up 13 percent from the same period a year ago. (See also: Top 5 Companies Owned by PayPal.)

Want to learn how to invest?

Get a free 10 week email series that will teach you how to start investing.

Delivered twice a week, straight to your inbox.