PayPal will let customers buy cryptocurrencies and use them for online payments

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F150HD
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PayPal will let customers buy cryptocurrencies and use them for online payments

Post by F150HD »

This is a new development....

https://www.marketwatch.com/story/paypa ... 1603283352

PayPal Holdings Inc. plans to allow customers to buy cryptocurrency through their accounts and use cryptocurrency for merchant payments.

...Starting early next year, PayPal users will be able to use cryptocurrency to pay for goods or services from merchants who accept PayPal. “Consumers will be able to instantly convert their selected cryptocurrency balance to fiat currency, with certainty of value and no incremental fees,” the company said in a release. PayPal argued that this move will “significantly increase cryptocurrency’s utility.”
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nisiprius
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Re: PayPal will let customers buy cryptocurrencies and use them for online payments

Post by nisiprius »

Payment processors have been available for many years. It was only last year that we were being told that SPEDN was the big mainstream breakthrough. What is special about this, just that it's PayPal doing it?
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Valuethinker
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Re: PayPal will let customers buy cryptocurrencies and use them for online payments

Post by Valuethinker »

nisiprius wrote: Wed Oct 21, 2020 8:37 am Payment processors have been available for many years. It was only last year that we were being told that SPEDN was the big mainstream breakthrough. What is special about this, just that it's PayPal doing it?
How can they satisfy themselves re money laundering checks?

Paypal is, AFAIK, governed by the rules that govern financial institutions & payment processors like VISA or Mastercard. Either they have to validate the payment OR the financial institution that manages the account of the payer has to verify that it is clean. But with a crypto, by definition it doesn't come from a financial institution that will have done the customer and payment checks (they have risk scales based on size of transaction & also account holder).

A dark web entity that does ransomware just contributed $10k to 2 charities - and they have to refuse it.

https://www.theguardian.com/technology/ ... in-bitcoin
bogivan
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Re: PayPal will let customers buy cryptocurrencies and use them for online payments

Post by bogivan »

nisiprius wrote: Wed Oct 21, 2020 8:37 am Payment processors have been available for many years. It was only last year that we were being told that SPEDN was the big mainstream breakthrough. What is special about this, just that it's PayPal doing it?
Right, a massive magnitude larger: by one metric, "100,000,000+" app installs on Google Play versus "1,000+" for SPEDN (assuming you're talking about Flexa's SPEDN).

Even Square's Cash App which already allows you to purchase bitcoin is only "10,000,000+" Android installs.
Valuethinker wrote: Wed Oct 21, 2020 8:54 am How can they satisfy themselves re money laundering checks?
In a similar way to cash: if bank note serial numbers related to a bank robbery start popping up, law enforcement start investigating. There are blockchain analytic firms that flag the bitcoin "serial numbers" for possible relation to past theft which presumably Paypal will be contracting with. They'll also likely require creating a Paypal account for larger purchases so that they have more info about the person involved. Perhaps even small purchases might require an account if they're being very conservative...
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Re: PayPal will let customers buy cryptocurrencies and use them for online payments

Post by Fortune Seeker »

Valuethinker wrote: Wed Oct 21, 2020 8:54 am How can they satisfy themselves re money laundering checks?
From cursory read of news sites, it seems that they don't allow you to deposit/withdraw your own cryptocurrency. You transfer money into PayPal account, where you buy crypto tokens which you can use to buy things on their platform. Other platform users receive these crypto tokens and exchange to money to transfer them out of their PayPal account. I presume PayPal buys/sells appropriate amount of coins (or derivatives) at their custodian to avoid currency risk.
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Re: PayPal will let customers buy cryptocurrencies and use them for online payments

Post by silent_john »

Fortune Seeker wrote: Wed Oct 21, 2020 10:56 am
Valuethinker wrote: Wed Oct 21, 2020 8:54 am How can they satisfy themselves re money laundering checks?
You transfer money into PayPal account, where you buy crypto tokens which you can use to buy things on their platform. Other platform users receive these crypto tokens and exchange to money to transfer them out of their PayPal account.
What's the point of this? It just sounds like extra steps.
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Re: PayPal will let customers buy cryptocurrencies and use them for online payments

Post by MBB_Boy »

Valuethinker wrote: Wed Oct 21, 2020 8:54 am
nisiprius wrote: Wed Oct 21, 2020 8:37 am Payment processors have been available for many years. It was only last year that we were being told that SPEDN was the big mainstream breakthrough. What is special about this, just that it's PayPal doing it?
How can they satisfy themselves re money laundering checks?

Paypal is, AFAIK, governed by the rules that govern financial institutions & payment processors like VISA or Mastercard. Either they have to validate the payment OR the financial institution that manages the account of the payer has to verify that it is clean. But with a crypto, by definition it doesn't come from a financial institution that will have done the customer and payment checks (they have risk scales based on size of transaction & also account holder).

