Finance News

Possible impact of PayPal allowing cryptocurrency purchases

Bitcoin
Written by Steven White

PayPal has been a huge name in the online payments industry since being launched in an IPO back in 2002. It was listed just outside the top American companies in terms of revenue in the 2019 Fortune 500 listing.

Will their recent announcement of a move into cryptocurrencies affect their position, or cause a revolution in the digital money business?

What will they now offer?

This shift in policy will allow users of PayPal to buy cryptocurrencies, with Bitcoin, Bitcoin Cash, Litecoin, and Ethereum being the coins that they will be working with. Once a wallet holder has purchased some tokens for one of these currencies, they can then use them to pay for purchases from the 26 million merchants who accept PayPal.

The first people who can try this approach will be Americans, as the intention is to introduce the cryptocurrency option in the US in the next month or so. If it is a success, then we can expect to see the service reach other parts of the planet in early 2021.    

Any users who buy digital money in this way can store it directly in their PayPal online wallet. This means that they will see their BTC or other tokens using the company’s mobile app or on the desktop site.

BNPL and other things you can do with PayPal

Another recent change to PayPal’s services has helped to show that the payments giant is still looking for new ways to add value. This is because they launched a scheme called “Pay in 4” a few months ago.

Again, it is targeted initially at the American market and looks to take advantage of the increases we have seen this year in the Buy Now Pay Later (BNPL) sector. PayPal will now allow customers in the US to divide their payments over four instalments in six weeks, provided that the total cost is from $300 to $600.

For consumers, this means that they get more flexibility when making purchases, with no interest added to the overall cost. Merchants will get paid the full amount upfront, so there is no risk to them.

In 2019, they teamed up with Instagram for a scheme called Checkout on Instagram. This was created to allow customers in the US to buy and sell on the social media platform, using stickers and tags to make the process easier.

Another way of using PayPal is through online betting accounts. It joins other e-wallets such as Skrill and Neteller in this sector, as well as cards from Visa and MasterCard, among others. PayPal can be used on casino sites such as Roxy Palace, 32Red, and 888, and the payment service is used to ensure safe and secure deposit and withdrawals can take place on any casino site.

The acquisition in early 2020 of Honey for more than $4 billion suggests that PayPal is still looking to the future and searching for new markets, while consolidating their position as an online payments processor. This link-up will allow users to automatically find coupons at the check-out.

Will this move help PayPal to grow?

The big question is whether PayPal will benefit from allowing their users to buy cryptocurrencies and then use this virtual money for buying things. With over 280 million active users and net revenue of $2.46 billion in 2019, this brand is already hugely popular all over the world.

Their latest changes appear to be aimed to keep them at the forefront of an online payments market that has been shaken up by the arrival of innovative rivals like Revolut and Monzo. Without making these moves, they ran the risk of falling behind and perhaps starting to appear like an out-dated option.

Source: Pixabay.

Will it lead to greater interest in cryptocurrencies?

The biggest beneficiaries of PayPal’s new policy on cryptocurrencies could be the existing holders of these tokens. The announcement of the company’s latest plans was followed by a rise in the price of Bitcoin.

This could be due to investors believing that it will now be easier for people to buy digital coins and use them, leading to more movement in the market. Reports suggest there are more people interested in these currencies than currently own them, with a Grayscale Investment survey finding that 55% of American investors are interested in buying Bitcoin.   

The PayPal release was accompanied by a statement saying that they will provide educational content regarding cryptocurrencies that their clients can check out.

Overall, this is probably an important step for PayPal, to keep its service relevant in changing times. However, the positive effect that they see may be lower than the impact that it has on the cryptocurrency markets.

Main image: Pxhere.

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