The crypto revolution is gaining momentum and startups as well as large corporations are all scampering to enter the blockchain space in order not to become obsolete.
World payments giants PayPal does not want to be left behind in the fast-paced cryptocurrency world. Therefore the firm is putting preparations in top gear to create its virtual currency payment system, in a bid to remain competitive.
The Crypto Craze
Famous financial services company, PayPal Holdings Inc., has joined the crypto bandwagon. According to reports, the firm has filed a patent with the United States Patent and Trademark Office for a faster cryptocurrency payment system.
The online payment processor has been around the e-commerce space since 1998 (formerly known as Confinity) facilitating e-commerce transactions with its payment services.
Although PayPal has been performing well regarding revenue generation for several years now, the proliferation and near ubiquity of bitcoin and other cryptocurrencies into the finance industry has given the legacy payments processor a cause to innovate or face the risk of becoming redundant.
Apart from bitcoin, which is already a legal tender in Japan and also accepted by various merchants all over the globe, there are over 1500 cryptocurrencies on the market today that offer users a decentralized, fast, cheap, secure and anonymous means of doing transactions globally. For example, several banks and financial service providers have been carrying out experiments on how to send cross-border payments in a cheap and lightning-fast manner using the Ripple (XRP) altcoin.
These decentralized blockchain-powered digital currencies demonstrate that if the PayPal team fails to improve on their current business model, it could begin to lose its market dominance.
Presently, PayPal users are charged a 5% fee per transaction. Meanwhile, the same payment could be made with cryptocurrencies and the fees would be minuscule in comparison. Ranging from pennies flat to free depending on which coin is being used.
In a bid to remain relevant and maintain its market share in the payments ecosystem, PayPal is creating an “Expedited Virtual Currency Transaction System.” The team is focused on building a payment system that will compete with or disrupt the crypto ecosystem.
The payments firm is looking to take advantage of the largely unregulated crypto ecosystem by creating its version of virtual currency. The CEO of PayPal, Dan Schulman said recently that:
Regulations need to be sorted out along with a whole number of other things. It’s an experiment right now that is unclear as to the direction it will go in.
Going by the CEO’s statement, the firm will probably not create a decentralized cryptocurrency. Instead, it could just integrate blockchain into its processes and develop a centralized virtual currency.
One thing that is certain is that PayPal must create a solution that its clients could use in sending cross-border payments fast and cheap to remain relevant for a long time to come.