PayPal is jumping into cryptocurrency

PayPal has finally announced that it would soon launch a cryptocurrency service which will allow PayPal users to buy, hold and sell several types of digital currencies on its platform.

The online payment service company has partnered with Paxos, a cryptocurrency company to launch its new crypto service. The New York State Department of Financial Service has granted PayPal a conditional BitLicense which would allow it freely launch its crypto service in the United States. While PayPal monitors all surface transactions, Paxos will work behind the scenes to monitors trading and custody.

The long-anticipated cryptocurrency feature marks a significant milestone for the company. The move has also caused Bitcoin to surge 5% on Wednesday, and investors agree that it is a good move to make.

Shares of PayPal also surged after Wednesday’s opening bell, shortly before it slid back to its previous position before the market opened. Nonetheless, PayPal’s stock has beyond doubled since the wake of the coronavirus pandemic in the United States.

President and CEO of PayPal Dan Schulman described the shift to digital currencies from physical currencies as “inevitable” as cryptocurrency gives people more access advantages. The company said its new digital currency service will provide customers with the ability to either hold or exchange digital currency such as Bitcoin, Bitcoin Cash, Ethereum, and Litecoin. Customers will have to use the PayPal digital wallet to shop online, request, and/or send money.

“Our global reach, digital payments expertise, two-sided network, and rigorous security and compliance controls provide us with the opportunity, and responsibility, to help facilitate the understanding, redemption, and interoperability of these instruments of exchange,” said Schulman, in a statement.

PayPal’s cryptocurrency services will be available in the United States first. Customers will have access to crypto services in the weeks to come, but won’t be able to make purchases using digital currencies until early 2021. Customers on PayPal-backed Venmo and other international customers will not have access to crypto services until mid-2021.

With the cryptocurrency industry booming, many fintech companies have had their eyes on the industry. PayPal isn’t the only big name fintech that has shown interest in including crypto service. Square is also making moves to delve into the crypto industry. Earlier this month, the company spent purchased 4,700 bitcoins for $50 million. Square CFO Amrita Ahuja reportedly said that the company sees potential in Bitcoin becoming a “more ubiquitous currency in the future.”

Updated fees

PayPal recently updated its fees and charges to accommodate digital currency. Customers will pay 2.3% for transactions below $100 and 2% for transactions between $100 and $200. For transactions between $200 and $1,000, customers will pay 1.8% and 1.5% for all transactions above $1,000. There will also be a minimum fee of $0.50 for all transactions below $25.