Paypal recently announced its entry into the cryptocurrency market. Paypal partnered with cryptocurrency company Paxos to launch a new service. Users in the US will now soon be able to buy, hold, and sell cryptocurrencies.
Those virtual coins could then be used to buy things from the 26 million sellers which accept PayPal, it said. PayPal plans to roll out buying options in the US over the next few weeks, with the full rollout due early next year. Bitcoin prices rose alongside the news, breaking the $12,000 (£9,170) mark. The other cryptocurrencies to be added first will be Ethereum, Litecoin, and Bitcoin Cash (a spin-off from Bitcoin).
All could be stored “directly within the PayPal digital wallet”, the company said.
There are 26 million merchants that offer PayPal around the world. For those merchants, customers paying in crypto won’t have any impact. Everything will be converted to a fiat currency when a transaction is settled. Other mainstream fintech companies, such as mobile payments provider Square Inc and stock trading app firm Robinhood Markets Inc, allow users to buy and sell cryptocurrencies, but PayPal’s launch is noteworthy given its vast reach.
The company, based in San Jose, California, has 346 million active accounts around the world and processed $222 billion in payments in the second quarter. Cryptocurrencies tend to be volatile, making them attractive to speculators, but a lot less appealing to merchants and shoppers. Transactions have been slower and more costly than other mainstream payment systems.
As a part of today’s move, PayPal has been granted a conditional Bitlicense by the New York state department of financial service, it should be able to launch its crypto service in partnership with Paxos in New York.