PayPal is unlikely to buy digital currency like bitcoin, although the company sees huge opportunities in the digital wallet.
In an appearance on CNBC’s “Mad Money” Thursday, PayPal Chief Financial Officer John Rainey said the payment giant has no interest in buying cryptocurrency, but would rather invest in services that complement the platforms it offers.
“We’re probably not going to invest corporate money in such financial assets,” he said in response to a question from the show’s presenter, Jim Cramer, “but we want to take advantage of this growth opportunity that lies ahead of us.”
The company has acknowledged that it believes the transition to digital currencies is inevitable. In December, PayPal CEO Dan Schulman called digital wallets a “natural addition to digital currency” and said the company serves 360 million digital wallets.
PayPal has exposure to the crypto market. In October, the company announced that it would allow users to buy, hold and sell cryptocurrencies, including bitcoin, ethereum, bitcoin cash and litecoin. Users can also shop with the digital coins on PayPal’s shopping network.
Venmo, PayPal’s mobile wallet, is expected to start offering the same services in the first half of this year. The functions will also be expanded to international markets.
PayPal plans to invest its money in companies that provide “additional assets to our platform” that can drive growth, Rainey said. The company also announced on Thursday that it would introduce crypto services in the UK in the near future.
“The types of services we provide, such as buy now, pay later [and] crypto as an example – even offline QR code – those are the kinds of things we want to keep investing in, be it organic or even inorganic when we see opportunities in the ecosystem, ”he explained.
Buy Now, Pay Later is a point-of-sale loan program much like layaway plans, allowing shoppers to pay for products through an installment plan with no interest or fees.
The crypto comments come as activity in crypto markets has increased this year. Tesla caused a furore earlier this week when the company announced that it had purchased $ 1.5 billion worth of bitcoin and was also going to accept the currency as a form of payment from customers. That followed a strong interest in dogecoin, the digital currency blessed on its Twitter page by Tesla CEO Elon Musk.
Tesla’s move to invest in bitcoin sparked wonders in the investment community if other companies followed in the automaker’s footsteps. Earlier Thursday, Uber CEO Dara Khosrowshahi said the topic was discussed but the company ultimately declined to invest in the digital currency.
Schulman, who appeared alongside Rainey in the “Mad Money” interview, said PayPal reduced free cash by 48% to $ 5 billion by 2020. He predicts the company will generate $ 10 billion in annual free cash flow by 2025.
PayPal will be a consolidator in the financial technology industry, he said.
“We want to use that money. We want to use our balance sheet as a strategic weapon,” said Schulman. “That could be giving cash back to shareholders and it could be through acquisition, but all those dollars are important to us and we really take our capital allocation seriously.”
Last month, PayPal made its first acquisition since announcing in late 2019 that it would buy coupon aggregator Honey Science for $ 4 billion. PayPal took 100% control of the GoPay payment platform, which is based in China, in a deal closed on Jan. 11.