PayPal is not likely to buy digital currencies like bitcoin, although the company sees an immense opportunity in the digital wallet space.
In an appearance on CNBC’s “Mad Money” program on Thursday, PayPal’s chief financial officer, John Rainey, said the payment giant has no interest in buying cryptocurrencies, preferring to invest in services that are additional to the platforms it offers. .
“We are not going to invest corporate money, probably, in financial assets like this,” he said in response to a query from the show’s host, Jim Cramer, “but we want to capitalize on this growth opportunity that lies ahead of us.”
The company acknowledged that it believes the transition to digital currency forms is inevitable. In December, PayPal CEO Dan Schulman called digital wallets “a natural complement to digital currencies” and said the company serves 360 million digital wallets.
PayPal has exposure to the crypto market. In October, the company announced that it would allow users to buy, hold and sell cryptocurrencies, including bitcoin, ethereum, bitcoin cash and litecoin. Users can also make purchases with digital currencies on the PayPal retail network.
Venmo, a mobile wallet owned by PayPal, is expected to start offering the same services in the first half of this year. The funds will also be extended to international markets.
PayPal plans to invest its money in companies that provide “complementary assets to our platform” that can drive growth, said Rainey. The company also announced on Thursday that it will present its cryptographic purchase, sale and maintenance services in the UK in the near future.
“The types of services we offer, like buy now, pay later [and] cryptography for example – even the offline QR code – are the types of things we want to continue to invest in, whether organically or even inorganically when we see opportunities in the ecosystem, “he explained.
Buy Now, Pay Later is a point-of-sale loan program that works similarly to layaway plans, allowing customers to pay for products through an interest-free installment plan.
Crypto commentary comes at a time when activity in the crypto markets has increased this year. Tesla made a splash earlier this week when the company revealed that it bought $ 1.5 billion in bitcoins and would also start accepting the currency as a form of payment from customers. This followed an increase in interest in dogecoin, the digital currency that was blessed by Tesla CEO Elon Musk on his Twitter page.
Tesla’s decision to invest in bitcoin did wonders in the investor community if other companies would follow in the carmarker’s footsteps. On Thursday, Uber CEO Dara Khosrowshahi said the issue was discussed, but that the company ended up refusing to invest in digital currency.
Schulman, who appeared alongside Rainey in the “Mad Money” interview, said free money grew 48% in 2020 to $ 5 billion. He predicts the company will generate $ 10 billion of free annual cash flow by 2025.
PayPal will be a consolidator in the financial technology industry, he said.
“We want to use that cash. We want to use our balance sheet as a strategic weapon,” said Schulman. “This can be returning money to shareholders and it can be through acquisitions, but each of these dollars is important to us and we really take our capital allocation very seriously.”
Last month, PayPal made its first acquisition since the announcement in late 2019 that it would buy coupon aggregator Honey Science for $ 4 billion. PayPal took 100% control of the China-based payment platform GoPay, in a deal closed on January 11.