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Venmo, PayPal, and Cash App have added cryptocurrency purchasing to their popular payment services, expanding the reach of Bitcoin, Ether, and other digital coins to investors who may be daunted by intricate exchanges and a multitude of digital wallets. However, that convenience comes at a cost that can eat away at returns.

Payment apps are popular because they make it simple for people to shop online using their phones or split checks with friends. The apps also bring familiarity to buying cryptocurrency, a process that can present a psychological hurdle for some potential investors because exchanges require separate accounts and often have complex registration and transaction processes.

Also, the payment apps remove the need to understand digital wallets, a subfield of crypto that can quickly become its own research topic.

However, the convenience of buying cryptocurrency on payment apps comes with trade-offs. Venmo, PayPal, and Cash App lock you into a transaction fee that might be cheaper if you comparison-shopped at more than one exchange. And unlike exchanges, which let you move crypto, PayPal and Venmo hang on to it unless you want to sell it through the same app.

Despite their limitations, the availability of cryptocurrency on payment apps may help the public get comfortable with financial assets that’ve been cloaked in obscure math and that are often associated with illegal activities.

Analysts say a new Bitcoin-linked ETF that started trading last month will also help expand the acceptance of digital money.

“It’s a great training wheels experience,” said David Siemer, CEO of Wave Financial, an asset management firm that focuses on cryptocurrency.

Square has seen mounting user interest since it introduced features for buying and selling Bitcoin on Cash App in 2018. The company, known primarily for helping merchants process card payments, earned $97 million from Cash App fees on Bitcoin sales in 2020. It’s already brought in nearly $130 million in the first half of 2021.

Buying Bitcoin or other cryptocurrency offerings on PayPal means you’ve let the company store your cryptocurrency. The same applies to its subsidiary, Venmo. Cash App offers more services, allowing people to send and receive Bitcoin or put it in their own wallets, but it charges a fee if users want to withdraw their coins immediately. Withdrawal will be tempting for people who want to start buying and selling crypto on other exchanges, which can’t do from the payment app.

Bitcoin and other cryptocurrencies are now widely available at trading websites and through stock trading apps like Robinhood. ATMs handling cryptocurrency have popped up around the world, though they tend to charge hefty fees. Coinstar machines, which let customers turn spare change into gift cards at retailers like Walmart, can also dispense Bitcoin through a partnership with Coinme. Debit cards backed by cryptocurrency are available through companies including Coinbase and BitPay.

To really interest users in cryptocurrency, payment apps will need to introduce wallets and exchanges, analysts say. A streamlined system for buying, selling, storing, and lending cryptocurrency could interest more people and keep them using the services instead of looking elsewhere for flexibility, says Corey Barrett, an analyst with M Science.

“It would unlock a portion of the cryptocurrency investor base who were never interested until they had that functionality,” Barrett said.

Giving people simpler tools for buying and selling cryptocurrency has the potential to drive interest in Bitcoin, Ether, and the like, analysts say. If the features encourage a significant number of new cryptocurrency buyers, the increased demand could drive up crypto’s value. With little data on how many transactions are taking place on these apps, though, it’s still unclear whether that’s happening.

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