A dark web entity that does ransomware just contributed $10k to 2 charities - and they have to refuse it.

https://www.theguardian.com/technology/ ... in-bitcoin
The article says you'll be buying the token via Paypal - so they'll know where the money is coming from in the first place. They'll be buying the crypto and then issuing it to the user (or partnering with someone else to do so).
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Re: PayPal will let customers buy cryptocurrencies and use them for online payments

Post by MBB_Boy »

silent_john wrote: Wed Oct 21, 2020 2:43 pm
Fortune Seeker wrote: Wed Oct 21, 2020 10:56 am
Valuethinker wrote: Wed Oct 21, 2020 8:54 am How can they satisfy themselves re money laundering checks?
You transfer money into PayPal account, where you buy crypto tokens which you can use to buy things on their platform. Other platform users receive these crypto tokens and exchange to money to transfer them out of their PayPal account.
What's the point of this? It just sounds like extra steps.
The point is to satisfy regulators - 90% of financial regulations just result in extra steps that make you wonder what the point is :twisted: I kid....sorta

More seriously, I assume this is to ensure that all the crypto on the platform was purchased from a real bank account with fiat currency - as opposed to stolen or something. If you acquire crypto through nefarious means, you won't be able to transfer it into Paypal and convince them to cash you out with actual currency, or buy goods to unload it. Instead, you'll have to already get it to actual currency in order to then make purchases on Paypal.

If what you're actually asking is why I (or anyone) would do this instead of just using cash in the first place, then there's not a good answer. If you buy hoping the value will go up and you'll have increased buying power in the future, you'll have make a purchase "knowing" that you may have overpaid. Or you just like the idea.

Still like the idea for Paypal though - regulation will eventually catch-up and allow them to use crypto that's transferred in. In the meantime, they get to work out the kinks of a blockchain based payment system in a "safe"environment with select buyers and sellers, where they have clear records of the recent $ value of transactions in case things go wrong and they just need to use dollars to fix it. The ultimate promise is that a blockchain based payment processing system will be cheaper, more accurate, and ultimately faster than the current rails. If I'm them, I want to be in the best position possible for that future
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Re: PayPal will let customers buy cryptocurrencies and use them for online payments

Post by nisiprius »

MBB_Boy wrote: Wed Oct 21, 2020 3:33 pm...The article says you'll be buying the token via Paypal - so they'll know where the money is coming from in the first place. They'll be buying the crypto and then issuing it to the user (or partnering with someone else to do so)...
That rather sounds like a traceable transaction, not anonymous or even "pseudonymous," mediated by a trusted central authority, i.e. PayPal. It also sounds as if the buyer is exposed to the risk of government interference during the interval in which the transaction takes the form of the fiat currency of that government.

I see no reference to "tokens" in the article, but as you describe it, you are also relying on the integrity of PayPal for assurance that the token is actually backed by its face value in cryptocurrency.

Correct?
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Fortune Seeker
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Re: PayPal will let customers buy cryptocurrencies and use them for online payments

Post by Fortune Seeker »

Yes, this looks like we're being sold a derivative. I guess after it picks up PayPal will gradually introduce holding and conversion fees to profit off "investors".
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Re: PayPal will let customers buy cryptocurrencies and use them for online payments

Post by bogivan »

nisiprius wrote: Wed Oct 21, 2020 6:02 pm
MBB_Boy wrote: Wed Oct 21, 2020 3:33 pm...The article says you'll be buying the token via Paypal - so they'll know where the money is coming from in the first place. They'll be buying the crypto and then issuing it to the user (or partnering with someone else to do so)...
I see no reference to "tokens" in the article, but as you describe it, you are also relying on the integrity of PayPal for assurance that the token is actually backed by its face value in cryptocurrency.

Correct?
Fortune Seeker wrote: Wed Oct 21, 2020 7:33 pm Yes, this looks like we're being sold a derivative.

Not a derivative. Paypal is partnering with Paxos that does the actual custody of the bitcoin. Maybe there is a regulatory or rule loophole somewhere, but Paypal got a crypto license from New York and Paxos works with the real crypto, so it appears to me that every purchase will be backed 1:1 with regulators involved.

