PayPal launches crypto checkout service
Huge news from PayPal! They will announce later on today that it has started allowing U.S. consumers to use their cryptocurrency holdings to pay at millions of its online merchants globally, a move that could significantly boost use of digital assets in everyday commerce. This is the type of adoption we need to significantly cement crypto into everyday use.
This breaking news was reported by Reuters about 4 hours ago.
Customers who hold bitcoin, ether, bitcoin cash and litecoin in PayPal digital wallets will now be able to convert their holdings into fiat currencies at checkouts to make purchases, the company said. The service, which PayPal revealed it was working on late last year, will be available at all of its 29 million merchants in the coming months, the company said.
“This is the first time you can seamlessly use cryptocurrencies in the same way as a credit card or a debit card inside your PayPal wallet,” President and CEO Dan Schulman told Reuters ahead of a formal announcement.
Checkout with Crypto builds on the ability for PayPal users to buy, sell and hold cryptocurrencies, launched in October. This is a way for PayPal to gain market share in the market. These offering makes PayPal one of the largest mainstream financial companies to open its network to cryptocurrencies and helped and will continue to fuel a rally in virtual coin prices.
“We think it is a transitional point where cryptocurrencies move from being predominantly an asset class that you buy, hold and or sell to now becoming a legitimate funding source to make transactions in the real world at millions of merchants,” Schulman said.
The company will charge no transaction fee to checkout with crypto and only one type of coin can be used for each purchase, it said. This is a start and will do wonders for adoption.
Digging in a bit more the actual transactions will be conducted in crypto, but the merchant will be settled in cash. I would like to see it all stay in crypto, but Paypal has acknowledge that markets are volatile and merchant don't want to take on that risk at this time.
For both the merchant and buyer there are tax considerations that still might be an issue...
The terms and conditions for “Checkout with Crypto” include a number of important caveats, such as the tax liability: “Sales of Crypto Assets via Checkout with Crypto are taxable just like all other sales of Crypto Assets.” PayPal will provide the consumer with a 1099 tax form and report to the IRS as necessary, but “it is your responsibility to determine what taxes, if any, apply to transactions you make.”
I think until we get meaningful tax reform for cryptos this will be issue. However, with the Visa announced I talked about yesterday this has been a big week for crypto. I can't wait to see if this price action is as bullish as I think it should be.
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