Visa announced on Monday a new pilot program to test transaction settlements using cryptocurrency. The new payment trial will not actually impact end-users who operate debit cards from the crypto exchange platform Crypto.com. Users will be able to pay for goods without worrying about what happens in the background — the Crypto.com cards do support top-ups from crypto balance. At the end of the day, some of the fees that the exchange has to pay Visa for online transactions will be settled in USDC, a stablecoin that’s pegged to the dollar.
PayPal followed on Tuesday with a different online payment move that involves crypto. This time around, PayPal’s initiative impacts buyers directly, as they’ll be able to instantly convert bitcoin, ethereum, litecoin, and bitcoin cash balances to fiat, which can then be used for online payments.
PayPal brought cryptocurrency exchange features to its app back in mid-November 2020, allowing users to buy and sell bitcoin, ethereum, bitcoin cash, and litecoin inside the app. The new functionality simply builds upon that.
Checkout with Crypto is available to PayPal users in the US and is a straightforward process. Users will be able to choose what balance to use for online payments. Crypto payments appear next to more traditional payments, including bank account transfer, debit or credit card, or fiat balance in PayPal. That’s assuming the cryptocurrency balance is enough to cover the value of the online purchase.
Once the customer selects one of the four different cryptocurrencies available inside PayPal and confirms the purchase, PayPal will process the transactions.
It’s important to note that PayPal users will not pay retailers directly via crypto. That sort of settlement might be costly and time-consuming, depending on the chosen digital coin used for the payment. PayPal doesn’t support that sort of crypto wallet to crypto wallet payment. Instead, PayPal will just exchange the selected cryptocurrency into US dollars, which will then be used to settle the payment. It’s still an online purchase that uses a traditional fiat transfer.
PayPal says it’s not charging any transaction fees when users select Checkout with Crypto, but the company will use a cryptocurrency conversion spread when exchanging bitcoin, ethereum, litecoin, or bitcoin cash to US dollars.
Depending on the day’s price fluctuations, it might be a better idea to hold on to the crypto and pay with fiat, some people might say. That’s because the crypto market is currently experiencing a bull run, and the interest around crypto seems to only grow stronger. But the market can be very volatile and quickly turn direction. Ultimately, it’s up to PayPal users to decide what balance to use for online payments. PayPal’s short video explaining the new Checkout with Crypto feature follows below: