John Rainey, Paypal’s CFO, declared yesterday that he thinks the main problem with cryptocurrency adoption on the merchant side lies in volatility issues. He stated this while being interviewed on CNBC’s program “Mad Money”.
Paypal is the leading payment processor in all the world. Officially gaining fame for being the preferred payment system for eBay purchases, it is now immensely popular, boasting more than 88 million users all around more than 60 countries. Last year only, it posted revenues of more than 13,000 billion dollars.
John Rainey arguments that even if buyers are interested in a determined form of payment, if merchants are not interested, it won’t be adopted. There has got to be interest and benefits from both sides for adoption, and some merchants are not really sold on cryptocurrencies for a simple but powerful reason: volatility. About this matter, he stated:
“IF YOU’RE A MERCHANT AND YOU HAVE, LET’S SAY, A 10 PERCENT MARGIN ON A PRODUCT THAT YOU SELL AND YOU ACCEPT BITCOIN, FOR EXAMPLE, AND THE VERY NEXT DAY IT MOVES 15 PERCENT, YOU’RE NOW UNDERWATER ON THAT TRANSACTION”
John states that when cryptocurrencies become more stable, merchants will be more interested in accepting them. Then they could consider adopting cryptocurrency payments again. Certainly, cryptocurrencies have experienced a rough start this first quarter, losing more than 50% of their market prices. Just this week, bitcoin has dropped more than $1000 of its price.
Paypal was one of the first payment processors that accepted cryptocurrency payments, back in September 2014. But later they were discontinued due to the same reasons mentioned by John. Other companies that have also accepted cryptocurrencies before have opted for not doing so. Steam, the online gaming store, accepted payments in bitcoin but also halted this service due to high transaction fees.
However, other payment processors think in a different way. Just yesterday, Jack Dorsey, the CEO of Square, another prominent payment processor, declared that the use of cryptocurrencies would be convenient because it would let them extend their operations all around the world.