Original translation: TechFlow
Money, Payment and Freedom
Money is not powerful when it accumulates; money is powerful when it flows.
Billions of transactions occur around the world every day, and payments are the most tangible and frequent use of money. However, payments are more than just an exchange of value; they are a story about progressive freedom.
Every transaction we make—from buying a cup of coffee to transferring money overseas—is an expression of our financial autonomy. On the other hand, not being able to pay the way we want limits our ability to build, share, and leverage value on our own terms.
PayPal has emerged at a critical juncture in the history of payments. From the early days of e-commerce, we have established ourselves as a beacon of trust, providing users with the confidence to transact in a powerful but difficult new ecosystem. Now, more than a decade after the emergence of blockchain technology, PayPal is once again taking on a new challenge at a critical moment in the history of payments. Just as we brought payments online, we are now bringing payments on-chain.
Our commitment throughout our tenure has remained the same: to advance payment innovation so everyone can pay how they want.
The digital payments revolution
With regard to payments, the latest structural shift came with the Internet.
As so much information moved online, so too did the mechanisms for tracking and managing money—from account balances and transaction histories to broader commerce. This burgeoning e-commerce ecosystem set new expectations for how transactions should be conducted.
Demand has now evolved to the point where people seek the same immediacy and borderless payments that they use in everyday online communications.
This digital transformation has highlighted an emerging gap. While the internet provides the infrastructure for global commerce, there is a distinct lack of a trustworthy and efficient online payment system. People seek a platform that is not only secure, but also fast and intuitive. Businesses need a reliable platform that resonates with their growing online customer base.
PayPal bridges the gap between new digital financial rails and consumers’ pressing needs for trust and accessibility. We have built an ecosystem that enables people to pay how they want by providing them with flexible and secure global payments.
Today, PayPal has over 40 million active accounts, proving that its success was not simply the result of identifying a gap in the market.
It’s about our unwavering commitment to making payments easier. Decades later, as the internet and other fintech tools emerged, our focus has remained the same. From our early days facilitating transactions on eBay to our acquisition of Venmo in 2013, our trajectory has been defined by the answer to one question: How do people want to pay?
We’ve spent decades answering this question. At the highest level, the answer remains fairly simple: people want fast, cheap global payments. Over the past three decades, the solutions have still not been great.
The New Gap: PayPal, Cryptocurrencies, and New Financial Rails
While the digital payments space has strived to provide global, instant and seamless transactions, the reality often falls short.
Payments innovations to date have been built on the same underlying financial rails that enabled the rise of the internet. Indeed, “instant” settlement and “24/7” service are often a convenience enabled by services that accept (or transfer) risk.
Online payments still take a long time to settle (2-3 days on average in the US). Marketplaces, banks, and services maintain working hours, further extending settlement times. Employers struggle to pay an increasingly distributed workforce. An increasingly global population struggles to send money across borders cheaply and quickly. Businesses feel this friction most, while consumers still face long settlement times in some payment environments that they believe should be fast.
Simply put, people today aren’t necessarily able to pay the way they want.
So why are we turning to Crypto? The answer is: it’s practical.
Cryptocurrencies bring us closer to what people want: fast, cheap, global payments. And, as we’ve said before, we’re in the payments business.
Blockchain is the new financial rails - the new payment rails. Blockchain technology disrupts the way payments look and work. For customers and businesses, settlement times are nearly instant - no matter where and when.
This cannot be underestimated, blockchain technology is the only technology that offers a whole new way to pay. While to some it may look like a fad, to PayPal blockchain looks like a legitimate idea.
If there is a payment instrument that can provide 24/7, near-instant and cost-effective transactions, then exploring that solution is a practical option. This is not about following a trend; it is about whether we can identify and adopt an alternative and potentially better payment financial technology.
Once again, PayPal finds itself with an opportunity to bridge the gap between new payment rails and their widespread adoption and trust. We have 40 million accounts that can be better served with the additional option of blockchain-based payment solutions. Just as we did in the early days of e-commerce, PayPal is once again moving toward a single goal: to enable you to pay however you want.
PayPal, Payments and PYUSD
In 2020, we enabled PayPal and Venmo users to buy, hold, and sell crypto in their accounts. Last year, users could begin transferring crypto assets they purchased in their accounts to external wallets, including decentralized wallets.
We envision PayPal and Venmo continuing to serve as critical hubs for commerce, as the primary channels for businesses and individuals to transact for goods and services. By allowing crypto assets to be transferred between PayPal and Venmo accounts, we better connect the DeFi and CeFi worlds through a platform that excels at facilitating payments.
Our broad view on blockchain and cryptocurrency is neutral — that is, we have no ideological preference in this race.
We know that customers still want easier, faster, and cheaper payments; we know that blockchain enables these types of payments in a way that today’s internet finance rails do not; and we believe that customers should choose to adopt new solutions to meet their potential needs.
However, we do have a subjective stance on stablecoins. We believe they are a necessary tool to fully realize the power of cryptocurrency as an accessible and flexible payment tool. Paxos's issuance of PYUSD is our stance on stablecoins. It is our commitment to our customers. We are doing what we have been doing since 1998: giving our customers what they want.
What our customers want is easier payments. Businesses want to pay suppliers without having to worry about settlement times. Individuals want to send money to their families without paying high fees and waiting days. Today's financial infrastructure cannot quickly meet the needs of customers for fast transactions, and we don't want customers to lose value in this wait.
Today, blockchain technology is the only innovation that offers an entirely new payment rail that helps meet the needs of our customers. We have always strived to be pioneers in one regard: to always provide our customers with what they want and deserve - trust, confidence, and ease. PYUSD is just the next evolution towards this goal.
Pay as you wish
At PayPal, we have always believed that the essence of money is its movement, and that fast, cheap and global movement of money is what our customers seek. PayPal’s history is the story of this unwavering commitment: to enable individuals and businesses to transact on their own terms. We believe that cryptocurrencies create a new paradigm that can help achieve payment goals around the world.
In other words, we think it’s simple: paying with crypto means paying whatever you want.
