Online payment company PayPal announced earlier this year on October 21 that it would launch a cryptocurrency payment service in line with the trend of global industry layout.
PayPal said it started offering the service because of growing interest from central banks and consumers in digital currencies during the COVID-19 epidemic.
PayPal users will be able to buy, hold and sell cryptocurrencies through their PayPal accounts, and will be able to shop at about 26m merchants around the world. The company said its digital wallet will initially allow transactions in bitcoin, Ethereum, BitcoinCash and litecoins.
PayPal launched its cryptocurrency trading service for US customers on November 12, 2020 and plans to launch a cryptocurrency service worldwide in early 2021.
PayPal Holdings (PYPL), an online merchant, has seen its share price jump 17 per cent since November 12 when it launched an encrypted trading platform for eligible US customers. That compares with a gain of about 6.5% for the Nasdaq and 3.5% for the S&P 500 large-cap index.
While PayPal’s foray into the cryptocurrency market isn’t the only catalyst behind its stellar performance, PayPal is well positioned to capitalize on the growing popularity of digital assets.
Some analysts have speculated that the rise in bitcoin prices could have a PayPal the outlook for bitcoin. Despite differing estimates, a 2019 survey of 5,000 people found that 6.2 percent of Americans over 18 owned bitcoin, while a further 7.3 percent planned to buy it for the first time. If these numbers are true, people may choose to buy cryptocurrency from PayPal.
There is also evidence that PayPal is having a positive impact on the price of Bitcoin. Recent industry data showed that PayPal had bought 70 per cent of the newly mined bitcoins in the weeks leading up to the launch of its cryptocurrency platform in the US.
PayPal has said it will not charge transaction costs for cryptocurrencies until the end of the year, nor will it charge users who hold cryptocurrencies in their PayPal accounts.
Meanwhile, PayPal plans to launch cryptocurrencies worldwide in early 2021. Dan Shulman, the company’s chief executive, said it was only a matter of time to support the central bank’s digital currency (CBDC).
PayPal plans to allow PayPal users to use cryptocurrencies in their accounts as a source of funds to pay PayPal’s 26 million merchants around the world starting in early 2021. Consumers will be able to convert the selected cryptocurrency into legal tender at a determined value immediately, at no additional cost. PayPal merchants without additional costs, as all transactions PayPal legal tender are settled at the current exchange rate at which they are traded.
In addition to PayPal, Square’s Cash App has also seen a big increase in revenue since it enabled the purchase of Bitcoin. Nearly 80% of CashApp’s revenue in the third quarter came from fees charged to bitcoin buyers.