‘Distress’: PayPal backs crypto, but worries about bad actors
We are an end-to-end payment and commerce company, so we believe that there are opportunities to improve and improve the payment experience. I’m sure you are well aware of this, but for your readers who may not have experienced what it’s like to load a Metamask wallet and go through this whole process, it’s really quite painful.
“We want to make sure we operate in a compliant environment, so when I see these things happening that are hurting consumers and giving the industry a bad name, it’s certainly distressing.”
We see that there are opportunities to really start streamlining the ability to facilitate payments and commerce in the Web3 space.
But that’s just the beginning: when we get into Web3, we get into programmable payments, and we get into this fundamental of financial services.
I think there are certainly other things that can come from that that we may not even have imagined yet.
Do you have any ideas what they might be?
I mean this is mostly speculation, but there are a few areas that I think could be quite interesting. About NFTs [non-fungible tokens], I think there are some interesting aspects, not necessarily the collection space, but using NFTs for things like ticketing, where you can enforce uniqueness and facilitate legitimate secondary markets. NFTs also have the opportunity to ensure that creators and artists continue to reap the benefits of continued interest in their work and share in resale earnings.
Another non-paying use case for Web3 is for identity. When you start looking at this idea of decentralized, self-sovereign digital identity, you’re exploring this idea of being able to give users control over the data they share. You can pull together these disparate sources of information, like the state government, your employer, your university. Being able to take that and syndicate it in an interesting way that still keeps the user at the center.
I think when people think of crypto these days, they usually think of the technology behind it. They don’t think of buying their lunch with it. For a company like PayPal, are you still in that “well, maybe people want to buy their lunch with crypto, and maybe we can facilitate that” mindset?
It is still early. When we first started with online payments or with a credit card and a touch to pay for a $2 transaction, it was really foreign and really weird. But we do it constantly now, don’t we? So I think it’s hard to predict exactly where crypto payouts will go.
That being said, there are certainly challenges that exist with the most popular cryptocurrencies today regarding gas fees, throughput, volatility, or access that I think we as an industry must overcome for this to become a viable payment model.
But I think we have shown that there is interest, especially from traders. Here in Australia there’s an overwhelming opinion that it will come, and in the United States we did a survey and a large majority of those people said their consumers were asking for digital currency payments.
So I have the feeling that there are technical challenges to overcome. The use of these digital currencies poses structural problems. But that’s absolutely the case, I think we’ll see them become more useful as a payment mechanism over time.
PayPal is a large publicly traded company. Have you ever looked at the Web3 space and worried about the quality of companies operating in the industry? There is a great site called “Web3 is doing very well” that tracks every major failure in the space, and there’s regular talk of a company losing millions in customer funds or whatever.
Oh yes, I saw it.
Does that concern you as a large company looking to break into this space?
Absolutely, that concerns us. We are very attached to this notion of responsible innovation, the safety of our customers is paramount. We want to make sure we’re operating in a compliant environment, so when I see these things happening that are hurting consumers and giving the industry a bad name, it’s certainly distressing.
For PayPal, what we can control in space is how we create and position our offers ourselves. Our view is that we’re going to take all the parts that people trust about PayPal and the experience that we have in this area as a regulated company, to try to bring that sensibility into Web3.
On the regulatory side, we have seen action in the United States against things like Tornado Cash, and some recent announcements in Australia. What is your opinion on the measures taken by regulators at the moment?
We assume that regulators mean well. I think regulators and policymakers, by and large, want to do the right thing for their constituents. They want to make sure consumers are protected. They want to ensure that the financial system is structurally sound.
But there’s that fine line between making sure customers are well-protected, well-educated, and informed of both the opportunities and the risks. But at the same time, you want to have a mechanism that really encourages innovation. Whoever doesn’t react to the latest blog headline “Web3 is just going great”.
For us, it is about ensuring that we take a responsible position in this regard. We’ll see this space evolve, just like we’ve seen, you know, online payments evolve or some of the other things that we take for granted now. And I think the regulatory and legislative agendas will get there over time.
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