PayPal CEO Dan Schulman provides a comprehensive view of the company’s recent investments in the crypto business, discussing potential business partnerships with central banks and the development of shopping tools on the payment platform.
Schulman said that starting in 2022, PayPal will allow consumers to use crypto wallets to pay for goods and services, as 28 million merchants use PayPal to receive payments. He stated that such an arrangement would not result in an increase in transaction costs for both traders and consumers.
Schulman said that PayPal’s expansion plans slated to take place next year will also allow consumers using popular peer-to-peer payment service Venmo to buy and transact using cryptocurrencies. He added that when PayPal first announced that it would enable crypto payments on its platform, the announcement elicited positive reactions from customers who had expressed great interest in cryptocurrencies.
Schulman revealed a very large waiting list of customers who intend to access cryptocurrencies through the PayPal application. He said that currently, only 10% of PayPal customers can access crypto services through its mobile app. He mentioned that in the next few weeks, all US users will comfortably enjoy the availability of PayPal crypto services on their smartphones and PC devices.
Furthermore, Schulman discussed how Central Banks and companies conduct research on central bank digital currencies (CBDCs) and digital wallets. Such wallets are typically associated with payment services provided by Google and Apple, but also include applications used to store cryptocurrencies and other digital assets.
“Digital wallets are a natural complement to all forms of digital currency.”
He hinted that PayPal is engaged in close discussions with regulators and the central bank to examine new use cases of such digital wallets.
Schulman said that PayPal sees its cryptocurrency system, which runs on a blockchain network, as more efficient and less expensive than the Automated Clearing House (ACH) network that supports the existing banking system for electronic funds transfers.
Traditional Financial Institutions Embracing Cryptocurrencies
Shulman’s statement follows PayPal’s announcement that the payment platform will allow consumers to purchase cryptocurrency within its mobile app in the near future.
PayPal is one of the companies focused on bridging the traditional financial system with the new cryptocurrency landscape. Schulman says that the conventional financial system doesn’t work for low-income groups. Therefore, with crypto, companies like PayPal are working to offer cryptocurrency to the unbanked population. Financial institutions are now seeing accelerated financial inclusion through cryptocurrencies.
On October 28, exchange Coinbase launched a debit card that consumers can use at any business that accepts visa card payments. Global payments company Mastercard then also launched a digital currency platform aimed at enabling Central Banks to distribute money directly to consumers without relying on commercial banks as intermediaries.
However, efforts to make cryptocurrencies mainstream still face obstacles from taxation demands. The US tax agency and the Internal Revenue Service (IRS) treat any type of cryptocurrency transaction as a taxable event. This implies that PayPal customers who purchase goods and services using cryptocurrency could be forced to pay capital gains tax.
Schulman did not discuss the impact of taxation on PayPal’s cryptocurrency package. However, crypto proponents have lobbied the US Congress and the President to introduce a bill identified as a “de minimus” exemption, which could exempt customers with small-scale transactions from being taxed. However, these efforts have yet to bear fruit.