PayPal Holdings Inc. (NYSE: PYPL) is planning to expand its business to enable customers to pay merchants using crypto assets, but the company will not invest its cash into the assets for now.
PayPal not ready to put money into crypto assets
The company’s CFO, John Rainey, said that crypto assets are volatile in reference to the price fluctuation of digital assets. He added that if crypto assets have stability in the coming years, he will never say no. However, he declined to indicate what he meant by referring to more stability.
In recent weeks crypto-assets such as Bitcoin, dogecoin, and ether’s value has significantly risen due to strong market sentiment, the popularity of NFTs, and other factors. Equally, mainstream companies embrace cryptocurrencies, with Square Inc. and Tesla disclosing corporate investments in crypto early this year.
Interestingly, CFOs of several companies have been cautious about crypto assets pointing to associated risks of spending corporate funds in BTC and other cryptocurrencies. Rainey said that the company is managing its cash consistently. At the end of its last quarter, PayPal had cash and cash equivalents of $19.1 billion.
PayPal allows users to pay merchants in crypto
In November 2020, PayPal introduced a feature that enables its US users to buy, hold and sell BTC, Bitcoin Cash, Litecoin, and Ether. At the beginning of this year, the company introduced an option allowing its customers to use crypto to pay merchants. The transactions are more appealing to PayPal than those that involve debit or credit cards since network providers or card issuers are not necessary for merchants to receive payments. However, PayPal will still charge merchants a transaction fee of 2.9% and keep most of this money.
The company pays Paxos Trust Co. to convert cryptocurrencies into US dollars before merchants can receive the money. Rainey said that it is a high-risk transaction with the execution risk lying with Paxos.
In its latest quarter, PayPal reported a 29% YoY growth in revenue to $6.03 billion. Over that period, payment volume was up 46% to $285.45 million.