PayPal Opens Crypto Payments

PayPal opened its Checkout with Crypto product to US customers Tuesday, allowing them to purchase items online using digital assets held in their PayPal wallets.

PayPal framed the offering as a “new way for businesses to get paid” and a way to add utility to cryptocurrency for its holders, according to a press release Tuesday. Although, while digital cash was the initial vision for bitcoin, that use case hasn’t yet taken off as merchants largely don’t want to take on the risk of its price volatility and cryptocurrency holders largely prefer to hold onto it as the price climbs higher.

Consistent with those trends, when customers use Checkout with Crypto, they sell their crypto and use the proceeds of the sale to pay for their purchases. Merchants are paid in dollars.

“We have no plans to purchase crypto  for investment or cash management purposes at this time,” a spokesman for PayPal said in an emailed statement when asked if PayPal had plans to hold bitcoin on its balance sheet. “As we further develop our product offerings, we may determine it appropriate to hold certain balances of crypto  for operational  purposes. However, we are not yet at a point that we believe this is necessary.”

Paxos Trust Company handles all the trading and custody of PayPal customers’ cryptocurrency balances. 

PayPal has 361 million consumer accounts and 29 million merchants in its global network. It began supporting bitcoin, ether, litecoin and bitcoin cash trading in October, when it first announced customers would soon be able to use their digital assets to pay for purchases from PayPal merchants.

More importantly, company’s new Crypto unit is laying the groundwork for the near-future implementation and use of central bank digital currencies. The company has also acquired the Israeli custody startup Curv as part of its digital wallets strategy.

“You think about how many [digital wallets] we’re going to have in the next two, three or five years, and we’re a perfect complement to central banks and governments to distribute those digitized forms of currency,” he said in the company’s fourth quarter earnings presentation last month. “This is a once in a multi-decade opportunity where the fundamental rails of the system are going to be redefined and we have a chance to help shape that.”

This is a developing story.