Customers who hold bitcoin, ether, bitcoin cash and litecoin
in PayPal digital wallets will now be able to convert their holdings into fiat
currencies at checkouts to make purchases, the company said.
The service, which PayPal revealed it was working on late
last year, will be available at all of its 29 million merchants in the coming
months, the company said.
"This is the first time you can seamlessly use
cryptocurrencies in the same way as a credit card or a debit card inside your
PayPal wallet," President and CEO Dan Schulman told Reuters ahead of a
formal announcement.
Checkout with Crypto builds on the ability for PayPal users
to buy, sell and hold cryptocurrencies, which the San Jose, California-based
payments company launched in October.
The offering made PayPal one of the largest mainstream
financial companies to open its network to cryptocurrencies and helped fuel a
rally in virtual coin prices.
Bitcoin has nearly doubled in value since the start of this
year, boosted by increased interest from larger financial firms that are
betting on greater adoption and see it as a hedge against inflation.
PayPal's launch comes less than a week after Tesla said it
would start accepting bitcoin payments for its cars. Unlike PayPal transactions
where merchants will be receiving fiat currency, Tesla said it will hold the
bitcoin used as payment.
Still, while the nascent asset is gaining traction among
mainstream investors, it has yet to become a widespread form of payment, due in
part to its continued volatility.
PayPal hopes its service can change that, as by settling the
transaction in fiat currency, merchants will not take on the volatility risk.
"We think it is a transitional point where
cryptocurrencies move from being predominantly an asset class that you buy,
hold and or sell to now becoming a legitimate funding source to make
transactions in the real world at millions of merchants," Schulman said.
The company will charge no transaction fee to checkout with
crypto and only one type of coin can be used for each purchase, it said.