PayPal (NASDAQ:PYPL) recently introduced capabilities for its users to buy and sell bitcoin, but the big news is that the cryptocurrency will be available as a payment method at PayPal’s merchants later in 2021. While this is certainly a big deal when it comes to mainstream acceptance of bitcoin, will it translate into more revenue for PayPal?
In this Fool Live video clip recorded on Jan. 25, Fool.com contributor Matt Frankel, CFP, explained why bitcoin acceptance could be a needle-mover for the payments giant.
Matt Frankel: Biggest news by far in PayPal is the crypto news. Everyone knows what PayPal is, it’s a way to pay for stuff online. But late October they announced that you could buy and sell Bitcoin on Venmo and PayPal. That’s not the big news, the big news is that they said in early 2021, they plan on making Bitcoin a payment option at PayPal’s 26 million merchants. This is the first and this is the biggest by far legitimization of Bitcoin as a means of payment in its history, by far, not even close. I personally, I’m not a Bitcoin fan when it comes to the use case for it, but a lot of people do, there’s hundreds of millions of people around the world who do believe in Bitcoin. This could be huge for Bitcoin adoption, which could help PayPal tremendously because they do make money when people buy and sell Bitcoin on their site. The real question is, will Bitcoin being available to the millions of PayPal and Venmo users, drive engagement on the platform? Will it make people use Venmo and PayPal for other things more than they otherwise would because they can engage with the Bitcoin side of the platform? They said that it will be available as a payment mechanism in early 2021. I’m watching to see if we can get any more clarity on that when they report earnings on February 3rd because I think that is the big news out of the crypto. Square (NYSE:SQ), which we’re going to talk about in a second, is an easy enough way to buy Bitcoin, we didn’t really need another. One-fourth of the US Bitcoin volume takes place on the cash app though. We don’t need another Bitcoin platform, but as far as the way to spend Bitcoin, that’s a game-changer potentially. That’s the big news with PayPal and that’s what I’m watching.