[2018-05-17] PayPal CFO Says Merchants Aren’t Interested in Crypto Due to Volati

[moriskarlov]

PayPal CFO John Rainey said in an interview with CNBC May 16, that the company doesn't see much interest in digital currencies because price volatility threatens the viability of their merchants’ businesses.

Centralized payment service PayPal was a pioneer in accepting cryptocurrencies. Merchants could opt-in to accept Bitcoin (BTC) on the platform as far back as 2014, when BTC was worth around $400. Today, Rainey stated that PayPal currently doesn’t see much interest in digital currencies from their merchants, as the volatile nature of cryptocurrencies can cause contingent losses, explaining:

"If you're a merchant and you have, let's say, a 10 percent margin on a product that you sell and you accept Bitcoin, for example, and the very next day it moves 15 percent, you're now underwater on that transaction... You could have something that appeals to consumers, but if merchants don't accept it, it's of little value. Right now, we don't see a lot of interest from our merchants.”

“But if it's something that stabilizes in the future and is a better currency, then we'll certainly support that," he added.

The latter statement supports PayPal’s patent filed in March, which aims to speed up cryptocurrency transaction times. If the technology can be implemented at a large commercial scale, it could allow cryptocurrency payments to be processed between merchants and buyers instantly and off-chain, eliminating large transaction fees and long verification periods.

PayPal, which was launched in 1998, has 237 mln registered active accounts, with a payment volume of $132 bln in the first quarter of 2018, up more than $30 bln since the first quarter of 2017.

Today, Square CEO Jack Dorsey expressed optimism toward digital currency adoption on a global scale. At the Consensus conference, Dorsey shared his vision that cryptocurrencies are the future of a legitimate means of global payment, which reaffirms his previous comments that Bitcoin will become the world’s “single currency” within a decade.

https://cointelegraph.com/news/paypal-cfo-says-merchants-arent-interested-in-crypto-due-to-volatility

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[1Referee]

It's nonsense all the way through.

Merchants shouldn't worry about the volatility because of how payment processors such as BitPay take away that exposure. The only thing merchants care about is to increase their revenue, and accepting Bitcoin through one of the several payment processors allows them to do exactly that. They aren't interested in holding the coins because they just want the fiat for every purchase, so all these discussions don't contribute to anything. It's just a matter of logical thinking.

You want potential revenue through Bitcoin? Then go ahead and partner with one of the plenty payment processors, cut the bullshit.

[davis196]

But if it's something that stabilizes in the future and is a better currency, then we'll certainly support that," he added.

Such a hypocrite.Paypal will never support any type of cryptocurrency adoption,because it will kill their business model and their company as well.
Merchants aren`t interested in crypto because buyers don`t use it.Buyers don`t use it,because merchants aren`t interested.It`s a circle.

[richardsNY]

Merchants aren`t interested in crypto because buyers don`t use it.Buyers don`t use it,because merchants aren`t interested.It`s a circle.

It might be a circle, but the main point of importance is that merchants are looking to expand their payment options and to get in some extra sales. In other words, merchants have to set the first step. It doesn't cost merchants one single penny if someone isn't using Bitcoin to pay for their goods, so there basically is no reason to hold back -- the fees these payment gateways charge apply on a per transaction basis mostly. As 1Referee pointed out, payment gateways make sure merchants don't have to deal with this market's volatility. Again, it's all up to the merchants to show interest, because it definitely won't be coming from the users....

[gentlemand]

Of course they're not interested in volatility and that's why they all use places like Bitpay. Even then merchant adoption is contracting, not expanding. Even if it's custom for free money it looks like many aren't interested in the ball ache it can potentially create.

[BitMaxz]

Honestly, the good advantage of Bitcoin payment gateway is to reduce reversible payment and the price volatility that could give you a higher profit than using Paypal due to its volatility and you can only pay for less fee unlike Paypal that asking for higher fee when you are dealing to someone lives in other country and I think not all merchants are not interested about Bitcoin there are some of them are interested.

Anyway, Bitcoin can be stabilize maybe in the future, but right now Bitcoin still volatile and unstable and we don't know when is the exact time could Bitcoin become stable.

If they could check how BitPay works maybe they will be interested since BitPay is favor to merchant even the price increase or decrease.

[Mahanton]

But if it's something that stabilizes in the future and is a better currency, then we'll certainly support that," he added.

Such a hypocrite.Paypal will never support any type of cryptocurrency adoption,because it will kill their business model and their company as well.
Merchants aren`t interested in crypto because buyers don`t use it.Buyers don`t use it,because merchants aren`t interested.It`s a circle.

Even though theres a demand or lets say buyers do make use of it for sure they would still stick into their own ways which is on using fiat money or traditional transaction. Paypal and Crypto wont really collaborate to each other which even just using our common sense this thing isnt really surprising at all. Owners will always have negative impressions to bitcoin yet they do always see this as a competitor.I was little bit pissed about on what he claimed on here.

[dE_logics]

Bitpay should eliminate the volatility issue for the merchant, but what about the buyer? Keeping your assets in cryptocurrency means the value of it will be volatile. You could keep your money in a fiat currency, but if you do that, why purchase in crypto at all if the merchant accepts fiat?

