Monumental changes hit the world of finance in October 2020 as PayPal announced they would offer a new service that enabled users to engage with cryptocurrency. The company, founded in 1998, has often represented the height of technology in the payments industry. So, what does PayPal’s pivot to crypto mean for the wider world of finance?
Why Has PayPal Moved Towards Cryptocurrency?
The involvement with cryptocurrency is a response to the market. There is an acceleration towards digital payments and representations of value (i.e. cryptocurrency or digital coin). The extent of PayPal’s move towards cryptocurrency allows its users to buy, hold, and sell the digital coin using their account. More importantly, PayPal has enabled cryptocurrency to be a ‘funding source’ for the 26 million merchants that operate using their system. As more people are looking to get into investing, this is a move that could pay off for PayPal.
As they announced the news, their prices rose – surpassing the $12,000 mark. In the first instance, customers will be able to engage with the most popular cryptocurrencies: Bitcoin, Ethereum, Litecoin, and Bitcoin Cash. Through their years of business success tied to eBay (they broke away in 2015 after the initial 2002 purchase), PayPal garnered a name for themselves in reliability and trustworthiness. So, their name attached to cryptocurrency could be more likely to get people engaged with it.
Cryptocurrency is not without its flaws. Some people see it as volatile, with prices being able to fluctuate dramatically due to it being untethered to a major bank. But recent years have proven that other currencies can also experience price fluctuations and that perhaps the world of digital finance is no more volatile than the world of traditional finance. The move is certainly a way of PayPal committing to engaging with new technology and embracing the benefits of doing so.
Growth of Alternative Payment Methods
The world of business has also been in flux. New concepts for how we deal with and manage our finance have changed centuries-old industries. Monzo and Starling, for example, represent digital-first banking. To compete with these easy methods of not just holding your funds, but giving you data on spending habits, mainstream banks are updating their own digital services. Indeed, according to a survey by Finder 12 million Britons – or 23% of people – have opened a digital-only bank. While most of these (88%) still have a traditional bank, this figure could change annually.
There is a growing appetite and a matching supply for the demand of people wanting to pay using methods that aren’t just bank transfers. For example, Paysafecard can be used on the site PeoplePerHour, which acts as a way to outsource small projects to creative professionals. As the work could be conducted anywhere in the world, it makes sense that a payment method would reflect this.
Furthermore, Etsy often allows sellers to set their own payment methods. While not suitable for everyone, some may want to pay with an advanced payment method. The option opens up further opportunities for them. Elsewhere, in the entertainment sector, online casino Betway allows players to use many payment methods to deposit and withdraw when engaging with titles on the site. From bank transfer to PayPal and Neteller, the variety of options suit those who may want to use non-traditional methods. It also helps the site stand out from competitors by professing a commitment to the future of technology. Moreover, communications service Skype can be paid for using Skrill as well as a myriad of more traditional options. Given the forward-thinking nature of the comms platform, it makes sense that users can engage with this modern finance technology.
Usually, concepts such as cryptocurrency – which has been around since 2009 – don’t take off properly until one of the big names gets involved. Facebook attempted to wade into the industry in 2019 with its Libra coin, which ended up being pulled back. PayPal’s venture into the industry could help give cryptocurrency and the future of digital payments in general greater credibility. Digital banking has shown that there is clearly an appetite for these modern methods. Time will tell whether PayPal became involved with cryptocurrency because they were leading the pack or they were simply responding to the inevitable pull of the future.