PayPal has announced the introduction of a new range of services for its users. The online payment merchant notified the public that the New York State Department of Financial Services (NYDFS) has granted it a Bitlicense which will allow it to introduce an option on its digital wallet where PayPal users can buy, hold, and sell four cryptocurrencies – Bitcoin, Ethereum, Bitcoin Cash and Litecoin. The company also announced that other cryptocurrencies will be added to the service later.
In its announcement, PayPal declared that users can now buy items from its 26 million retailers using the four cryptocurrencies and that no service fee will be charged for buying and selling of cryptocurrency on its wallet for the rest of the year. Holding cryptocurrency in a PayPal account will also not attract fees according to the company. However, users will not be able to transfer purchased cryptocurrencies to other accounts.
“Consumers will be able to instantly convert their selected cryptocurrency balance to fiat currency, with the certainty of value and no incremental fees,” PayPal stated. “PayPal merchants will have no additional integrations or fees, as all transactions will be settled with fiat currency at their current PayPal rates.”
The announcement has been criticized by some experts in the crypto world. Satoshi Labs announced in a blog post that PayPal has been against the use of cryptocurrency for a long time. In 2018, the blog post reads, former CEO of PayPal, Bill Harris, referred to Bitcoin as a big scam, warning people to avoid it. The blog also stated that PayPal’s motives are not clear and that people who will be newly introduced to Bitcoin by PayPal will have great difficulty in getting familiar with the world of cryptocurrency.
Peter Smith of Blockchain.com stated that PayPal’s policies towards cryptocurrency are “highly centralized and inflexible”. Smith explained that the major principle of cryptocurrency is towards providing financial freedom for everyone so that everyone can access their funds from anywhere in the world but that PayPal’s approach of having users hold their cryptocurrencies in their PayPal wallets will reduce accessibility to their funds.
Other experts have refuted the claims of Satoshi Labs and Smith based on the fact that Dan Schulman, current CEO of PayPal became CEO in 2014 and could not have been influenced by Harris’ anti-crypto statement. The experts in support of PayPal’s introduction of cryptocurrency have cited it as a welcome development since a lot more people trust and use PayPal than crypto exchanges.
According to a survey carried out on 3,000 users in the United States by Cornerstone Advisors and FICO, 60% of people that have a smartphone have the PayPal app, 14% of people who use PayPal already trade cryptocurrency, and 53% of PayPal users purchase or plan to purchase items with Bitcoin. The survey further revealed that out of the $31.2 billion’s worth of cryptocurrencies that was used to buy items and pay for services from last year, $23.1 billion was used by PayPal users.
PayPal’s adoption of cryptocurrencies is expected to be very successful considering these figures and the terms of service the company has introduced. PayPal is allowing users to access cryptocurrency that can be used for retail transactions as well as access the services of over 26 million merchants registered with PayPal using cryptocurrencies.