PayPal and Visa move to embrace cryptocurrency

Crypto 'becoming a legitimate funding source to make transactions in the real world at millions of merchants' says PayPal boss Dan Schulman

Online payment service PayPal has launched a new 'Checkout with Crypto' feature that will allow US consumers to use their cryptocurrency holdings to pay for goods and services at millions of global ecommerce sites.

The new feature is currently available for the PayPal customers in the US and will be rolled out broadly to more customers in coming months.

The company said that the customers will be able to use the new feature to convert Bitcoin, Litecoin, Ethereum or Bitcoin Cash cryptocurrencies to US dollars at checkout with no additional transaction fees. PayPal will then use those dollars to complete the transaction.

In cases where a merchant doesn't accept US dollars, the company will covert dollars into local currency at standard conversion rates set by PayPal.

"The introduction of Checkout with Crypto reinforces our commitment to offering PayPal customers more ways to pay and shop at their favourite businesses," John Kunze, senior vice president of brand experiences wrote in the announcement.

"Seamlessly woven into the PayPal checkout flow, customers using Checkout with Crypto can check out safely and easily, quickly converting cryptocurrency holdings to US dollars at checkout, with clear conversion rates and no additional fees."

According to Kunze, users will see crypto balances for each kind of coin in their PayPal wallets, although they can use only one type of cryptocurrency for each purchase.

The new payment option from PayPal comes on the heels of an earlier move in November, where the firm allowed US users to buy, hold and sell four types of cryptocurrency in the PayPal wallet. The company said that the new service would ill encourage digital currency use globally and would also prepare its network for new virtual currencies that may be developed by central banks in the future.

"We think it is a transitional point where cryptocurrencies move from being predominantly an asset class that you buy, hold and or sell to now becoming a legitimate funding source to make transactions in the real world at millions of merchants," PayPal President and CEO Dan Schulman told Reuters ahead of Tuesday's announcement.

However, PayPal is not the first online payment app to provide customers access to digital currency.

In 2018, PayPal competitor and mobile payments provider Square also rolled out support for bitcoin through its Cash app. In October, Square said that it had bought $50 million worth of Bitcoin.

On Monday, US-based payments technology firm Visa also announced that it would allow customers to use the cryptocurrency USD Coin (USDC) to settle transactions on its payment network.

"We see increasing demand from consumers across the world to be able to access, hold and use digital currencies and we're seeing demand from our clients to be able to build products that provide that access for consumers," Cuy Sheffield, head of crypto at Visa, said.

Sheffield told Reuters that Visa was running a pilot programme with payment and crypto platform Crypto.com, and is likely to offer the option to more partners later this year.

Last week, Elon Musk, the CEO of Tesla and a major supporter of digital currencies, announced that Tesla would start accepting bitcoin payments from customers for cars, hoping to encourage more day-to- day use of crypotocurrencies.