In October there was a turning point in the world of cryptocurrencies. It was triggered by PayPal, which announced at the time that it would allow its users to trade cryptocurrencies directly through its popular payment gateway.
PayPal today activated its ‘Checkout with Crypto’ service, which precisely allows users in the United States to can already pay in merchants with cryptocurrencies such as bitcoins, litecoin, ether or bitcoin cash. Merchants will not receive those cryptocurrencies, but the equivalent of that moment in dollars (less the PayPal commission, of course).
PayPal becomes a total intermediary for purchases with cryptocurrencies
The president of PayPal, Dan Schulman, showed on video a first purchase with this system. The process is practically transparent for the user, that when selecting PayPal as the payment method in stores, then you can choose, within the payment gateway, whether to pay with your balance in PayPal, with any of your credit or debit cards or, and this is the important thing, with your balance in any of the cryptocurrencies supported in the system.
After choosing to pay with bitcoins, for example, the system shows the amount of bitcoins that will be subtracted from our “wallet” of those cryptocurrencies integrated into PayPal, and then it is in charge of selling the necessary bitcoins —without commissions applied in that conversion, they assure in PayPal— for the purchase of that product in the desired commerce.
A few moments later, the confirmation of the purchase arrives, which has been produced by spending bitcoins or some other of the cryptocurrencies from our balances in PayPal. The process is managed by this company at all times, although behind is the work of Paxos, a company specialized in these transactions.
It is important to note that we can only spend cryptocurrencies that we have previously purchased through PayPal, not being able to use external wallets that we previously had. Dan Schulman explained that the idea is to be able to make a complete follow-up of the transactions, something important to comply with the regulation.
The differences between paying with crypto visas and with conventional fiat currencies are thus diluted. That first idea was originally about promote decentralization, privacy and anonymity of those operations, but it also proved to be very bad for the image of these platforms, which were inevitably associated with buying prohibited merchandise in black markets like Silk Road.
In PayPal, in fact, they conceive this option in a curious way, because the only ones who work with end-to-end cryptocurrencies are them: users can operate with their bitcoin or Ether wallets, for example, but the merchants are not paid in those cryptocurrencies, but rather in dollars, as would happen with a direct transaction in that currency. The commissions applied do not change (2.9% + 30 cents on the amount of the purchase in the US) because for the merchant the entire operation continues to be done in dollars.
This, they claim in PayPal, is an opportunity for example for unbanked people, but also for migrant workers who send money to their countries of origin but do so with huge commissions that are often around 10%.
The ‘Checkout with Crypto’ service has already started its deployment among PayPal users in the United States, and works in more than half of the 29 million stores with whom the company works there.
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