This post was originally published on October 10, 2014.
PayPal recently announced that it is teaming up with three Bitcoin processors – BitPay, Coinbase and GoCoin – to enable certain retailers to accept the virtual currency.
The new service will initially be geared toward sellers of digital goods, such as MP3 downloads and online games, and will be limited to merchants in North America and Canada, though PayPal’s Scott Ellison, senior director of corporate strategy revealed that the company’s strategy would evolve over time, writing that “we’re proceeding gradually, supporting Bitcoin in some ways today and holding off on other ways until we see how things develop.”
Ellison went on to explain that PayPal’s choice of partners was influenced by its joint commitments of offering safer payment methods to sellers as well as to its own customers.
PayPal will not however be adding Bitcoin to its own digital wallet, or processing such payments through its secure platform. Instead, all Bitcoin payments will be processed entirely by BitPay, Coinbase and GoCoin themselves.
Additionally, PayPal will not accept payments from merchants that pre-sell goods or services that it intends to deliver in the future. The thinking behind that decision is that such organisations can sometimes go bust before orders are fulfilled but after the buyer protection period expires. PayPal, Ellison writes, is committed to protecting its customers and Bitcoin is simply not a viable option where advance payments are concerned.
Ellison also explains how adoption of the virtual currency will be shaped by legislation, noting that “PayPal also needs to follow the laws and regulations in every market we operate. For this reason, virtual currency exchangers and administrators interested in working with PayPal in the future must secure the appropriate licenses and put anti-money laundering procedures in place.”
Reading between the lines, it looks like PayPal certainly has an interest in alternative currencies and, presumably, the effect their acceptance will have on the company’s bottom line, yet has some reservations about jumping straight in.
The latest move builds on an earlier announcement that its subsidiary Braintree, a payment processor used by companies such as Airbnb, Dropbox, LivingSocial and Uber, was also looking into how it too could accept Bitcoin as a payment method, again via Coinbase.
The successive Bitcoin announcements from the firm may prove to be a prelude to far wider adoption of the crypto currency by PayPal, a move that some Bitcoin owners may welcome. Indeed Ellison wrote how the company is excited to be working with businesses that facilitate new types of currency, adding that “we hope to do more with Bitcoin as its ecosystem continues to evolve.”
Whether every Bitcoin fan will be happy to imagine a future for Bitcoin that potentially involves closer integration with PayPal and maybe even eBay remains to be seen though. Whilst Bitcoin continues to gain momentum as a legitimate currency part of its attraction in the past, for some at least, has been its unofficial and unregulated nature and subsequent potential uses.
That aside, many virtual coin users look set to benefit from additional methods to pay for ebooks, songs, games and even their favourite VPN, so it’s not all bad eh?