Maybe in practice it turns out to be backed 0.99:1 as daily/(weekly?) activity gets settled or something, but it certainly doesn't appear that they're just playing games with the bitcoin future markets or something like that.
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Re: PayPal will let customers buy cryptocurrencies and use them for online payments

Post by cos »

This after buying Venmo. Looks like PayPal's doing everything in their power to capture as many of the modern world's financial transactions as possible.
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Re: PayPal will let customers buy cryptocurrencies and use them for online payments

Post by whodidntante »

cos wrote: Wed Oct 21, 2020 8:54 pm This after buying Venmo. Looks like PayPal's doing everything in their power to capture as many of the modern world's financial transactions as possible.
It's almost like they want to make more money and crush or aquire their competitors. :P
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Re: PayPal will let customers buy cryptocurrencies and use them for online payments

Post by cos »

whodidntante wrote: Wed Oct 21, 2020 9:15 pm
cos wrote: Wed Oct 21, 2020 8:54 pm This after buying Venmo. Looks like PayPal's doing everything in their power to capture as many of the modern world's financial transactions as possible.
It's almost like they want to make more money and crush or aquire their competitors. :P
Wow, yeah, they should start a company. :mrgreen:
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Re: PayPal will let customers buy cryptocurrencies and use them for online payments

Post by ohboy! »

As someone who does a lot of business through Paypal and also holds a decent amount of crypto, I do not see much use case for this. Without being able to transfer or have keys I just dont see who would use it. Next thing you know Paypal will have options trading too.
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Re: PayPal will let customers buy cryptocurrencies and use them for online payments

Post by MBB_Boy »

nisiprius wrote: Wed Oct 21, 2020 6:02 pm
MBB_Boy wrote: Wed Oct 21, 2020 3:33 pm...The article says you'll be buying the token via Paypal - so they'll know where the money is coming from in the first place. They'll be buying the crypto and then issuing it to the user (or partnering with someone else to do so)...
That rather sounds like a traceable transaction, not anonymous or even "pseudonymous," mediated by a trusted central authority, i.e. PayPal. It also sounds as if the buyer is exposed to the risk of government interference during the interval in which the transaction takes the form of the fiat currency of that government.

I see no reference to "tokens" in the article, but as you describe it, you are also relying on the integrity of PayPal for assurance that the token is actually backed by its face value in cryptocurrency.

Correct?
Token is a generic term for crypto - Bitcoin is a token for example.
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Re: PayPal will let customers buy cryptocurrencies and use them for online payments

Post by MBB_Boy »

ohboy! wrote: Thu Oct 22, 2020 10:04 am As someone who does a lot of business through Paypal and also holds a decent amount of crypto, I do not see much use case for this. Without being able to transfer or have keys I just dont see who would use it. Next thing you know Paypal will have options trading too.
Same for me. But SOMEONE will use this service, and Paypal will get a few at bats running such a system. Heck, they (or merchants) could probably gift crypto to new users or something to use on the system. Unlike a cash incentive, you don't have an option to do anything except spend it
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Re: PayPal will let customers buy cryptocurrencies and use them for online payments

Post by rockstar »

This is starting to remind me of Mr. Robot.
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Re: PayPal will let customers buy cryptocurrencies and use them for online payments

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ohboy! wrote: Thu Oct 22, 2020 10:04 am As someone who does a lot of business through Paypal and also holds a decent amount of crypto, I do not see much use case for this. Without being able to transfer or have keys I just dont see who would use it. Next thing you know Paypal will have options trading too.
what products do you commonly buy with your crypto? and which store(s)? Thanks.
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Re: PayPal will let customers buy cryptocurrencies and use them for online payments

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ohboy! wrote: Thu Oct 22, 2020 10:04 am As someone who does a lot of business through Paypal and also holds a decent amount of crypto, I do not see much use case for this.
I'm thinking about sellers/merchants and not buyers.

It sounds like this would enable people to pay literally anyone with PayPal, no matter what country they reside in or whether or not they have a bank account?
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Re: PayPal will let customers buy cryptocurrencies and use them for online payments

Post by nisiprius »

ccf wrote: Thu Oct 22, 2020 6:18 pm
ohboy! wrote: Thu Oct 22, 2020 10:04 am As someone who does a lot of business through Paypal and also holds a decent amount of crypto, I do not see much use case for this.
I'm thinking about sellers/merchants and not buyers.

It sounds like this would enable people to pay literally anyone with PayPal, no matter what country they reside in or whether or not they have a bank account.
But they do have to have a PayPal account, don't they? And if they have a PayPal account, you can pay them in dollars.
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ohboy!
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Re: PayPal will let customers buy cryptocurrencies and use them for online payments

Post by ohboy! »

F150HD wrote: Thu Oct 22, 2020 6:13 pm
ohboy! wrote: Thu Oct 22, 2020 10:04 am As someone who does a lot of business through Paypal and also holds a decent amount of crypto, I do not see much use case for this. Without being able to transfer or have keys I just dont see who would use it. Next thing you know Paypal will have options trading too.
what products do you commonly buy with your crypto? and which store(s)? Thanks.
Hah, that’s the same as asking what do you buy with your vanguard funds and bonds? Except crypto is far outperforming equities and bonds. I ain’t sellin’, yet. I could buy a lambo tho...
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Re: PayPal will let customers buy cryptocurrencies and use them for online payments

