Global payment leader PayPal announced on Wednesday morning that starting in early 2021, its users would be able to shop with cryptocurrencies and pay its network of 26 million merchants worldwide. Following the announcement, PayPal's stock rose 5.5% to close at $213.07—a monthly high—while Bitcoin surged past $13,000, marking a yearly peak.
PayPal’s Cryptocurrency Service Details
PayPal revealed that this service would partner with Paxos, a U.S.-based cryptocurrency service provider and the first company licensed by the New York State Department of Financial Services (NYSDFS) for crypto-related activities. Initially supported cryptocurrencies include:
- Bitcoin (BTC)
- Ethereum (ETH)
- Bitcoin Cash (BCH)
- Litecoin (LTC)
How It Works
Merchants will receive settlements in their local fiat currency, with PayPal handling the conversion. Beyond payments, users can buy cryptocurrencies directly via the app, effectively turning PayPal into a crypto wallet for purchasing, selling, and holding digital assets. This also means PayPal will manage volatility risks.
Leadership Insights
PayPal CEO Dan Schulman emphasized the company’s commitment to collaborating with central banks and regulators:
"We are eager to work with central banks worldwide, offering our support to shape the future of digital currencies in global finance and commerce."
The San Jose-based company aims to mainstream cryptocurrency adoption while preparing for emerging central bank digital currencies (CBDCs). Schulman added, "We’re engaging with central banks to explore diverse digital currency forms and PayPal’s role in their ecosystems."
Industry Context
Central Bank Digital Currencies (CBDCs) on the Rise
PayPal’s launch coincides with accelerating global CBDC development. Notably, PayPal withdrew from Facebook’s Libra project last year due to regulatory pressures, becoming the first major exit.
Post-Pandemic Digital Payment Surge
Since COVID-19 hit the U.S. in March 2020, contactless payments have soared, doubling PayPal’s stock value. Q2 2020 saw 346 million active accounts processing $222 billion in transactions. Competitors like Square and Robinhood already support crypto trading, but PayPal’s scale makes this move pivotal.
👉 Discover how PayPal’s crypto integration compares to other platforms
Strategic Investments
PayPal Ventures, the company’s investment arm, backed two firms in 2020:
- A crypto fraud prevention tool for financial institutions.
- A blockchain startup focused on identity verification and compliance software.
FAQs About PayPal’s Crypto Service
1. Which cryptocurrencies does PayPal support?
Initially Bitcoin (BTC), Ethereum (ETH), Bitcoin Cash (BCH), and Litecoin (LTC).
2. Can merchants receive crypto payments directly?
No—PayPal converts crypto to local fiat currency for merchant payouts.
3. How does PayPal manage crypto price volatility?
By acting as an intermediary, PayPal absorbs conversion risks, ensuring merchants receive fixed amounts.
4. Is PayPal’s service available globally?
Initially U.S.-focused, with plans to expand alongside regulatory approvals.
5. What’s the significance for Bitcoin’s price?
PayPal’s entry lends institutional credibility, potentially driving long-term demand.
👉 Explore cryptocurrency trends post-PayPal’s announcement