PayPal this morning announced the launch of Checkout with Crypto, a new feature that will allow consumers to check out at millions of online businesses using cryptocurrency. The feature expands on PayPal's current investments in the cryptocurrency market, which include its partnership with Paxos to power its service that allows customers to buy, sell and hold a range of cryptocurrencies, and more recently, its acquisition of cryptocurrency security startup Curv.
According to PayPal, customers with cryptocurrency holdings in the U.S. will be able to check out using their cryptocurrency at millions of businesses. The company plans to expand the service to reach PayPal's 29 million global online businesses in months ahead. The feature will also work without any additional integrations or fees required by the businesses themselves.
Essentially, Checkout with Crypto allows the customers to sell their cryptocurrency through PayPal at the time of checkout, then settle the actual transaction in U.S. dollars. For the businesses, that means nothing really changes on their end -- they're still being paid in USD, not cryptocurrency. But PayPal's feature makes it possible for this transaction to take place within the same checkout flow, making it easier on shoppers to quickly make their purchases using cryptocurrency.
At launch, the service will support Bitcoin, Litecoin, Ethereum and Bitcoin Cash -- but only one type of cryptocurrency can be used for each purchase.
If the customer has enough cryptocurrency to pay for their online purchase, then the Checkout with Crypto feature will appear, alongside other traditional payment methods, like the customer's bank account, PayPal balance or credit or debit card. Like other payment methods, Checkout with Crypto will also include PayPal's safety and security benefits, including fraud protection, return shipping and purchase protection on eligible items, PayPal notes.
After the transaction completes, the customer will receive both a record of the cryptocurrency sale, as well as their purchase receipt.
The company had announced its plans to launch support for checkout with cryptocurrency last year, when it first entered the cryptocurrency market. It said that after providing support for buying and selling cryptocurrencies, it would launch a checkout feature in 2021.
Today, PayPal makes makes money by charging transaction fees when customers buy or sell their cryptocurrencies, which is why it's not placing any fees on their merchants themselves.
PayPal's launch will help to dramatically expand the number of places where cryptocurrency can be used for real-world purchases, which could help accelerate mainstream adoption of digital currencies.
According to Jim Magats, PayPal SVP, Omni Payments, it's historically been difficult for businesses to offer cryptocurrency as a payment option due to integration requirements, technical barriers, and general lack of awareness among consumers.
"Checkout with Crypto allows businesses to accept the proceeds from sales of cryptocurrency as a payment type, all within the current PayPal integration, removing the need for any additional action for businesses," Magats said. "PayPal handles the crypto sale and conversion with the consumer and passes on U.S. dollars to the business for the purchase, streamlining the process for businesses."
PayPal's move comes shortly after last week's announcement from Tesla, which said U.S. customers could now buy a car using bitcoin, and Japanese e-commerce giant Rakuten's news earlier this month where it said users could check out with online merchants in Japan using cryptocurrencies. And Visa yesterday announced it would allow payment settlements using cryptocurrency.
"As the use of digital payments and digital currencies accelerates, the introduction of Checkout with Crypto continues our focus on driving mainstream adoption of cryptocurrencies, while continuing to offer PayPal customers choice and flexibility in the ways they can pay using the PayPal wallet," President and CEO Dan Schulman said, in a statement about the launch. "Enabling cryptocurrencies to make purchases at businesses around the world is the next chapter in driving the ubiquity and mass acceptance of digital currencies," he added.