Post by F150HD »

ohboy! wrote: Thu Oct 22, 2020 6:34 pm
F150HD wrote: Thu Oct 22, 2020 6:13 pm
ohboy! wrote: Thu Oct 22, 2020 10:04 am As someone who does a lot of business through Paypal and also holds a decent amount of crypto, I do not see much use case for this. Without being able to transfer or have keys I just dont see who would use it. Next thing you know Paypal will have options trading too.
what products do you commonly buy with your crypto? and which store(s)? Thanks.
Hah, that’s the same as asking what do you buy with your vanguard funds and bonds? Except crypto is far outperforming equities and bonds. I ain’t sellin’, yet. I could buy a lambo tho...
lol, question was moderately serious as I am not sure what actual businesses accept crypto for payment.
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Re: PayPal will let customers buy cryptocurrencies and use them for online payments

Post by ccf »

nisiprius wrote: Thu Oct 22, 2020 6:21 pm But they do have to have a PayPal account, don't they? And if they have a PayPal account, you can pay them in dollars.
so I'm just spitballing here ;) but at work I regularly deal with sellers with needs like...

* don't have a bank account so they can only use their PayPal balance to pay for things with PayPal
* want to price things in USD and receive USD but cannot withdraw USD without paying a hefty conversion fee
* find that the passed-on credit card transaction fee really hurts their bottom line (for small payments)

but I have no idea what PayPal's fees will be or how they are going to deal with the fact that it still takes 9 minutes to confirm a Bitcoin transaction.

I know that people have seen saying "blah blah bitcoin micropayments revolutionize" for years but traditional credit card transactions really are terrible when it comes to small payments made digitally for digital services.
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Re: PayPal will let customers buy cryptocurrencies and use them for online payments

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ohboy! wrote: Thu Oct 22, 2020 10:04 am As someone who does a lot of business through Paypal and also holds a decent amount of crypto, I do not see much use case for this. Without being able to transfer or have keys I just dont see who would use it. Next thing you know Paypal will have options trading too.
Perhaps lower transaction fees than Visa/MasterCard? Share the discount with the merchant/customer to gain market share? Then earn free float on customer’s crypto (lending, etc.)

Then Visa/MasterCard will have to respond in some way? Etc. etc.
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Re: PayPal will let customers buy cryptocurrencies and use them for online payments

Post by bogivan »

bogivan wrote: Wed Oct 21, 2020 8:07 pm
nisiprius wrote: Wed Oct 21, 2020 6:02 pm
MBB_Boy wrote: Wed Oct 21, 2020 3:33 pm...The article says you'll be buying the token via Paypal - so they'll know where the money is coming from in the first place. They'll be buying the crypto and then issuing it to the user (or partnering with someone else to do so)...
I see no reference to "tokens" in the article, but as you describe it, you are also relying on the integrity of PayPal for assurance that the token is actually backed by its face value in cryptocurrency.

Correct?
Fortune Seeker wrote: Wed Oct 21, 2020 7:33 pm Yes, this looks like we're being sold a derivative.

Not a derivative. Paypal is partnering with Paxos that does the actual custody of the bitcoin. Maybe there is a regulatory or rule loophole somewhere, but Paypal got a crypto license from New York and Paxos works with the real crypto, so it appears to me that every purchase will be backed 1:1 with regulators involved.

Maybe in practice it turns out to be backed 0.99:1 as daily/(weekly?) activity gets settled or something, but it certainly doesn't appear that they're just playing games with the bitcoin future markets or something like that.
Further confirming that they aren't just halfheartedly getting into the crypto world or pretending to hold bitcoin, now Paypal is supposedly working on acquiring crypto firms including specifically an existing custodian, BitGo.
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Re: PayPal will let customers buy cryptocurrencies and use them for online payments

Post by MBB_Boy »

nisiprius wrote: Thu Oct 22, 2020 6:21 pm
ccf wrote: Thu Oct 22, 2020 6:18 pm
ohboy! wrote: Thu Oct 22, 2020 10:04 am As someone who does a lot of business through Paypal and also holds a decent amount of crypto, I do not see much use case for this.
I'm thinking about sellers/merchants and not buyers.

It sounds like this would enable people to pay literally anyone with PayPal, no matter what country they reside in or whether or not they have a bank account.
But they do have to have a PayPal account, don't they? And if they have a PayPal account, you can pay them in dollars.
Not without significant fees if they are overseas. Granted, don't know what the fees here will be. There will likely be fees to buy the tokens, but perhaps no difference buying something in the US vs Japan or wherever
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