PayPal has filed an application with the U.S Patent and Trademark Office with the aim to achieve a faster payment system for virtual currencies. Since PayPal was launched in 2002, it has been a leading player in the online payment arena. However, competition has been high and the company has been forced to make some big moves if it wants to maintain it’s position in the global payment scene.
Perhaps, Paypal is responding to predictions of the inevitable rise of cryptocurrency-based payment solutions into competitors. On March 1st, PayPal filed a patent application for an “Expedited Virtual Currency Transaction System”.
PayPal’s ultimate goal is to accomplish quicker and less expensive transactions across the global platform – criteria which decentralized cryptocurrencies already accomplish. For this reason, they are beginning to look like better alternatives to PayPal.
Top PayPal CEOs Dan Schulman and John Rainey have made statements regarding the opportunities, obstacles, and risks involved with cryptocurrency-based payment solutions.
“Regulations need to be sorted out along with a whole number of other things. It’s an experiment right now that is very unclear as to the direction it will go in,” Dan Schulman said.
Rainey also discussed the risks involved specifically with companies accepting Bitcoin: “Given the volatility of Bitcoin right now, it’s not a reliable currency for transactions because if you’re a merchant and you have a 10% profit margin, and you accept Bitcoin, and the very next day Bitcoin drops 15%, you are now underwater on that transaction.”
The Road Ahead
It is evident that PayPal’s senior executives are aware of Bitcoin’s existing flaws, ongoing regulatory measures and their own platform’s weakness against cryptocurrency alternatives.
Nonetheless, there are many ways that PayPal can use cryptocurrency technology to their advantage, regardless of the obstacles. For instance, PayPal could choose to create it’s own cryptocurrency exchange service to enable cryptocurrency users to send and receive payments easily – maintaining all exchange and settlement behind the scenes. Another alternative (which is more likely) is that PayPal will create its own centralized cryptocurrency, just like what Ripple has done.
In any case, PayPal has a lot of catching up to do and competition is stiff. Hopefully, PayPal will finally be able to break free from its service providers and provide more efficient and cheaper services to its clients.