Customers can now access their crypto holdings through PayPal wallets, using their crypto assets to make purchases.
The announcement by Elon Musk is the latest in a longline of cryptocurrency wallets offering customers the ability to purchase items with cryptocurrencies. This year has been excellent for the crypto sphere, with many traditional banking companies looking to adopt digital payment systems.
PayPal is one of the most popular payment systems in the U.S. and this unique service will certainly be a catalyst for many other companies to begin offering a similar service to meet the growing demand.
The PayPal checkout system will be available with millions of PayPal merchants at the customers’ disposal, with the intention of adding more based on the success of the initial launch.
How does the system work?
The app has a feature called Checkout with Crypto, which allows PayPal users to choose from various major cryptocurrencies, including Bitcoin, Litecoin, Ethereum, and Bitcoin Cash. The PayPal checkout isn’t the first of this kind, but it’s the first system to offer access to so many marketplaces.
Customers will have the choice of various cryptocurrencies to purchase with at checkout, depending on the type of assets they hold. On top of that, customers won’t be charged a transaction fee for making payments. This aspect of the service is something that is less common with other crypto payment services. It’s common for companies to charge users a fee for the conversion of crypto into fiat currency.
The system functions by settling transactions in U.S. dollars and then converts payments to the corresponding cryptocurrency at the current conversion rates. This is a step up from what was previously available to customers.
PayPal has been building up to this, having rolled out a service to allow customers to buy, sell, and hold cryptocurrencies. Having provided a virtual currency platform for customers to manage their crypto holdings has now given those customers access to a much more complete service.
If the platform is successful, it would ultimately bring many more customers to PayPal and could propel them to industry leaders for accessible crypto payments. A recent announcement from the company claimed that customers who are managing cryptocurrencies are engaging twice as much with the platform.
Other financial-services have been active in the industry, with Visa announcing they will provide a payment service for crypto users. Industry rivals Mastercard have proposed similar plans, allowing users to access crypto assets — though the plans aim to target stablecoins, as well as other digital assets. The volatility of crypto leaders like Bitcoin and Ehtereum might not meet compliance standards.
There are other payment companies like Square that allow customers to buy and sell crypto through their wallets, as well as smaller crypto payment systems like BitPay and Coinbase commerce. The rise in the number of payment services adopting crypto is very encouraging for the industry, but there’s still work to be done.
In order for the industry to thrive, it must be given access to familiar payment systems such as debit cards — and for the more modern generation mobile payment apps. For the vast majority of customers, if they can access their funds, in whatever form they might be, there will be an acceptance of digital currencies by the masses.
Cryptocurrencies are thriving and the number of new users is encouraging, with big players like Visa, Mastercard, and now PayPal showing their hand, we are likely to see many more big companies offering services.