PayPal have announced support for Bitcoin, at least starting in North America. This is different from the previous Braintree partnership where merchants could choose to accept Bitcoin payments, it now means that all PayPal digital goods merchants can accept Bitcoin with a simple integration through the PayPal Payments Hub.
It does not mean that PayPal users will instantly see a Bitcoin balance in their PayPal accounts, all transactions will go through the Bitcoin payment processors PayPal have partnered with – BitPay, Coinbase and GoCoin. PayPal is also not offering the bitcoin payment option to merchants who sell products. To start with it’s offered to digital goods merchants selling the likes of ringtones, games and music.
PayPal will also hold off from allowing pre-sales to be paid with Bitcoins. Pre-selling is when a business asks for money up-front for a product or service it will deliver in the future. Customers may not get their money back if the business goes out of business before the product is shipped but after a buyer protection period expires, so Paypal’s decision not to support pre-sales is shaped by their desire to protect customers.
PayPal say “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”.
It may still be some time before you can buy and sell on eBay with Bitcoin, but the day you can accept crypto-currencies has just got a little closer. What will be interesting is to see if other Payment companies start to embrace Bitcoin or whether they’ll fall behind PayPal. Google Wallet and Apple Pay may find Bitcoin considerably more troublesome to integrate as they merely use stored credentials linked to traditional credit or debit cards for payments.
As a buyer the PayPal announcement will enable you to spend your Bitcoins when paying with PayPal, however as a seller you won’t see Bitcoins as PayPal convert Bitcoins instantly into a fiat currency through a bitcoin payment processor.
Refunds would be tricky as there’s no guarantee that at a later date the same amount of bitcoins would be given due to exchange rates, which could lead to some interesting scenarios where a refund was significantly higher or lower than the original Bitcoin payment amount. In fact potentially in the future buying and returning products could be the new Bitcoin arbitrage gamble which is something no merchant would want to see.
Have you ever used Bitcoins? Is it a payment method you’d welcome either as a buyer or a seller?