eBay’s PayPal unit to begin accepting bitcoin payments

SAN FRANCISCO — eBay’s PayPal service will start accepting bitcoins, opening up the world’s second-biggest Internet payment network to virtual currency transactions.

“We’re announcing PayPal’s first foray into bitcoin,” said Mr Bill Ready, chief of eBay’s Braintree unit, at Techcrunch’s Disrupt SF conference on Monday. “Over the coming months, we’ll allow our merchants to accept bitcoins. On the consumer side, it will be a sleek experience.”

PayPal’s payment processor subsidiary Braintree will work with bitcoin-payment service provider Coinbase to enable payments in the virtual currency, added Mr Ready.

eBay, the world’s biggest Web marketplace and operator of a global payment service, is the most significant business to date that has embraced bitcoin.

The move could potentially enable PayPal’s 152 million registered accounts to transact using the virtual currency, spurring wider use and acceptance of bitcoins, said financial services and investment firm Wedbush Securities analyst Gil Luria.

“PayPal integrating bitcoin into Braintree is a very substantial development,” added Mr Luria.

“Not only will it make it possible for some of the fastest-growing apps to integrate bitcoin seamlessly, it also opens the door for PayPal to integrate bitcoin into its main wallet functionality. If that happens, millions of retailers will be de facto accepting bitcoin overnight.”

Braintree provides payment capabilities on websites and in mobile apps such as car-booking service Uber Technologies and Airbnb, a short-term home-rental service for travellers.

eBay acquired Braintree for US$800 million (S$1 billion) in cash last year to expand its mobile-transaction business.

Mr Ready said tens of thousands of PayPal merchants using Braintree would be able to accept bitcoins if they choose to do so.

“We’re at the right time for this and to see how to propel it forward,” added Mr Ready. He said he expects to announce which merchants would accept bitcoins in the coming months.

eBay will join other companies in accepting bitcoins, a digital currency that started to enter the mainstream last year. Dell began accepting bitcoins for products such as computers in July.

In total, about 63,000 businesses handle bitcoins and users had set up more than five million digital wallets to keep their holdings at the end of June, said CoinDesk, a website tracking the digital currency’s use.

Bitcoin emerged from a 2008 paper written by a programmer or group of programmers under the name Satoshi Nakamoto, becoming the most popular virtual currency.

It relies on a public ledger and cryptography to record transactions and protect ownership.

A Bloomberg Global Poll of financial professionals in July indicated that there is still scepticism over the virtual currency even while technology entrepreneurs, venture capitalists and hedge funds plough money and effort into building it into a global payment system.

Bitcoin prices have swung from more than US$900 to as low as US$341 this year, as enthusiasts try to address the digital currency’s weaknesses, persuade consumers to embrace it and overcome governments’ concerns that criminals may misuse it.

Fifty-five per cent of those surveyed said the virtual currency trades at unsustainable, bubble-like prices, the quarterly poll of 562 investors, analysts and traders who are Bloomberg subscribers showed.

Another 14 per cent said it is on the verge of a bubble. BLOOMBERG