PayPal Wants More Customers to Pay Using Crypto Assets
07 May 2021 - 9:21AM
Dow Jones News
By Nina Trentmann
PayPal Holdings Inc. is looking to expand its lucrative business
of enabling customers to pay merchants with crypto assets, but the
digital payments company doesn't yet plan to invest in these
assets, Chief Financial Officer John Rainey said.
"It is still a highly volatile asset right now," Mr. Rainey
said, referring in general to fluctuations in price of
cryptocurrency assets. "But if in a couple of years, there is more
stability, I would never say no," he said. Mr. Rainey declined to
comment on what he would define as more stability.
The value of crypto assets such as bitcoin, ether and dogecoin
have risen in recent weeks on the back of strong market sentiment
and the rise of nonfungible tokens, among other factors. Some
companies, including Tesla Inc. and Square Inc., earlier this year
disclosed corporate investments in cryptocurrencies.
However, most CFOs have been cautious so far, pointing to the
risks associated with spending corporate cash on bitcoin and other
crypto assets. "We are managing our cash very consistently,"
PayPal's Mr. Rainey said. The company held $19.1 billion in cash,
cash equivalents and investments at the end of its latest
quarter.
San Jose, Calif.-based PayPal in November introduced a feature
enabling most U.S. customers to buy, sell and hold bitcoin, ether,
litecoin and Bitcoin Cash. Earlier this year, it launched an option
for people to use their holdings in these currencies to pay
merchants.
Those transactions are more attractive for PayPal than those
involving a credit or debit card, as there are no card issuers or
network providers that need to be paid. The payments company still
charges its merchants a standard transaction fee of around 2.9%,
but gets to keep more of that money, Mr. Rainey said. "It's a high
margin transaction for us," he said.
PayPal has to pay Paxos Trust Co., a company that converts the
crypto assets into U.S. dollars before they are sent to the
merchant. The execution risk lies with Paxos, Mr. Rainey said.
PayPal on Wednesday reported revenue of $6.03 billion for its
latest quarter, up 29% compared with the prior-year period. Total
payment volume rose 46% to $285.45 billion. The company is now
expecting payment volume to grow by about 30% this year, up from
its prior guidance of the high-20% range.
Building out its crypto offering enables PayPal to connect with
customers that are more engaged than those using other forms of
payment, said Harshita Rawat, a managing director and senior
research analyst at financial services firm AllianceBernstein
Holding LP. About half of PayPal's crypto users open its app every
day, the company said.
"Both cryptocurrencies and the underlying technology have become
a big strategic focus for the company," Ms. Rawat said.
Write to Nina Trentmann at Nina.Trentmann@wsj.com
(END) Dow Jones Newswires
May 06, 2021 19:06 ET (23:06 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.
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