PayPal Is Pushing Further Into Crypto as Payments Competition Heats Up.

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PayPal’s growth has slowed and its stock declined sharply.

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PayPal Holdings is looking to turn to crypto to increase revenue as the company faces stiff competition from Apple and other rivals in the digital payments space.

PayPal (ticker: PYPL) said on Tuesday that its app will now support the transfer of crypto to other digital wallets and exchanges, making it more functional for peer-to-peer transfers and transactions through other brokerages. .

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Users can now buy and sell certain tokens on the PayPal app: Bitcoin, Ethereum, Bitcoin Cash and Litecoin. But it is not possible to transfer those cryptos to another user or exchange.

The company said that it will not charge other PayPal users for crypto transfers. For transfers outside of PayPal, users must pay network fees, which are payments to operators of blockchains such as Ethereum or Bitcoin for processing transactions.

PayPal charges fees for trading crypto, and earns a cut-off exchange rate for transactions between crypto and dollars.

The new services should make PayPal more competitive with other crypto wallets that offer full functionality, including wallets from MetaMask and Coinbase Global (COIN).

PayPal is pushing into crypto in other ways as well. Users of its app can now convert crypto holdings into cash when making purchases at the online store. Users of the company’s Venmo credit card can also buy crypto with cash back earned from purchases with the card.

“When you get into the digital dollar and DLT, we are moving on to everything that could happen” [distributed ledger technology] world,” CEO Dan Schulman said on the company’s first-quarter earnings call in April, referring to blockchains like bitcoin and ethereum.

The cryptocurrency initiative comes as Apple (AAPL) develops more payment services, competing more directly with PayPal. Apple on Monday said it plans to offer a “Buy Now Pay Later” service through Apple Pay, which is now being offered by PayPal, Confirmation (AFRM), Block (SQ) and other companies. It is similar to BNPL services.

PayPal, Apple, and all other so-called super apps, are digital wallets that handle everything from peer-to-peer transfers to savings, shopping, credit cards, and other consumer financial services.

PayPal could certainly use a boost from crypto. The company stunned Wall Street when it backtracked from its growth targets in February, causing its stock to lose 30% of its value in two days.

According to consensus estimates, the company’s annual transaction growth is expected to be 11.9% this year, up from 17.5% in 2021. Wall Street sees active accounts grow just 2.7% this year to 437.5 million, down from 13% growth in 2021.

Total payment volume through PayPal’s apps is expected to grow 14.4% this year to $1.4 trillion, which will decline to $1.25 trillion in 2021 from 33% growth.

The slowing growth is taking a toll on PayPal’s revenue and earnings, not to mention its stock. Analysts expect revenue to rise 11.5% this year to $28.2 billion, down from 18% growth in 2021. Earnings are expected to fall 15.6% to $3.88 per share.

Wall Street’s share price target has also fallen, according to FactSet, rising from an average of $272 in December 2021 to $116 now.

PayPal stock is down 53% this year and is down more than 70% from its 52-week high of $310. The stock was up 1.2% around $87.80 on Tuesday afternoon.

Write to Darren Fonda at [email protected]

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