(Photo: André François McKenzie)

PayPal will offer cryptocurrency services for members

PayPal Holdings Inc revealed they will be adding new features to allow customers to hold funds in the form of cryptocurrency. PayPal will now allow customers to use cryptocurrency for online wallets and can be used among 26 million merchants in the PayPal network.

This new cryptocurrency deal with PayPal gives customers access to cryptocurrencies by one of the largest U.S. companies. The PayPal network has nearly 346 million active accounts and processed $222 billion in payments in Q2.

This deal can also help cryptocurrencies gain a reputation as a viable payment option. PayPal hopes that the use of cryptocurrency will promote the use of virtual currency while preparing the network for new cryptocurrencies that companies and central banks can incorporate in their services.

The new PayPal service will be available to customers over the next couple of weeks and Paypal is planning to expand the service to Venmo while expanding to other countries by 2021. PayPal customers will be able to make payments with cryptocurrency starting by early 2021.

The PayPal share prices increased by 4% and Bitcoin increase by 4.8% following the announcement of the new cryptocurrency deal. As cryptocurrency prices fluctuate, PayPal will be actively managing the risk of price inflation and merchants receiving cryptocurrency payments.

This deal brings PayPal one step closer to developing its own digital version of their currencies shortly after Facebook announced its cryptocurrency Libra project in 2019. PayPal was one of the founding members of the Libra project and dropped out after several months.

PayPal is planning on working with the cryptocurrency firm Paxos Trust Company to offer a digital currency service and the New York State Department of Financial Services granted PayPal the first conditional cryptocurrency license.