Many have said that Bitcoin is of no use to PayPal, and only threatens it, because Bitcoin's payment system solves the problem of online transactions better than the PayPal model.
I disagree. I think it is actually a threat to PayPal as are other bitcoin payment processors.
I think Bitcoin poses the biggest business threat to Visa, not PayPal, and that the latter, being a technology company, can leverage Bitcoin to expand its market reach.
I disagree it's a bigger threat but it still is one to Visa etc.
The main problem with PayPal is that it's not merchant friendly. Consumers love it, because they can chargeback a payment if they don't receive a product from a merchant, and fees are reasonably low, but merchants have to worry about fraudulent chargebacks. If the product that the merchant provides is one that is not shipped, because it's digital or a service, then it is difficult, if not impossible, to prove delivery to the customer, meaning the customer will almost always win the dispute.
The fees are also pretty large. Some online stores actually charge a premium if you pay with PP though it is very quick and convenient but I hope a bitcoin payment processor will arrive that is similar to PP but cheaper and doesn't just give the customers their money back for bullshit reasons.
PayPal could get around this by offering its customers a new option: to pay with bitcoin. By allowing PayPal users to make standard Bitcoin payments, PayPal would immediately be able to reach every merchant in the world, regardless of the risk of fraud and chargeback in their industry or region.
I think this is a possibility and if they do get involved it will likely be as a payment processor though they might just leave it up to others to do. I hope they do get involved as it will be interesting to see how they handle it and if it changes their business practices.