[kjlimo]

Bitpay should eliminate the volatility issue for the merchant, but what about the buyer? Keeping your assets in cryptocurrency means the value of it will be volatile. You could keep your money in a fiat currency, but if you do that, why purchase in crypto at all if the merchant accepts fiat?

Your argument is fair which is why I often don't find it makes sense to "buy bitcoin" only to turn around and spend it... I typically try to find ways that make sense to send bitcoin to someone else (for example, I tipped my bell hop yesterday in bitcoin).

And now when he's traveling to Prague in a couple weeks, he can go to a place that accepts and then spend it.

Or I sent him a link to Coinbase to sell it. His choice.

He seems pretty excited, so I hope he finds one of the couple places I found accepting bitcoin in Prague.

[darkangel11]

"If you're a merchant and you have, let's say, a 10 percent margin on a product that you sell and you accept Bitcoin, for example, and the very next day it moves 15 percent, you're now underwater on that transaction... You could have something that appeals to consumers, but if merchants don't accept it, it's of little value. Right now, we don't see a lot of interest from our merchants.”

Why would you have to sell your coins the next day? You either do swaps through a payment processor or your exchange account and the moment the coins land on your address they are being exchanged, or you hold and sell at the best value, so you're additionally trading the coins and taking this risk into account. Selling the next day after it had dropped by 15% is stupid and I don't see it as a negative factor. He should think of some better explanation, really.

[cetald]

PayPal is not in a hurry to work with cryptocurrencies for two reasons, it's volatility and the legalization of cryptocurrencies in different countries.

[prehisto]

I dont see how the non stability of coins is relevant, just use a payment processor and put  price in Euros/ USD or other FIAT and let the consumers to pay with crypto which can be easily calculated and automated by many companies already.

[veleten]

It's nonsense all the way through.

Merchants shouldn't worry about the volatility because of how payment processors such as BitPay take away that exposure. The only thing merchants care about is to increase their revenue, and accepting Bitcoin through one of the several payment processors allows them to do exactly that. They aren't interested in holding the coins because they just want the fiat for every purchase, so all these discussions don't contribute to anything. It's just a matter of logical thinking.

You want potential revenue through Bitcoin? Then go ahead and partner with one of the plenty payment processors, cut the bullshit.

I agree completely,it is just that PayPal realised that bitcoin is a  threat to their market position
not an immediate one,but why breed competition that you cannot control or buyout after

[imsotiredofmoviereboots]

Who needs Paypal anyway? Their competitor Utrust is going to steal all their customers from their strict and unfair policies that caused many accounts to be blocked and having no chance to recover their funds.

[d5000]

The problem is complex. Like @davis196 already mentioned, one of the issues to resolve is that cryptocurrency holders are often investing because of the volatility - to make money trading or simply hodling, but not paying with it for goods and services. They're simply not using it as a currency. But merchants aren't wanting to "hold the bag" either, here the PayPal  guy is right.

Where could be the solution? I guess for now standard cryptocurrencies won't achieve stability. However, there's a growing breed of stablecoins that try to minimize volatility, often with a peg to fiat currencies (no, I'm not referring to Tether, more to coins like BitUSD and Dai). At least they're useful for people wanting to hold cryptocurrencies when they fear a downmove.

So stablecoins could be the "bait" for people entering the market wanting to use cryptocurrencies as currencies - merchants and consumers (think of the "unbanked" or people in countries with unstable currencies such as Venezuela or even Argentina).

My dream would be an automatic atomic-swap-powered mechanism where you could accept cryptocurrencies and get paid out in stablecoins or vice versa - without any intermediaries. I think such a system could increase the usage of Bitcoin as a currency. Because all current solutions for the merchant-volatility problem (BitPay etc.) use a kind of fiat to "preserve" value - and then @kjlimo is right: why use cryptocurrencies for that?

[Carlton Banks]

all current solutions for the merchant-volatility problem (BitPay etc.) use a kind of fiat to "preserve" value - and then @kjlimo is right: why use cryptocurrencies for that?

Price inflation

There's a huge amount of generalised price inflation stored up specifically in the kind of assets large financial firms have been buying. As soon as the market in those assets begins to become saturated enough, the owners will begin to sell, so that they can diversify their risk further (and the stock markets did experience a little jolt this year). Alternatively, central banks stop printing money and lending it to large financial firms. And then that's pretty much defining a top in all markets when it happens, and the price inflation will be even more pronounced.

Regular business owners don't pay attention to this stuff? You'd be surprised. Once the money starts flowing out of assets and into the commodities markets, even consumers will notice, lol

[crypto1010]

Its no surprise to me that this kind of backlash is coming from paypal....why dont they come clean and just tell us they will not be bring crypto to their services anytime soon because bitcoin is some sort of competitor to their business and offering btc payments as an option will certainly cut their commissions!

AFAIK If merchants were to know that the are less chargebacks and fraud cases when it comes to using cryptos they will certainly go crypto and never return to their paypal nightmares regardless of the volatility and this is the truth they are hiding.