PayPal plans to support Bitcoin, Ethereum, Bitcoin Cash and Litecoin at first. You’ll be able to connect to your PayPal account to buy and sell cryptocurrencies. Behind the scenes, Paxos takes care of trading and custody.
In early 2021, PayPal wants to let you use your crypto assets as a funding source for your PayPal purchases. This could be a good way to use cryptocurrencies for everyday purchases without having to convert cryptocurrencies on an exchange first.
There are 26 million merchants that offer PayPal around the world. For those merchants, customers paying in crypto won’t have any impact. Everything will be converted to fiat currency when a transaction is settled.
As part of today’s move, PayPal has been granted a conditional BitLicense by the New York State Department of Financial Service. It should be able to launch its crypto service in partnership with Paxos in New York.
PayPal’s crypto service is rolling out progressively. You can head over to PayPal’s website and join the waitlist. Everybody should be able to access crypto-related features within the next month or so. The company has already updated its fees with more details about cryptocurrency exchange fees.
The company will charge high fees on fiat-to-cryptocurrency and cryptocurrency-to-fiat exchange transactions. You can expect to pay 2.3% for transactions below $100, 2% for transactions between $100 and $200, 1.8% for transactions between $200 and $1,000 and 1.5% for transactions above $1,000. There’s a minimum fee of $0.50 for transactions below $25. The page also says there will be some spread between buy and sell prices. Fees will be waived until 2021.
As a comparison, Coinbase charges 1.49% in conversion fees for any transaction over $200, and a fixed fee below that amount. Buying crypto assets with a debit card is much more expensive, as Coinbase charges 3.99%. Square’s Cash App charges variable fees and Robinhood hides its fees behind some markup on market prices.
Revolut, which also partners with Paxos in the U.S. to offer cryptocurrency trading, charges 2.5 to 3% in exchange fees for free customers. If you’re a premium user, you pay 1.5% in fees.
Many companies have been trying to build the PayPal of crypto. It turns out that the PayPal of crypto could just be PayPal.