Fintech giant, PayPal, is apparently in the process of rolling out direct sales of cryptocurrencies.
According to industry sources, its 325 million user base will soon be able to buy and sell crypto directly from PayPal and Venmo, a popular digital wallet payment app with over 40 million users, and that facilitated over $30 billion in payments in the Q1, 2020, owned by PayPal.
SEE ALSO: The Paypal-MPESA Collaboration – A Window for Crypto Payments in Kenya?
As significant as this move will be to the users globally, this also opens up a huge opportunity for Africa considering that PayPal has for a long time looked at the unbanked mobile users in emerging markets as a huge opportunity.
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PayPal has already built partnerships with mobile money operators and banks across Africa. Some of these include:
- Safaricom Kenya – Subscribers can now transfer money from PayPal to MPESA in a few easy steps
- Xoom acquisition – The money transfer service operates in 33 African countries with over 150, 000 withdrawal points in Africa and funds transfer directly to bank accounts including Egypt, Morocco, Nigeria, Rwanda, South Africa, and Uganda
- African banks – PayPal has partnered with a number of large African banks to offer its payment services. Some of these banks include:
- FNB (South Africa & Botswana)
- First Bank (Nigeria)
- Mauritius Commercial Bank (Mauritius)
- Equity Bank (Kenya)
The PayPal-MPESA partnership is already a big deal in Kenya where online businesses and freelancers are able to make instant money transfers from their PayPal accounts directly into MPESA, and vice versa.
A recent upgrade now means withdrawal requests take just 1 (one) minute between PayPal and M-PESA.
Chege hi, as fast as Paypal releases it onto Mpesa. ^SI
— Safaricom Care (@Safaricom_Care) June 23, 2020
Speaking about PayPal’s vision for Africa, the company CFO has previously said:
“We have a vision to democratizing financial services for those that are undeserved today. With a mobile device, we can put all of that power of a bank branch in the palm of their hand and allow them to join the world of eCommerce and shop online.” ~ John Rainey, CFO, PayPal
According to GSMA, mobile phone usage in Sub-Saharan Africa is expected to reach nearly 700 million by 2025.
Expanding access in Africa would benefit PayPal, as the company would have more people using its services to pay for online purchases. PayPal handles payment transactions for eBay and is seeking contracts to process payments for Amazon sellers.
Both eBay and Amazon have presences in Africa, with Amazon recently hiring over 3, 000 staff in South Africa and announcing its cloud computing platform partnerships for Amazon Web Services (AWS) in 2020 with major African partners in South Africa and Kenya.
Peer-to-peer Bitcoin marketplaces like Paxful, enable PayPal transactions and this offers African traders a huge arbitrage opportunity, sometimes as high as 30%, making PayPal payments a much-preferred method.
Interestingly, Venmo is one of the most popular P2P payment services in the United States along with Zelle and Square Cash. It is thus reasonable to conclude that PayPal has a fairly good understand and insights into the P2P marketplace.
Recent statistics have placed Africa as the second largest P2P Bitcoin marketplace, behind North America, making this a viable market for the likes of PayPal and Venmo.
There is no doubt that enabling direct crypto purchases on PayPal will have a huge impact on the crypto space in Africa. We can only wait and see how this will change or at least alter, the current African crypto ecosystem.
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