The CFO of PayPal has said that merchants aren’t interested in accepting cryptocurrency for payments because of its volatile nature.
Appearing on CNBC’s ‘Mad Money‘ with host Jim Cramer, John Rainey, the chief financial officer of the online payments company, said:
“If you’re a merchant and you have, let’s say, a 10 percent margin on a product that you sell and you accept bitcoin, for example, and the very next day it moves 15 percent, you’re now underwater on that transaction.”
He went on to state that when merchants were receiving payments in cryptocurrency, they were then moving those to a more stable currency. This, however, is understandable. The end of 2017 saw bitcoin within touching distance of $20,000 for the first time, a surge in value that was boosted by heightened interest from new investors to the market.
Yet, the first three months of the 2018 have also been the worst for the industry, in particular bitcoin. In January, the total market capitalisation of all cryptocurrencies was valued at $830 billion. Yet, at the beginning of February it was down to under $300 billion; a significant drop in a short space of time. Bitcoin’s value fell to just above $6,000 in February. Consequently, it’s no surprise that many merchants who were accepting cryptocurrency through PayPal were quick to move the funds elsewhere.
Rainey added that:
“You could have something that appeals to consumers, but if merchants don’t accept it, it’s of little value. Right now, we don’t see a lot of interest from our merchants. But if it’s something that stabilizes in the future and is a better currency, then we’ll certainly support that.”
Yesterday, it was reported that Square Cash, the mobile payment app developed by Square, was growing at a faster rate compared to PayPal’s Venmo, according to Nomura Instinet. Research indicated that since 2016 downloads for Square Cash had averaged 128 percent year-over-year growth each month compared to Venmo’s 74 percent.
Analyst Dan Dolev said: ‘Historically, Venmo saw more downloads versus Square, but the gap appears to have peaked in July 2017.’
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