PayPal today announced partnerships with three leading Bitcoin payment processors: BitPay, Coinbase and GoCoin. The eBay-owned company wants to help digital goods merchants accept Bitcoin payments, although it is starting with those located in the US and Canada first (“We are considering expanding to other markets,” a PayPal spokesperson told TNW. “Stay tuned.”)
PayPal says it chose to integrate the third-party functionality directly in the PayPal Payments Hub because the aformentioned trio already offers its customers protections when dealing with the virtual currency. The company envisions anything that can be obtained digitally, such as video games and music, being sold in Bitcoin.
This is important to emphasize, because PayPal isn’t adding Bitcoin as a currency to its own digital wallet. It also won’t be processing Bitcoing payments on its secure payments platform: everything is being handled by one of the three third-parties.
Merchants who pre-sell products, meaning asking for money up-front for a product or service that will be delivered in the future, will also not be supported. This is, according to PayPal, to safeguard customers from businesses that can’t give refunds if they fold before the product is shipped and after buyer protection expires.
In other words, the company is starting to accept Bitcoin, but very slowly and very cautiously. PayPal Senior Director of Corporate Strategy Scott Ellison explains:
PayPal has always embraced innovation, but always in ways that make payments safer and more reliable for our customers. Our approach to Bitcoin is no different. That’s why we’re proceeding gradually, supporting Bitcoin in some ways today and holding off on other ways until we see how things develop.
PayPal also needs to follow the laws and regulations in every market we operate. For this reason, virtual currency exchangers and administrators interested in working with PayPal in the future must secure the appropriate licenses and put anti-money laundering procedures in place.
In short, PayPal is asking others to dip their toes into Bitcoin. The company knows swimming can be great, but it just isn’t sure yet if it wants to get wet.
That being said, PayPal has tested the water in other ways already. Earlier this month, its online and mobile payments platform Braintree announced Bitcoin integration for developers via Coinbase. It also accepts payments from merchants selling Bitcoin mining equipment.
While actions speak louder than words, PayPal still made a point to shower praise on Bitcoin, saying there is “good reason” it has seen so much hype this year, and that while crypto-currencies are not completely new, it is the only one that has “achieved significant scale.”
