This week, the PayPal e-payment service said that its partner companies can let customers pay with Bitcoin virtual currency.
PayPal has partnered with major Bitcoin payment processing companies BitPay, Coinbase and GoCoin to help users buy virtual goods, such as games, music, e-books and apps. Initially, this service will be available to businesses in North America.
Bitcoin is a virtual currency created to reduce intermediaries, such as through banks and governments. Companies like BitPay are tasked with making it easier for businesses to make payments in Bitcoin and convert to cash for businesses.
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This virtual currency is not recognized by many countries as a currency. Their prices also fluctuate greatly, between 400-1,100 USD last year. However, transaction fees are much lower, helping businesses save significantly. Due to the current 2-3% fee paid to credit card companies is eating away their profits.
Since last year, two eBay executives - CEO John Donahoe and former Chairman David Marcus have expressed interest in Bitcoin. On CNN, PayPal's Chief Strategy Officer Scott Ellison also said they are keen to capitalize on the potential of Bitcoin technology. This is a completely new payment method, allowing users not to completely disclose their identity when transacting.
"We think Bitcoin has a huge growth opportunity. If you really want to understand how a technology works, you need to get into that environment first," Ellison said. He also said integrating Bitcoin into PayPal's payment system is to confirm its position of operation - always a disruptor of traditional payment methods.