PayPal revealed a series of groundbreaking partnerships earlier today when it announced a broad move to allow digital goods merchants to accept bitcoin payments via its PayPal Payments Hub service.
The move has so far proved to be an expected though undeniable boon for bitcoin as it pushes toward mainstream acceptance. For example, the eBay-owned payments giant has 143 million registered users as of 2013, though only North American merchants are able to access the new payment methods.
Larger effects on the ecosystem aside, the announcement is also a validation of the major bitcoin payment processors serving the ecosystem – Atlanta-based BitPay, San Francisco-based Coinbase and Santa Monica-based GoCoin – all of which PayPal lauded for their commitment to consumer protections and business models that focus on compliance.
Speaking to CoinDesk, representatives from the three companies confirmed that the PayPal integration had been in the works for months, and that the decision was representative of PayPal’s dedication to working in the space.
Coinbase director of business development and strategy Adam White, for example, said that he has been impressed with PayPal and its ability to recognize the value in bitcoin’s technology, a sentiment echoed by his peers.
White told CoinDesk:
“When we were working with PayPal, it wasn’t ‘What’s square one?’ It was a team that understood bitcoin, and recognized the potential benefits as well as risks.”
All three companies framed the news as another key step on bitcoin’s road to mainstream adoption, and further proof of the digital currency’s continued popularity as an emerging payment method.
PayPal’s latest advance
Though important for all three of the companies involved, Coinbase’s inclusion may be most notable given it made headlines with PayPal subsidiary Braintree earlier this month.
White told CoinDesk that both announcements were developed in tandem, and that the deals arose from the positive statements representatives from eBay and PayPal have issued in the media.
Addressing the existing partnership with Braintree, White indicated he doesn’t expect the services to take away from each other. Rather, he said the goal of bitcoin payment processing providers should be to provide their services, wherever merchants are operating.
“We think this will build on the partnership we have with Bill Ready and team at Braintree.”
The news marks the first time PayPal or its subsidiaries have worked with either BitPay or GoCoin. However, both reported that they, too, had been engaged with the company’s representatives for some months before today’s announcement.
GoCoin CEO Steve Beauregard indicated that the news was supposed to be announced in tandem with the Braintree release, but that the decision was held back by the company.
BitPay, Coinbase and GoCoin also stressed how impressed they have been with PayPal and its proficiency with bitcoin technology.
Speaking to CoinDesk, BitPay executive chairman Tony Gallippi, for instance, said that he was left with the impression that PayPal is cognizant of many of the issues in the traditional payments space, and that the company is keen to work with bitcoin as a way of opening up a new avenue of addressing them.
Gallippi told CoinDesk:
“[PayPal] really sees value in the technology, and they’re in the business of making payments easy. They’re probably just as frustrated with the barriers in traditional payments as anybody.
Gallippi further praised the end product produced by the PayPal team, adding: “They really understand what it takes and what a customer would go through when they want to make a bitcoin purchase.”
Reaching more customers
Of course, while all three companies have gained another way to enroll merchant customers, they must now compete for this business as well.
White indicated that Coinbase has already opened up conversations with merchants using PayPal’s Payment Hub, and that it believes the service will help it onboard clients that don’t have the time or resources to invest in a full integration, a sentiment echoed by Gallippi.
Rather than integrating with BitPay, Coinbase or GoCoin directly, for example, PayPal Payment Hub merchants can enable one or all of the processors.
“You’re looking at a product that they’ve launched that can accept 200 payment methods and you don’t have to do 200 integrations,” Gallippi said. “You just do it one time and you turn on the different features you want to turn on, so I think there’s tremendous value for the merchants to go with a platform like that.”
Beauregard suggested that PayPal’s decision to partner with all three companies was a calculated move that would foster growth and competition in the space through the service, creating a better end-product for users.
“My own opinion is they didn’t want to make a king out of one company.”
Though overwhelmingly positive about the news, Beauregard voiced his disappointment that PayPal’s endorsement only extended to bitcoin and not any other alternative currency communities.
Framing the statement as part of PayPal’s decision to cautiously embrace digital currency innovation, Beauregard went on to reiterate his belief that the altcoin community will continue to develop and foster business interest.
“I contend that the altcoins that are coming out are far more advanced than what we’ve seen so far.”
Beauregard ended by reiterating his hope that PayPal will continue to pay close attention to developments in the digital currency space, and that this isn’t the last collaboration between it and the larger ecosystem.
Images via PayPal, Shutterstock