By Jeff Domansky, April 2, 2021
Ostrich cowboy boots. New. Paid by crypto.
With apologies to Hemingway, who wrote the apocryphal six-word short story about baby shoes, it nicely describes PayPal’s full-fledged launch into cryptocurrency payments.
Earlier this week, PayPal CEO Dan Schulman made the first purchase of cowboy boots paid for by Bitcoin on PayPal. It’s a new US service offer called “Checkout with Crypto” from the payments giant.
“As the use of digital payments and digital currencies accelerates, the introduction of Checkout with Crypto continues our focus on driving mainstream adoption of cryptocurrencies while continuing to offer PayPal customers choice and flexibility in the ways they can pay using the PayPal wallet,” said Schulman in a news release.
“Enabling cryptocurrencies to make purchases at businesses around the world is the next chapter in driving the ubiquity and mass acceptance of digital currencies,” he added.
How “Checkout with Crypto” works
Checkout with Crypto will appear as a payment option for US customers if shoppers have sufficient cryptocurrency available in their PayPal digital wallet. The payment process is instantly familiar and completed in a couple of clicks.
Once the shopper confirms the purchase, PayPal converts the cryptocurrency to fiat currency and completes the sale. Customers receive a record of both the crypto sale, as well as the purchased item. There are no additional fees to pay with cryptocurrency.
Checkout with Crypto includes PayPal security, including 24/7 fraud protection, return shipping, and purchase protection on eligible items.
In Oct 2020, the company enabled US account holders (excluding Hawaii) to buy, sell and hold four cryptocurrencies directly through PayPal using their Personal or Premier PayPal Cash/plus account. Current eligible digital coins for payment include one of four cryptocurrencies – Bitcoin, Litecoin, Ethereum, or Bitcoin Cash.
On cryptocurrency purchases, PayPal earns commissions of 0.5% on the spread between the market price from its trading service provider (Paxos) and the exchange rate between US dollars and the crypto asset. Buyers pay exchange rates (including spread) and fees on cryptocurrency purchases.
New ostrich cowboy boots
A two-minute video from PayPal’s Schulman shows just how quick and easy purchasing with a cryptocurrency balance is. It’s just another payment option in the menu of choices at checkout. In a matter of seconds and a couple of clicks, Schulman buys his fancy new Luchesse ostrich cowboy boots from Bronco Western Wear.
Schulman sums it up nicely. “That’s pretty cool,” he says. “You can just use your crypto balance as a funding source like you would your PayPal balance, or your credit card or your debit card. It’s just another funding instrument.”
PayPal says shoppers can purchase at millions of merchants using cryptocurrency, and the company expects to expand the service from the US soon.
Bloomberg offers one cautionary note. Bitcoin and other cryptocurrencies are volatile. When Schulman purchased his $299 cowboy boots, bitcoin was valued at $55,279.87. A day or two later, the digital currency had bounced back up to $59,179.62. That spread buys a lot of cowboy boots a couple of days later and shows there are both costs to consumers and fees to be made in these transactions.
Cryptocurrency is finally making headway in the financial world and another sign of what’s ahead in the fast-changing world of payments.
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