Banking News

PayPal happy with crypto progress, but wants role as CBDC wallet

paypal

In the last couple of earnings callsPayPal CEO Dan Schulman has been very bullish on the progress of PayPal with cryptocurrencies. In yesterday’s call, he outlined some new cryptocurrency features but spent most of the time talking about central bank digital currencies (CBDCs). 

He noted the importance of wallets for CBDCs and the new low cost payment infrastructure that will be built around them. And ultimately, PayPal is one of the world’s largest wallet providers. 

Last year PayPal enabled U.S. customers to buy cryptocurrencies. In late March, it enabled users to spend their cryptocurrencies, so-called ‘buy with crypto’. He mentioned they are rolling out the service in the UK.

Dan Schulman transcript excerpt

Cryptocurrency

Well, we continue to be really pleased with the momentum we’re seeing on crypto. And we’re obviously adding incremental functionality into that. You probably saw we increased limits to $100,000 a week. We’re right in the middle of some open banking integration, which will increase the ability to fully integrate into ACH and do faster payments.

We’re going to launch, hopefully, maybe even next month in the UK. Open up trading there. We’re working right now on transfers to third party wallets. And we really want to make sure that we create a very seamless process for taxes and tax reporting. And so, we’re really looking at how do we integrate that into both the trading and the ‘buy with crypto’ on our platform.

CBDC

But I will say this, all of that is interesting. But it is in the main course, in terms of what we are trying to do with our blockchain and digital currency business unit. We are clearly thinking about what the next generation of the financial system looks like. How we can help shape that. 

We are working with regulatory agencies, central banks across the world. The number of countries that are looking at CBDCs, central bank issued digital currencies is increasing rapidly. You’re like at 40 countries six months, a year ago. You’re almost up to 100 countries looking at it right now.

And clearly there is an opportunity to think about a new infrastructure that can more efficiently, that could be a lower cost, do transactions and also get money to people much faster than happens today. I mean, the other day, I sent an EFT from one bank to another bank, and that bank told me it would take three days to access that money in the EFT I sent. That’s crazy. It needs to be instantaneous. 

And there is a lot of desire by governments to really think how can you create a more efficient system using new technology to bring in more citizens, more underbanked, underserved citizens into the financial system. Because they disproportionately pay a higher take rate than those who are fully banked to our higher income levels. 

And there’s a lot of connections between digital wallets and central bank issued digital currencies. Imagine not having to send out stimulus checks but sending those directly into a digital wallet where you instantaneously receive it. And you don’t have to go to a check cashing location and exchange that and get charged for that exchange. There’s just so many benefits to that as well as just plain utility to payments.

Smart contracts & DeFi

How can we use smart contracts more efficiently? How can we digitize assets and open those up to consumers that may not have had access to that before? There are some interesting DeFi (decentralized finance) applications as well. 

Hiring

And so we are working really hard, and by the way, as you probably have seen, we are trying to pick off the very best talent in the ecosystem to come work here at PayPal. We have a list of names and phone numbers and we are slowly but surely building a team that I think it’s going to really shape the thought process around this. And I’m really pleased with at least the early returns on that.