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LONDON (Reuters) – PayPal Holdings Inc will announce later on Tuesday that it has started allowing U.S. consumers to use their cryptocurrency holdings to pay at millions of its online merchants around the world, a move that could significantly stimulate the use of digital assets in everyday commerce.
Customers who hold bitcoin, ether, bitcoin cash and litecoin in PayPal digital wallets will now be able to convert their holdings into fiat currencies at checkout to make purchases, the company said.
The service, which PayPal revealed it was working on late last year, will be available at all of its 29 million merchants in the coming months, the company said.
“This is the first time that you can seamlessly use cryptocurrencies the same way you would a credit card or debit card in your PayPal wallet,” Chief Executive Officer Dan Schulman told Reuters before an official announcement.
Checkout with Crypto builds on the ability of PayPal users to buy, sell, and hold cryptocurrencies, which the San Jose, Calif., Based payments company launched in October.
The offer made PayPal one of the largest mainstream financial firms to open its network to cryptocurrencies and helped fuel a rise in the price of virtual coins.
Bitcoin has nearly doubled in value since the start of this year, spurred by increased interest from large financial firms who are betting on greater adoption and seeing it as a hedge against inflation.
PayPal’s launch comes less than a week after Tesla Inc announced it would start accepting bitcoin payments for its cars. Unlike PayPal transactions where merchants will receive fiat currency, Tesla has said it will keep bitcoin used as a form of payment.
Yet, while the nascent asset is gaining traction among traditional investors, it has yet to become a popular form of payment, in part due to its continued volatility.
PayPal is hoping its service can change the fact that by settling the transaction in fiat currency, merchants won’t take the risk of volatility.
“We believe this is a transition point where cryptocurrencies move from being an asset class primarily that you buy, hold and / or sell to becoming a legitimate source of funding for real-world transactions at millions of traders, ”Schulman said.
The company will not charge any transaction fees for paying with crypto and only one type of coin can be used for each purchase, he said.
Reporting by Anna Irrera; Edited by Susan Fenton
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