PayPal’s stock price is up 30% since November, from $175 to currently trading at $252 thanks to bitcoin.
It has more to go according to Mark Palmer of BTIG research who stated this Wednesday:
“PayPal (PYPL, Buy, $300 PT): Upgrading to Buy with $300 PT; Recent itBit Exchange Volumes Provide Snapshot of Strong Traction on Cryptocurrency Initiative, with Effort to Promote Merchant Acceptance of Crypto Set to Provide Next Leg Up.”
PayPal customers have been buying some $100 million worth of bitcoin a day and as much as $250 million according to itBit volumes, with itBit acting as PayPal’s custodian.
Bitcoin could add $1 billion to PayPal’s revenue by 2022 according to Palmer’s estimate who says “the traction seen in itBit’s rising crypto volumes bodes well for PYPL’s active account growth and engagement.”
PayPal’s Venmo app is expected to roll out bitcoin later this year, but the real difference may be in PayPal’s plan to expand bitcoin purchases to 28 million merchants.
Currently Visa and MasterCard takes most of the 2.9% fee PayPal charges their merchants, but for bitcoin payments they can charge just 1%, like BitPay.
As such payments would be through PayPal, bitcoin’s network fees would not play a role as the assets themselves can remain with itBit while PayPal keeps account of ownership changes.
Hence this could be an inception point for bitcoin going mainstream, with PayPal’s stock price up and up, while Visa and MasterCard have seen a 5% and 6% decline.
This bringing to life of PayPal by bitcoin will probably have an effect on other service providers.
Stripe, for example, might be unable to compete unless it too offers merchants the option of lower fees through bitcoin.
This could have an ecosystem wide knock on effect, with bitcoin for commerce set for a comeback, this time through second layers like PayPal.
Paying with bitcoin therefore may become something a lot more common as the network effectively scales through a different business model.