By Landon Manning
In a continuation of its plans to more thoroughly encourage the use of cryptocurrency, online payments giant PayPal (PYPL) has announced that it will allow users to pay in bitcoin (BTC) and other leading assets upon checkout with various vendors.
PayPal has been signaling a support for bitcoin for several months. In October 2020, the company announced that it was planning to offer increasing support for crypto assets to roll out gradually, with CEO Jim Schulman claiming that PayPal is “eager to work with central banks and regulators around the world” to support the movement. The first installment of this plan materialized for regular customers in November, when PayPal took on many of the functions of both a wallet and an exchange.
In essence, this new update allowed users to hold crypto assets, such as bitcoin, ether and others, on a wallet integrated directly into their PayPal account. In addition to allowing crypto from other wallets to enter this one, it also allowed for the direct purchase of these assets with fiat currency from the reserves that PayPal itself owned. It is this two-pronged approach that laid the foundations for PayPal’s newest development, though it did not enable bitcoin holders to claim full custody of their own BTC.
On March 30, 2021, the company announced that the next phase of its bitcoin support rollout was forthcoming: an option to pay with cryptocurrency instead of a card or other payment method at vendor checkout. Now, naturally, PayPal itself does not have the power to compel every single merchant that uses its services to accept bitcoin as legal tender. However, thanks to its hosting and exchanging capabilities, PayPal is acting as an invisible middleman in these transactions.
When a user pays with a crypto asset, PayPal will instantly convert that sum into the corresponding amount of fiat currency, free of charge, and then send this fiat currency to the vendor in exchange for goods or services. The full rollout for this plan has not developed yet, but the company’s announcement claims that it will be functional with all 29 million vendors in the next several months.
Since PayPal does not charge any fees for these transactions, this move does not in itself seem like a way to increase profits on its exchange services. However, this move is looking towards a bold new future for the company as a whole. Schulman again made a statement on this development, claiming that “Enabling cryptocurrencies to make purchases at businesses around the world is the next chapter in driving the ubiquity and mass acceptance of digital currencies.”
And, indeed, a move like this could be a real shot in the arm for a decentralized crypto asset that has already been skyrocketing in 2021. With other companies like Visa also moving towards cryptocurrency payments, the wider world’s daily exposure to bitcoin could go up dramatically. A frequent criticism of the crypto space is that, although bitcoin has great potential as a true currency, a great number of its users prefer to treat it as if it were a speculative asset, or perhaps even a pure gamble. Criticisms like this, however, will surely ring a fair bit more hollow after cryptocurrency transactions become a reality for tens of millions of vendors and countless additional customers.
In short, PayPal is hoping that a show of confidence from several industry titans such as itself could change the whole dynamic of the way that average people interact with the world of cryptocurrency. When it becomes that much easier to spend bitcoin at a coffee shop, or grocery store, clothing sale or any other daily transaction, cryptocurrency’s status as a true currency will become an actual fact. Plus, since PayPal is still holding and selling a great deal of crypto assets through its exchange platform, it’s hard to imagine that a rising tide won’t lift its boat too.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.