The executives of global payment giant PayPal revealed more details on the company’s third-quarter 2020 earnings conference call to enter the encryption field in 2021, including plans to support central bank digital currency (CBDC).
PayPal’s first encryption step
PayPal (NASDAQ: PYPL) was established in December 1998 by Peter Thiel and Max Levchin. It is an online payment service provider headquartered in San Jose, California. Adhering to the corporate philosophy of “inclusive financial services to the public”, we are committed to providing inclusive financial services, through the combination of technological innovation and strategic cooperation, creating better ways of fund management and mobile, and providing flexible options for transfer, payment or collection. Help individuals and businesses participate and succeed in the global economy.
In fact, in October 2019, PayPal Holdings Inc has been approved by the People’s Bank of China to purchase a controlling stake in a domestic payment company. PayPal became the first foreign institution to enter the Chinese payment service market. On October 1, Paypal (PYPL.US) acquired a 70% stake in Guofubao and officially entered the Chinese payment market. On December 20, PayPal (PYAL.US) completed the acquisition of 70% of Guofubao’s equity. By the end of January 2020, PayPal (PYPL.US) Q4 revenue increased by 17.3% year-on-year to $4.96 billion, and payment transactions increased by 21% to 3.5 billion.
At the same time, PayPal’s encryption ambitions are gradually growing.
On October 4, 2019, PayPal announced its withdrawal from the Libra Association and became the first member to withdraw from the organization. On October 5, PayPal announced that it would give up participating in Facebook’s cryptocurrency Libra.
Until October 21, 2020, the US payment giant PayPal issued a statement: it has obtained a Conditional cryptocurrency license (generally known as BitLicense) issued by the New York Financial Services Agency, and will be custodial through cryptocurrency transactions with regulatory licenses Paxos Co., Ltd. cooperated to enter the cryptocurrency market, allowing customers to buy, hold and sell cryptocurrencies through its online wallet in PayPal, and it can be used on its huge network of up to 26 million merchants from early 2021. Buy any commodity with cryptocurrency. The initially supported cryptocurrencies mainly include Bitcoin (BTC), Ethereum (ETH), Bitcoin Cash (BCH), and Litecoin (LTC).
Eight days after the news was announced, PayPal officially launched the Bitcoin transaction service.
In the past few months, many well-known banking institutions have begun to get involved in encryption technology, and many countries are also experimenting with CBDC. This shows that it will only be a matter of time before financial giants like PayPal enter the encryption field.
New plan-support CBDC and more digital currencies
Obviously, providing encrypted transaction services is only the first step.
Recently, foreign media sources pointed out that during the third quarter earnings conference call, PayPal CEO Dan Schulman said that PayPal plans to support more digital currencies in the future. He said that the PayPal digital wallet platform and its current scale can help shape the utility of these currencies. PayPal’s foundation is very eager to provide these functions, and its encryption function has been extended to “base 10%.”
He added that the demand for the digital currency waiting list is twice or three times what PayPal expects. At the same time, for the central bank digital currency (CBDC), Dan Schulman said that this is just the beginning of an opportunity. PayPal will cooperate with regulators in the field of digital currency to accept new forms of digital currency.
Regarding the central bank’s digital currency itself, Dan Schulman emphasized that “from my perspective, it’s just a question of when and how to proceed, not whether it’s done or not.”
New expansion-open cryptocurrency services to international users in the first half of next year
It is worth mentioning that in the third quarter earnings conference call, PayPal CEO Dan Schulman also said that in response to user needs, PayPal will increase the weekly purchase limit of crypto from $10,000 to $15,000. He also revealed that PayPal’s virtual currency service will be open to international users in the first half of next year and will be launched on its mobile payment application Venmo. He said: “In the next year, you will see us enter several different areas.”
Parallel with supervision
In fact, in addition to providing the above-mentioned important cryptocurrency services, PayPal is also exploring the potential of digital currencies through cooperation with licensed and regulated cryptocurrency platforms and with central banks around the world. In the past five years, PayPal has increased its development and resource investment in the next generation of digital financial service infrastructure through an internal research team focused on blockchain.
In 2019, the company’s venture capital arm PayPal Ventures invested in TRM Labs and Cambridge Blockchain. TRM Labs is a company focused on helping financial institutions prevent cryptocurrency fraud and financial crimes. Cambridge is a blockchain-based identity management and cooperation. Regulatory software company.
PayPal also stated that it will continue to explore the potential of distributed ledger technology to improve financial services and ensure that they are faster, safer, and cheaper. In this regard, the company intends to work hand in hand with regulators, the government and the central bank.
