After months of talking up its interest in Bitcoin, PayPal is taking concrete steps to accepting the digital currency as payment.
Bill Ready, CEO of PayPal subsidiary Braintree Payments, announced that the company would let merchants accept bitcoins through a partnership with Coinbase, a startup which offers a virtual wallet for the currency, in the coming months.
Before you get whipped up with excitement over the idea of PayPal taking bitcoin, here are some caveats:
- You can’t keep bitcoins in your PayPal account like you would dollars, euros, or other major currencies. Nor can you send bitcoins back and forth via PayPal.
- Only merchants who have adopted Braintree’s newest software, the V.zero SDK, and signed up for a Coinbase account will be eligible.
- Some of the customer conveniences of using Braintree, like storing a customer’s shipping address so she doesn’t have to fill it out on a mobile device, won’t be available in the initial release.
It’s nonetheless a foot in the door for Bitcoin at PayPal, and a big validation of Coinbase, one of many competing bitcoin-wallet startups.
The announcement shows how PayPal is paving the way to help retailers not not just with Bitcoin but other rapidly evolving forms of payment as well.
“We want to future-proof merchants so they don’t have to have 10 different dashboards to see all the buying that’s happening,” Ready told me in a joint interview with Brian Armstrong, CEO of Coinbase, on Monday.
Armstrong said he expected there to be more interest in bitcoin payments from online retailers.
“People swipe their cards in bricks-and-mortar and find it pretty convenient,” Armstrong said. By contrast, paying 2% in credit-card fees can consume much of online retailers’ profit margin.
Coinbase doesn’t charge for bitcoin-to-bitcoin transactions, but Armstrong says the “vast majority” of its merchants use a service called Instant Exchange, which converts bitcoin to local currencies. Coinbase charges a 1% fee for those transactions, though it currently waives fees on the first $1 million in sales.
The joint PayPal-Coinbase will charge the same fees, including the waiver. It’s not clear if PayPal and Coinbase will split the fees on transactions routed through Braintree’s software.
“The merchant will have one price that covers what both of us are doing,” Ready said.
Photo by btckeychain