With an ever-increasing demand for digital and online payments, Paypal will increase the utility and usability of cryptocurrencies by making them available as a funding source for purchases, with nearly 26 million merchants accepting the currencies.
The service has been enabled by a partnership with Paxos Trust Company and has seen PayPal secure a first-of-its-kind conditional Bitlicense from the New York State Department of Financial Services.
With over 5,300 different types of cryptocurrencies, PayPal has been selective in its choices, and will only offer support to Bitcoin, Ethereum, Litecoin and Bitcoin Cash. Customers will then be able to instantly convert their cryptocurrency balance to fiat currency.
In addition to this, PayPal will offer educational content which aims to help account holders understand more about cryptocurrency and blockchain, as well as the risks and opportunities associated with investing.
Dan Schulman, President and CEO of PayPal, said: “The shift to digital forms of currencies is inevitable.”
“This shift will bring with it clear advantages in terms of financial inclusion and access; efficiency, speed and resilience of the payments system; and the ability for governments to disburse funds to citizens quickly.”
“Our global reach, digital payments expertise, two-sided network, and rigorous security and compliance controls provide us with the opportunity, and the responsibility, to help facilitate the understanding, redemption and interoperability of these new instruments of exchange.”
However, there are concerns from the crypto community, as customers currently cannot move the cryptocurrencies to other accounts either on or off PayPal, and PayPal will not provide customers with the private key. There will also be a transaction fee for any purchase or sale, but these have been waived until 2021.
Upon the news, Bitcoin’s price hit a record high for the calendar year, rising 13% to $12,900 on Thursday. PayPal’s share price had a similar reaction, with shares up 7% to $215.