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When PayPal became one of the first companies to let merchants accept cryptocurrencies, one major issue emerged, PayPal CFO John Rainey announced on Wednesday.
“Because of the volatility of the cryptocurrencies,” the merchants were seeing swings in crypto that threatened the viability of their businesses, Rainey told “Mad Money” host Jim Cramer.
Centralized payment service PayPal was a pioneer in accepting cryptocurrencies. Merchants could opt-in to accept Bitcoin (BTC) on the platform as far back as 2014, when BTC was worth around $400. Today, Rainey stated that PayPal currently doesn’t see much interest in digital currencies from their merchants, as the volatile nature of cryptocurrencies can cause contingent losses, explaining:
“If you’re a merchant and you have, let’s say, a 10 percent margin on a product that you sell and you accept Bitcoin, for example, and the very next day it moves 15 percent, you’re now underwater on that transaction… You could have something that appeals to consumers, but if merchants don’t accept it, it’s of little value. Right now, we don’t see a lot of interest from our merchants.”
“But if it’s something that stabilizes in the future and is a better currency, then we’ll certainly support that,” he added.
The latter statement supports PayPal’s patent filed in March, which aims to speed up cryptocurrency transaction times. If the technology can be implemented at a large commercial scale, it could allow cryptocurrency payments to be processed between merchants and buyers instantly and off-chain, eliminating large transaction fees and long verification periods.
In the case of PayPal, some have also raised questions about Square’s competing service, Square Cash, in light of its ability to process bitcoin transactions. Today, Square CEO Jack Dorsey expressed optimism toward digital currency adoption on a global scale. At the Consensus conference, Dorsey shared his vision that cryptocurrencies are the future of a legitimate means of global payment, which reaffirms his previous comments that Bitcoin will become the world’s “single currency” within a decade.
PayPal, which was launched in 1998, has 237 mln registered active accounts, with a payment volume of $132 bln in the first quarter of 2018, up more than $30 bln since the first quarter of 2017.