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Dan Schulman gives details on PayPal’s crypto ambitions, its plans for a “super app,” and whether the company will buy Bitcoin any time soon.
PayPal is riding high. The company posted blowout fourth quarter 2020 financial results last month thanks to spectacular growth in its core app and Venmo unit, and from the success of its new buy-now-pay-later service. The firm is expecting an even bigger 2021 as the pandemic leads more consumers to embrace e-commerce and to turn away from cash altogether.
None of this means that CEO Dan Schulman is resting easy, however.
In an exclusive interview with Decrypt, Schulman explained how PayPal is racing to adopt the next era of financial technology, including by launching a business unit dedicated to cryptocurrency, first announced last month.
“There is a ton of opportunity for us to be helpful in creating that next generation of infrastructure,” Schulman said. “That’s what this business unit is about.” He added that part of the mission is to “advance the utility of digital currencies.”
The new unit includes transfers from some of the firm’s core tech team, and is being guided by an advisory board that spans experts in technology, cryptocurrency and regulation. PayPal has in the past also worked closely with Wences Casares, a former board member and the founder of Bitcoin firm Xapo, who is a legend in crypto circles, for advice. “He encouraged us to look at all forms of different structures that might emerge,” noted Schulman.
Schulman himself turns out to be versant in the language of the cryptocurrency world. He describes how PayPal’s crypto unit is experimenting with smart contracts, and testing Ethereum and other blockchains as potential candidates to help the company improve payments and other transactions.
Schulman says PayPal’s crypto endeavors, which currently amount to just offering Bitcoin and a handful of other cryptocurrencies, will soon expand beyond “buy, sell, hold.”
On a broader level, Schulman expressed frustration with how digitization of the financial system has failed to bring down costs for consumers, noting that the average “take rate” for transactions has stubbornly remained at 2.8%. He added that this take rate—fees paid to banks, card processors and other entities—is typically lower for affluent consumers, but can be as high as 5-10% for the poor.
According to Schulman, it’s not just companies like PayPal, but governments and central banks that are looking at how blockchain and other new technologies might bring these costs down.
“I do think that some of the underlying technologies associated with cryptocurrencies—potentially some of the underlying technologies that central banks are looking at—do have that benefit of really taking the infrastructure of the old system and modernizing it so that we can achieve a much more inclusive society,” he said.
Will PayPal buy Bitcoin for its balance sheet?
Interestingly, Schulman…
