In an interview for TIME magazine, PayPal’s CEO Dan Schulman talked about the payment processor expansion of its crypto service. The executive expects a transformation of e-commerce into a personalized experience and “contextual” purchases driven by social media platforms. Bitcoin could spear point such a change and take it to the entire financial system.
Schulman believes 2020 was a crucial year that accelerated “the trend of digital payments by as little as three years and maybe as much as five years”. Due to the pandemic Covid-19, many decided to use PayPal and similar platforms to make their everyday purchases.
Data shared by Schulman claims that PayPal made 15.4 billion payments with an estimated value of $936 billion last year. This trend could be increased in 2021 to meet the demand of PayPal’s 300 million estimated users.
Over the next 10 years, PayPal’s CEO believes cash as a form of payment could see a decline in usage. Its detriment will also affect credit cards and the universally utilize forms of payment, like credit cards, checks, and wire transfers. Digital payment can “add more value”, according to Schulman. Predicting a benefit for Bitcoin and digital currencies, he said:
And so when all of those things start to happen, then central banks need to rethink monetary policy as well, because you can’t just issue more paper money into the system because people aren’t using paper money. And so this is the advent of digital currencies.
Bitcoin Will Rise With “SuperApps”
The executive classified the legacy financial system as “inefficient” and called for ways to “modernize it” for it to be more inclusive and cost-efficient. On average, a transaction on this system can have an average 2.8% fee. Therefore, many must transact outside of it, Schulman said:
(…) you’d expect with volume and technological improvements that would drop, but the worst part about the 2.8% is that if you have less income, or are outside of the system, and you’re not affluent, then that take rate is like 1,000 basis points; it’s not 280 basis points (…). Is there a way that you can do things more efficiently, with less cost, more inclusively, and add more utility into the system?
Central bank digital currencies (CBDC) could be a tool to achieve this goal. For example, a digital version of the U.S. dollar could allow the government to “open up Fed funding” with PayPal’s platform. In that way, citizens could receive aid directly to their digital wallet or pay taxes with a simple mechanism.
PayPal’s crypto service has been under review since 2014, but only recently launched. Schulman believes that cryptocurrencies have too much volatility and low awareness. Now, the timing seems to have been perfect.
In 10 years, PayPal and Bitcoin could be integrated with one of “six to 10 super apps”. These will work as a bridge, connecting people with other applications. Thus, users could have more control over their data and the way they interact with products or services. On the demand for Bitcoin and other cryptocurrencies, Schulman said:
Demand on the crypto side has been multiple-fold to what we initially expected. There’s a lot of excitement.
At the end of March 2021, the payment processor integrated a crypto checkout for its users in the U.S. During the year, PayPal will most likely expand its offer to international customers. Due to the nature of its BitLicense, granted by the state of New York, the company must hold BTC, ETH, LTC, in a 1:1 parity with its users.
Therefore, more demand for BTC or any other crypto on PayPal creates direct buying pressure on the market. BTC is trading at $53.950 with 8.7% profits in the daily chart. In the weekly and monthly chart, BTC still has 3.6% and 1.4% losses, respectively.