PYPL PayPal Holdings Inc

By Nina Trentmann 

PayPal Holdings Inc. is looking to expand its lucrative business of enabling customers to pay merchants with crypto assets, but the digital payments company doesn't yet plan to invest in these assets, Chief Financial Officer John Rainey said.

"It is still a highly volatile asset right now," Mr. Rainey said, referring in general to fluctuations in price of cryptocurrency assets. "But if in a couple of years, there is more stability, I would never say no," he said. Mr. Rainey declined to comment on what he would define as more stability.

The value of crypto assets such as bitcoin, ether and dogecoin have risen in recent weeks on the back of strong market sentiment and the rise of nonfungible tokens, among other factors. Some companies, including Tesla Inc. and Square Inc., earlier this year disclosed corporate investments in cryptocurrencies.

However, most CFOs have been cautious so far, pointing to the risks associated with spending corporate cash on bitcoin and other crypto assets. "We are managing our cash very consistently," PayPal's Mr. Rainey said. The company held $19.1 billion in cash, cash equivalents and investments at the end of its latest quarter.

San Jose, Calif.-based PayPal in November introduced a feature enabling most U.S. customers to buy, sell and hold bitcoin, ether, litecoin and Bitcoin Cash. Earlier this year, it launched an option for people to use their holdings in these currencies to pay merchants.

Those transactions are more attractive for PayPal than those involving a credit or debit card, as there are no card issuers or network providers that need to be paid. The payments company still charges its merchants a standard transaction fee of around 2.9%, but gets to keep more of that money, Mr. Rainey said. "It's a high margin transaction for us," he said.

PayPal has to pay Paxos Trust Co., a company that converts the crypto assets into U.S. dollars before they are sent to the merchant. The execution risk lies with Paxos, Mr. Rainey said.

PayPal on Wednesday reported revenue of $6.03 billion for its latest quarter, up 29% compared with the prior-year period. Total payment volume rose 46% to $285.45 billion. The company is now expecting payment volume to grow by about 30% this year, up from its prior guidance of the high-20% range.

Building out its crypto offering enables PayPal to connect with customers that are more engaged than those using other forms of payment, said Harshita Rawat, a managing director and senior research analyst at financial services firm AllianceBernstein Holding LP. About half of PayPal's crypto users open its app every day, the company said.

"Both cryptocurrencies and the underlying technology have become a big strategic focus for the company," Ms. Rawat said.

Write to Nina Trentmann at Nina.Trentmann@wsj.com

(END) Dow Jones Newswires

May 06, 2021 19:06 ET (23:06 GMT)

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