PayPal buys Coinbase

PayPal (available now as a source for) buys (of cryptocurrency in) Coinbase.

The PayPal and Coinbase mating ritual continues. Coinbase now accepts PayPal as a funding method.

To my understanding it works like this. When a merchant or other party accepts a cryptocurrency payment via Coinbase, you may use PayPal as a funding source to purchase that crypto from Coinbase on the spot to cover the purchase.

Im just guessing that this is how it works; I’ve been banned from using both Coinbase and PayPal for the past three years, so I’m not sure.

A couple things are interesting about this collaboration. For a while now Coinbase has made a point of telling users at the purchase screen:

Screenshot from Coinbase transaction.

Want to send your ETH? You can send the full amount instantly.

Which means you can now use PayPal to purchase things with Bitcoin instantly. It sounds like an obvious thing to offer, but PayPal’s own platform for buying cryptocurrency does not let you spend it or send it anywhere.

On the other hand, Coinbase does not allow you to fund crypto purchases with Credit Cards.

It seems like both parties circumvent a part of the transaction that they can’t quite legally do yet.

I imagine an inversion of fee accrual structure. Normally Coinbase makes their money on the conversion rates. And PayPal normally charges the merchant for their cut.

In this case the merchant is not expecting to accept PayPal so it wouldn’t be possible for charging them differently for the method of payment to the payment provider.

My guess is that in these partner transactions, PayPal gets the conversion rate spread while Coinbase charges the merchant. This way they can screw over both parties.

This is a roundabout way of reiterating my baseless claim that PayPal is going to buy Coinbase.

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