Scott EllisonThough long rumored, the news that PayPal had formally aligned its business with bitcoin dominated headlines this week due to the company’s size, brand recognition and influence as an early pioneer and dominant player in online payments.

For PayPal, the move comes at a time of increased competition in the web and mobile payments space, with tech giant Apple most recently entering the sector with Apple Pay.

As such, there has been much speculation as to how bitcoin could play an increasing role in helping PayPal continue its market dominance while helping ease the still prevalent friction in online payments.

Speaking to CoinDesk, PayPal senior director of corporate strategy Scott Ellison elaborated further on the nature of his company’s latest move, but cautioned that, as of now, PayPal plans to tread lightly in the bitcoin space.

Ellison told CoinDesk that PayPal’s initial role in its partnership with major bitcoin processors will be to function as an observer, explaining:

“[We’re looking] to gain insight into the types of consumers using bitcoin and will work with businesses to understand what types of content they are selling more of.”

To start, PayPal will analyze bitcoin buyer behaviour soley on its PayPal Payments Hub, an all-in-one online e-commerce platform that allows businesses to integrate multiple payment options – including bitcoin, credit cards and mobile carrier billing – with ease.

Merchants who use the platform will now be able to implement the existing bitcoin and altcoin processing services provided by BitPay, Coinbase and GoCoin, companies that Ellison called “the three leading bitcoin payment processors”.

Starting small

While PayPal did not integrate bitcoin into its digital wallet or proprietary payment processing services, Ellison framed this as consistent with PayPal’s approach to helping instill new behaviours in its online userbase.

When trying out new technologies, Ellison said, it’s common for consumers to start small as they look to test the waters with new buying methods.

Ellison told CoinDesk:

“Smaller, digital purchases are what consumers might like to try with this new payment method just as they did with then-new mobile operator billing for digital goods like games and ringtones on mobile devices.”

Ellison also suggested that the platform’s digital goods merchants may have the most compelling reasons to adopt bitcoin today, citing the digital currency’s potential to increase sales and reduce costs for this business segment.

Integration timeline

Ellison further confirmed the statements of BitPay, Coinbase and GoCoin, saying that PayPal has been working on integrating bitcoin into the PayPal Payments Hub for four months.

Though others like Overstock have implemented bitcoin processing services in as little as one week’s time, Ellison said that a longer timeline is consistent for this type of company procedure.

“This is a typical, normal integration timeframe, as we had to ensure we had customer service and partner support ready,” Ellison said.

However, he said PayPal has been interested in developments in the bitcoin space since 2012, due to the digital currency’s potential to reduce friction and cost in the payments space for both businesses and consumers.

Observing developments

Ellison framed PayPal’s overall move as consistent with its standard policies of embracing innovation but doing so in ways that ensure the services on its platform are safe and reliable.

He said:

“We’re proceeding gradually, supporting bitcoin in some ways today and holding off on other ways until we see how things develop.”

Going forward, Ellison indicated that PayPal is hoping to inform more of its merchants about their ability to now accept bitcoin, reaching out through the media and normal communications channels.

Images via LinkedInDenys Prykhodov / Shutterstock.com

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