PayPal is primarily known as an online payment method. But the company wants to become an easy way to get started with cryptocurrencies. In that regard, ConsenSys, the company behind MetaMask, announced that it would add an integration in its crypto wallet so that users can buy cryptocurrencies using their PayPal account.
MetaMask is one of the most popular non-custodial crypto wallets out there. It lets you store crypto assets and interact with web3 products, as you can use your wallet as your authentication method.
But you can’t do much if you have an empty MetaMask wallet. That’s why users rely on centralized cryptocurrency exchanges like Coinbase, Kraken
and FTX to buy cryptocurrencies and transfer them to their MetaMask wallet. MetaMask also has its own on-ramp features in its mobile app so you don’t have to switch to another service and go through many intermediate steps. On-ramp partners include MoonPay, Wyre and Transak.
If you buy crypto with one of those partners, you will have to go through a KYC process (“know your customer”). It means that you will have to enter a bunch of personal information and verify your identity with some form of ID.
The partnership between MetaMask and PayPal will benefit both companies. On MetaMask’s side, chances are the conversion rate with existing on-ramp solutions isn’t great. KYC processes can be intimidating.
There are already 430 million PayPal accounts in the world according to the company’s most recent earnings report. If MetaMask users see a big button that says you can buy cryptocurrencies with a PayPal account, it will sound easy and familiar. As for PayPal, more activity means more revenue.
At first, MetaMask users will only be able to buy Ethereum (ETH) with PayPal as the payment method. It will be available to some users in the U.S. before it is rolled out to everyone in the U.S.
If you already have ETH in your PayPal account, you can use those ETH to fund your MetaMask wallet. If that’s not the case, PayPal will help you buy ETH with your PayPal balance or other payment methods.
And that is going to generate some revenue for PayPal, as the company charges fees to buy cryptocurrencies. This is PayPal’s first integration as an on-ramp provider for a web3 wallet. But I wouldn’t be surprised if we see more PayPal buttons in crypto wallets going forward.
Earlier this year, PayPal also added support for crypto transfers. PayPal users in the U.S. can get wallet addresses to fund their PayPal account with crypto assets. Similarly, PayPal users can send funds to a third-party crypto wallet.
As many people consider cryptocurrencies as internet money, they think crypto can replace PayPal altogether as a way to send and receive money from a computer and a phone. But there will always be bridges between traditional bank accounts and crypto wallets. And PayPal plans to take advantage of that.