Thursday, November 30, 2023
  • In 2021 PayPal had 426 million users who completed 19.3 billion transactions worth US$1.25 trillion
  • Mike Kondoudis revealed two intellectual property filings made by PayPal
  • This puts PayPal in a good position to leverage its massive user base in web 3.0 technology

The recent news of Western Union filing intellectual property to do with cryptocurrency and digital assets is joined by PayPal’s filings in the same arena. This puts the spotlight on the future of international payments and digital currencies’ position in the new financial landscape.

About PayPal

PayPal was founded in 1998 in Palo Alto, California. The idea at the time was to create a system through which business travellers could make payments in foreign countries without the use of intermediaries and complicated exchange control regulations.

The company, however, found its success in peer-to-peer (P2P) payments on the online P2P marketplace eBay. Today PayPal does a little bit more than that, offering P2P transacting worldwide. In 2021 PayPal had 426 million users who completed 19.3 billion transactions worth US$1.25 trillion. Staggering figures though they pale in comparison to Western Union. PayPal is, of course, a digital-first platform.

Cryptocurrencies and remittances

One of the more notable use cases of cryptocurrency is in international remittances of money, where it has shaken up both the access to and cost of sending money across borders. El Salvador, which adopted Bitcoin as a legal tender a little over a year ago, is a testament to the big impact. The response by large players in the international money transfer game to register the intellectual property for transacting in cryptocurrencies and digital assets was to be expected.

Cryptocurrencies such as Bitcoin (BTC) and Ripple (XRP) are extremely popular in this use case. Of course, the blockchain world is more than cryptocurrencies, with Non-Fungible Tokens (NFTs) and utility tokens also playing a big part in the landscape thus far. The filing includes these two.

The same source that provided news on Western Union’s intellectual property filings also provided information on PayPal filings. Mike Kondoudis revealed two intellectual property filings made by PayPal. The first is for downloadable software that sends and receives digital assets and utility tokens. The latter hints at NFTs joining the party as well.

The second filing is for payment processing services for others to handle cryptocurrency, digital currency, stablecoins and other digital assets. PayPal has not reported merchant account numbers since 2019, but at the time, they stood at 24 million, with a constant annual growth rate of 36.92%, which is truly impressive.

This, at the very least, suggests that PayPal is a pretty big deal when it comes to payment processing in eCommerce. We can expect them to make a concerted push for cryptocurrency payment processing too. An arena that VISA and others are also making moves towards.

PayPal ready for crypto

With a digital approach, PayPal appears as a technology company in many people’s minds. This puts PayPal in a good position to leverage its massive user base in web 3.0 technology. While the transition would be by no means simple, PayPal may have an easier task of it than many other players.

PayPal is already set up on a wallet basis and has a personal feel when compared to services like Western Union and MoneyGram. So, convincing users to have crypto or digital asset wallets isn’t a huge task. The same goes for PayPal’s status as a trusted payment provider for online payments.  The rest is “just” a matter of integrating cryptocurrencies into the existing wallet infrastructure.

PayPal has a truly borderless approach to its provision of financial services, which is one of the threats to African regulatory authorities. They must delicately balance the need to regulate web 3.0 technologies like cryptocurrency while contending with movements in players such as PayPal that know no boundaries.

Intellectual property filings are not rigid. While they are very important indicators of actions towards plans, they do not cement any plan. However, when we see a wave such as the play by Western Union and now PayPal for cryptocurrency-related intellectual property filings, it would be folly not to take heed.

Read: Paypal introduces cryptocurrency payments to encourage adoption

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