PayPal has announced that it will be allowing its users to buy, sell, and hold digital currency beginning in a few weeks. This means that PayPal’s 346 million active users will soon be able to participate in the digital currency markets directly from the online payments system. In addition, PayPal plans to expand its digital currency service offering to Venmo users as well as the 26 million merchants who use PayPal beginning in early 2021.
How it works for consumers
To begin with, PayPal’s digital currency service will only allow users to buy, sell, and hold digital currency. Eventually, it will let users spend their digital currency at PayPal merchants.
“There are no service fees when buying or selling cryptocurrency through December 31, 2020,” said PayPal in their official statement, “and there are no fees for holding cryptocurrency in a PayPal account… Consumers will be able to instantly convert their selected cryptocurrency balance to fiat currency, with certainty of value and no incremental fees.”
What the wallet cannot do is accept external deposits, support withdrawals to external wallets, or facilitate digital currency transfers to other PayPal digital currency wallets.
How it works for merchants
“PayPal merchants will have no additional integrations or fees, as all transactions will be settled with fiat currency at their current PayPal rates,” said PayPal. “In effect, cryptocurrency simply becomes another funding source inside the PayPal digital wallet, adding enhanced utility to cryptocurrency holders, while addressing previous concerns surrounding volatility, cost and speed of cryptocurrency-based transactions.”
What this means for the industry
PayPal integrating digital currency services thanks to its partnership with Paxos Trust Company is bound to have an impact on the digital currency industry. PayPal is a prestigious company in the traditional payment services space, and its vast network as well as legacy has the potential to open the floodgates to the digital currency sector.
PayPal is the very first company to receive a conditional crypto license from the New York State Department of Financial Services, which means they already have permission to provide services in the state with the most-difficult barrier to entry for digital currency service providers.
With their service coming to the mobile-payment app Venmo and merchants in the first half of 2021, you can expect there to be more individuals and companies participating in the digital currency space in the next few months.
See also: HandCash presentation at CoinGeek Live on Making Bitcoin Easy to Use for Everyone.
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