With PayPal being a CBDC distributor, more customers would be interested in its products, especially those related to crypto.
On Thursday, online payments giant PayPal Holdings Inc (NYSE: PYPL) held its investor day. During the event, PayPal CEO Dan Schulman revealed the company’s plan to serve as a central bank digital currency (CBDC) distributor. In other words, PayPal’s digital wallets could become the means by which central banks distributed CBDCs to consumers across income levels.
Dan Schulman stated:
“You think about how many [digital wallets] we’re going to have in the next two, three or five years, and we’re a perfect complement to central banks and governments to distribute those digitized forms of currency.”
In addition, PayPal CEO revealed that the company is looking into smart contracts. It is also considering tokenizations of other non-crypto assets. He said:
“This is a once in a multi-decade opportunity where the fundamental rails of the system are going to be redefined and we have a chance to help shape that.”
With PayPal being a CBDC distributor, more customers would be interested in its products, especially those related to crypto. Notably, the transaction activity of PayPal customers has significantly increased. According to the company, the number of PayPal customers using its crypto services has increased by 12% in weekly transactions. This is partly due to the fact that more than 40% of the US PayPal customers who use a crypto return to complete more than two additional transactions.
PayPal added support for cryptocurrencies at the end of 2020. At present, users can buy, hold, and sell Bitcoin (BTC), Ethereum (ETH), Bitcoin Cash (BCH), and Litecoin (LTC) with PayPal. Later this year, PayPal plans to significantly increase cryptocurrency’s utility. The company wants to make it available as a funding source for purchases at its 26 million merchants worldwide.
PayPal’s Strong Q4 2020 Performance
The launch of crypto purchase options has proved to be a step in the right direction for PayPal. Recently, the company released its Q4 2020 result in which it posted a better than expected growth. According to the earnings release, the company recorded a 72% increase year-on-year in the number of its new accounts which came in at 16 million for the quarter.
Besides, PayPal increased its transaction revenue by 12% to $5.7 billion compared with the figures reported in the third quarter. It also recorded 40.9 transactions per active accounts with a total payment volume coming in at $277 billion. This figure represents a 39% on a spot basis growth with 36% on an FX-neutral basis, despite the approximately 50% decline in volumes from travel agents and event verticals.