The payments giant rolled out “Checkout with Crypto” after announcing the feature last October, a huge step forward for cryptocurrency payments. It lets customers in the US use crypto in their PayPal wallet as a funding source at checkout, converting the crypto holdings to fiat currency to complete transactions. The company will gradually roll out this feature to its global merchant network in more than 200 countries. PayPal first debuted its crypto service in the US in November 2020 and discussed its plans to invest in a crypto-dedicated business unit during the company’s Q4 earnings call.
PayPal’s entrance in the space will catalyze crypto retail payments.
PayPal’s crypto push could spell trouble for Cash App and its niche feature set. The Square-owned Cash App made a name for itself as the peer-to-peer (P2P) app that lets users buy and sell crypto: Cash App’s Bitcoin revenues skyrocketed nearly 900% year over year (YoY) in Q4 2020, reaching a value of $1.76 billion. And crypto use has skyrocketed on the app: In January 2021, more than 1 million customers bought Bitcoin for the first time using Cash App, compared with 3 million total Bitcoin users in 2020. But PayPal’s latest development could cut into this revenue and erode Cash App’s competitive advantage because it lets users do more with their crypto than they can on Cash App. The P2P app may need to follow in PayPal’s footsteps to stay competitive and keep its user base from moving to the payments giant.