In announcing the results of its third-quarter earnings, digital payments giant PayPal expanded upon its intention to integrate cryptocurrencies into its services.
In its Nov. 2 filing with the Securities and Exchange Commission, PayPal president and CEO Dan Schulman confirmed plans announced on Oct. 21 for a new service enabling its customers to buy, hold and sell cryptocurrency directly from their PayPal accounts. He also reiterated its intention to make cryptocurrencies “available as a funding source for purchases at its 28 million merchants worldwide.”
During PayPal’s third-quarter earnings call later that day, Schulman said it was the payments giant’s intention “to increase the utility of cryptocurrencies, as well as embrace new forms of central bank digital currencies.” He said:
“We are entering a new era of financial services where our wallets and all the services around them are moving from physical to digital. These include identity management, new forms of commerce, and fully digital payments and financial services.”
Schulman said that PayPal would expand its cryptocurrency payment services beyond the U.S., and to its Venmo platform, in the first half of 2021. He added:
“We are investing to create the most compelling and expansive digital wallet that embraces all forms of digital currencies and payments, and operates seamlessly in both the physical and online worlds.”
The company will ensure that when it makes crypto payments available at PayPal’s 28 million merchants at the beginning of next year, the “solution will not involve any additional integrations, volatility risk or incremental transaction fees for either consumers or merchants and will fundamentally bolster the utility of cryptocurrencies,” he said.
CBDC’s are moving closer
Schulman also said that he believes the financial system is evolving to a digital form. He explained:
“My conversations with central banks, with the regulators, with a number of folks in the crypto field, [tell me] there’s no question that digital currencies are going to be rising in importance, having increasing functionality and increasing prominence.”
Schulman said that based on those conversations he believes central bank digital currencies (CBDCs) “are a matter of when and how they’re done, not if.” PayPal, he explained, will play a role in shaping the utility of those digital currencies with its digital wallets and scale. He said:
PayPal is in a strong position to help shape a future where everyone, not just the affluent, can participate in the new digital economy. As the use of cash continues to decline, new and innovative financial technologies are rising.
Furthermore, he said that the company intends to become a market leader in the crypto space thanks to regulatory compliance:
“I see a lot of interesting things we can do with cryptocurrencies, with functionality, increasing functionality. And again, working hand-in-hand with regulators every step of the way, which is so important and what they expect from us in order to be a market leader in the digital currency space.”
While pointing to the need for caution in the near-term, PayPal is “at a moment in our history where all of our past efforts, our scale, brand reputation, and regulatory relationships position us to play an expansive role in our customers’ lives,” Schulman said.
“We see multiple tailwinds from the permanent shift toward a digital economy.”