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- PayPal is interested in making investments that drive growth, rather than investing in cryptocurrencies.
- But it believes the transition to digital currencies is inevitable and sees massive potential in digital wallets.
- CEO Dan Schulman told CNBC the company takes its capital allocation “quite seriously.”
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PayPal is unlikely to invest cash in cryptocurrencies like bitcoin, John Rainey, the company’s chief financial officer told CNBC on Thursday.
The payments-processor instead prefers to spend on assets that complement services it currently provides. It also sees massive potential in the digital wallets space, and currently serves 360 million such wallets.
“We’re not going to invest corporate cash, probably, in sort of financial assets like that,” Rainey told host Jim Cramer on CNBC’s “Mad Money” show. “But we want to capitalize on this growth opportunity that’s in front of us.”
PayPal still believes that the transition to digital forms of currencies is unavoidable. In October last year, the company opened its service to cryptocurrency purchases and sales, including bitcoin, ethereum, and litecoin. Furthermore, over 26 million merchants using the platform are now able to accept cryptocurrencies as a funding source.
Two months after the announcement, CEO Dan Schulman called digital wallets a “natural complement to digital currencies.”
More big-name players are entering the crypto space. Tesla this week announced a $1.5 billion bitcoin investment, Mastercard said it would open its network to select cryptocurrencies, and Bank of New York Mellon is to begin transacting bitcoin for its clients.
But rather than spending cash to invest in cryptocurrencies, Rainey said PayPal is looking at investments that can drive growth. The company said Thursday it plans to expand its crypto buying, selling, and custody services to UK residents later this year.
“The types of services that we’re providing, like buy now, pay later [and] crypto as an example – even offline QR code – those are the types of things that we want to continue to invest in, be it organically or even inorganically when we see opportunities in the ecosystem,” Rainey said.
CEO Schulman, who also appeared on the “Mad Money” episode, said he expects PayPal to be a consolidator in the fintech industry and to generate $10 billion of free cash flow per year by 2025.
“We want to use that cash. We want to use our balance sheet as a strategic weapon,” Schulman said. “That may be returning cash to shareholders and it may be through acquisition, but every one of those dollars matter to us and we really take our capital allocation quite seriously.”
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