PayPal, Visa Enable Streamlined Cryptocurrency Transactions

PayPal announced the launch of Checkout with Crypto, which allows customers to purchase certain items online via cryptocurrencies. The new feature is part of the company’s new unit focused on blockchain and crypto/digital currencies and adds to its current capability for customers to buy, sell and hold cryptocurrency. Bitcoin, Litecoin, Ethereum and Bitcoin Cash are the cryptocurrencies accepted, which are processed with clear conversion rates and no additional fees but only one type of cryptocurrency is accepted for each purchase.

ZDNet reports that PayPal senior vice president of Omni Payments Jim Magats said, “until now, offering cryptocurrency as a payment type has been challenging for businesses — from integration requirements, technical barriers, and general lack of awareness among consumers.” He added that, “PayPal handles the crypto sale and conversion with the consumer and passes on U.S. dollars to the business for the purchase, streamlining the process for businesses.”

PayPal received a conditional license from the New York State Department of Financial Services (NYDFS) in October that “allows U.S. users of its Venmo service to buy, hold, and sell cryptocurrencies.” PayPal also plans to purchase startup Curv, based in Tel Aviv, that “provides security infrastructure for digital assets and blockchains.”

The Verge notes that the new Checkout with Crypto feature “will automatically appear in the PayPal wallet” if a user has “a sufficient cryptocurrency balance to cover an eligible purchase” and that the user will “see [their] crypto balances for each kind of coin in the app.” Its rival Square was the first payment app to offer support for Bitcoin on the Cash App, in 2018.

Reuters reports that Visa launched a pilot cryptocurrency program using USD Coin (USDC) with Crypto.com and plans to expand it later in the year. USDC is considered a “stablecoin cryptocurrency whose value is pegged directly to the U.S. dollar.” BNY Mellon, BlackRock and Mastercard have also “embraced some digital coins” and Elon Musk said customers can buy Teslas with Bitcoin.

Visa’s new program, which will rely on Ethereum, “strips out the need to convert digital coin into traditional money in order for the transaction to be settled.” Visa partnered with digital asset bank Anchorage “and completed the first transaction this month — with Crypto.com sending USDC to Visa’s Ethereum address at Anchorage.”

Engadget notes that, “until now, buying an item with a Crypto.com Visa card would require cryptocurrency to be converted into fiat currency,” by which a “crypto wallet sends that traditional money to a bank account and those funds are transferred to Visa at the end of the day to settle the transaction.” That process “increases the cost and complexity of facilitating crypto payments.”

Related:
WhatsApp Payments Get Approved by Brazil’s Central Bank, Engadget, 3/31/21
Bitcoin Volatility Decline Paves Way for Banks, JPMorgan Says, Bloomberg, 4/1/21