PayPal joined the cryptocurrency market on Wednesday, allowing customers to buy, sell and hold bitcoin and other virtual coins using the U.S. digital payments company’s online wallets.
PayPal customers will also be able to use cryptocurrencies to shop at the 26 million merchants on its network starting in early 2021, the company said.
President and Chief Executive Dan Schulman said , “We are working with central banks and thinking of all forms of digital currencies and how PayPal can play a role.”
“The shift to digital forms of currencies is inevitable, bringing with it clear advantages in terms of financial inclusion and access; efficiency, speed and resilience of the payments system; and the ability for governments to disburse funds to citizens quickly,” he said.
Bitcoin and other virtual coins have struggled to become established as widely used forms of payment despite being around for more than a decade.
Cryptocurrencies’ volatility is attractive for speculators, but poses risks for merchants and shoppers. Transactions are also slower and more costly than other mainstream payment systems.
PayPal believes its new system will address these issues as payments will be settled using traditional currencies, such as the U.S. dollar. This means PayPal will be managing the risk of price fluctuations and merchants will receive payments in virtual coins.
“We are going about it in a fundamentally different way to make sure we provide the maximum amount of safety to our merchants,” Schulman said.