By Emily Bary
Company will let customers buy cryptocurrencies and use them for online purchases
PayPal Holdings Inc. plans to allow customers to buy cryptocurrency through their accounts and use cryptocurrency for merchant payments, a move that helped power its stock to a record high in Wednesday trading.
The company announced Wednesday morning that it is introducing a way for customers to buy, hold and sell certain cryptocurrencies within the PayPal (PYPL) wallet. This will roll out over the coming weeks in the U.S.
The announcement helped send PayPal shares surging 5.5% in the session. They finished the day at $213.07, above their previous closing high of $210.82 from Sept. 2.
Initially, PayPal users will be able to buy Bitcoin , Ethereum , Bitcoin Cash , and Litecoin through this new capability. PayPal intends to bring the function to its Venmo platform and to certain international markets in the first half of next year.
Read: Government is partnering with big banks, fintech to speed payments to Americans (link)
Starting early next year, PayPal users will be able to use cryptocurrency to pay for goods or services from merchants who accept PayPal. “Consumers will be able to instantly convert their selected cryptocurrency balance to fiat currency, with certainty of value and no incremental fees,” the company said in a statement. PayPal argued that this move will “significantly increase cryptocurrency’s utility.”
PayPal also disclosed in its statement that it has obtained a conditional Bitlicense by the New York State Department of Financial Services. The Bitlicense helps “encourage, promote, and assist interested institutions to have a well-regulated way to access the New York virtual currency marketplace,” NYDFS superintendent Linda Lacewell said in PayPal’s statement.
PayPal Chief Executive Dan Schulman said in the release that PayPal is “eager to work with central banks and regulators around the world to offer our support, and to meaningfully contribute to shaping the role that digital currencies will play in the future of global finance and commerce.”
The company is working with Paxos Trust Company, a provider of cryptocurrency products and services, on its initiative.
Financial technology companies have dabbled in cryptocurrency over recent years. PayPal rival Square Inc. (SQ) first allowed some customers to buy and sell Bitcoin through its app about three years ago (link), and it’s rolled out that feature more broadly since then.
Wedbush analyst Moshe Katri told MarketWatch that PayPal’s new cryptocurrency efforts are “likely another monetization tool,” but he said that similar to Square’s capabilities, PayPal’s foray into crypto will probably serve as a “pass-through revenue item, with no/little margin contribution.”
Wolfe Research analyst Darrin Peller was intrigued by the announcement, and particularly the plans to let people pay with cryptocurrency. The move “represents among the more import steps for crypto utility/normalization we have seen in years,” he wrote in a note to clients.
“Assuming this initiative is rolled out effectively, we believe PayPal’s leading security capabilities, global scale, massive user base and merchant relationships combined will create a highly differentiated offering relative to other crypto wallets,” Peller continued.
PayPal shares have added 15% over the past three months, as the S&P 500 has gained 5.7%.
-Emily Bary; 415-439-6400; AskNewswires@dowjones.com
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