Observations from the Fintech Snark Tank

PayPal’s Service is Going to Be a Big Hit

A new survey of 3,000 US consumers conducted by Cornerstone Advisors and FICO found that:

60% of smartphone owners have the PayPal app installed on their smartphone.

14% of PayPal users already own some form of cryptocurrency (in contrast to 8% of non-PayPal users). Of those PayPal users, 53% of them used Bitcoin to buy products or services in the past year, and two-thirds plan to in the next year or two.

Another 15% of PayPal users intend to purchase or invest in cryptocurrency in the next 12 months—and half of them expect to make retail purchases with Bitcoin in the next year or two.

$31.2 billion worth of retail products and services were purchased in the past year using cryptocurrencies by all Americans. PayPal users accounted for 74%—$23.1 billion—of that amount.

Survey data is not very reliable, and I can't believe that 8% of non-PayPal users own cryptocurrency. But I wouldn't be surprised if half of smartphones have PayPal installed. Adding a Buy Bitcoin button to the app would overcome the friction that has long slowed adoption: buying from an institution that people already (wisely or not) trust with money. Robinhood is similar but may need more time to build their brand and reputation.

I don't see any reason PayPal would ever have to touch cryptocurrency to support this service, other than to cover crypto gains. The press release says "all transactions will be settled with fiat currency at their current PayPal rates."