PayPal's Move Is Good for Crypto Adoption but Not So Much for Profits: Morgan Stanley
There may be more upside for crypto than for PayPal's earnings, researchers wrote.
Oct 22, 2020 at 7:51 p.m. UTCUpdated Aug 19, 2021 at 5:13 a.m. UTC
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PayPal's pledge to support cryptocurrency as a funding source for 26 million merchants will likely benefit mass cryptocurrency adoption more than it will boost the payments firm's bottom line, Morgan Stanley researchers said in a Wednesday report obtained by CoinDesk.
- The move "should expand crypto acceptance online, which to date has stalled at 1% of the top 500 internet retailers," wrote the Morgan Stanley analysts.
- It is "unclear" if PayPal's earnings will benefit from that shift. The researchers said bitcoin, bitcoin cash, litecoin and ether funding is "likely immaterial to earnings."
- "Assuming PayPal is able to scale its crypto trading activity to Square's current level, it would only add [0.3%] of growth to PayPal's ~$21.3 billion" revenue base for 2020, they wrote.
- The reason: Boosting crypto acceptance doesn't necessarily mean greater transaction volumes.
- Other upsides of supporting crypto include staying competitive with Square and attracting "a new user base" to PayPal, the researchers said.
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