John Rainey says one of the challenges in digitizing payment is that 95 percent of payments are in cash form. Cryptocurrency is not likely to replace cash in near future
PayPal CFO John Rainey says cryptocurrency and Bitcoin are very likely to become popular as a payment method because it has real merits to it. However, that will take time, he says.
At the same time, PayPal says the high volatility of Bitcoin payments makes it undesirable for merchants doing business.
The CFO said,
“Given the volatility of bitcoin right now, it’s not a reliable currency for transactions because if you’re a merchant and you have a 10% profit margin, and you accept bitcoin, and the very next day bitcoin drops 15%, you are now underwater on that transaction.”
He was speaking to Wall Street Journal about future of mobile payments.
PayPal was the first company to allow merchants to accept payments in Bitcoin through its Braintree platform was in 2014 or 2015 according to Rainey.
Currently, Braintree works with Coinbase, BitPay, and GoCoin to allow Braintree merchants to accept Bitcoin payments.However, the growth into integrating with Bitcoin has been very slow over the years.
Competition towards shifting to digital payments
PayPal now has 227 million active customer accounts, with 8.7 million coming to the platform in the last fourth quarter of the year. Venmo, which is a payment platform with a social feature, is also popular, processing $10.4 billion in the fourth quarter. This represents a 86 percent increase from a year earlier.
The company, which has been conservative over the years in terms of allowing linkage with traditional banks in various countries. However also faces stiff competition. For instance, Some of its competitors include Square Inc. and Apple Inc which are challenging it with peer-to-peer payment. The eBay now does not use PayPal but Adyen as its payment processor.
PayPal says the biggest problem in shifting to digital payments is that 85 percent of global consumer payments use cash. Hence, that means it has to provide a value proposition to consumers and merchants. Since to help accelerate a shift to digital payment even as it accelerates that shift.
Although many consumers are now using mobile as their primary computing device. It is hard to say if cash will disappear completely according to him.
“I don’t think we will ever be entirely cashless, maybe in large part. Because I don’t know if we will ever be in a world that every person has a smartphone or a mobile device,” he said.