PayPal sets new records during pandemic; Australia experiments with digital currency

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Winning streak

Reflecting the rapid transition to digital payments, PayPal has reported its strongest growth in total payment volume (TPV) and revenue in its history, coupled with strong growth for Venmo, its P2P app.

Building on a record-breaking second quarter performance, PayPal's revenue in the third quarter of 2020 grew to $5.46 billion, up 25% from the same quarter one year earlier; and TPV reached $247 billion in the quarter, up 38% from $179 billion in the same quarter one year earlier (36% on an FX neutral basis). Supporting this explosive growth was a new record for transactions processed, at 4 billion for the quarter — the highest level in the company’s history.

This performance puts PayPal in stark contrast to many other companies that saw earnings plunge at the start of the pandemic. Even other payment companies, with strong digital capabilities, suffered if they were active in hard-hit verticals such as travel. By comparison, PayPal's second quarter (the first full quarter since the start of the pandemic) was its best ever since the company went public in 2015.

Digital down under

The Reserve Bank of Australia is working with Commonwealth Bank of Australia, National Australia Bank, Perpetual and ConsenSys Software on a central bank digital currency experiment.

The project is determining the effectiveness of a wholesale version of a CBDC operating on a distributed ledger, reports Finextra. A tokenized currency will be designed to execute funding, settlement and repayment of a syndicated loan on an Ethereum-based platform, an initial step toward a formal CBDC project.

While CBDC projects are progressing in countries such as China and the Bahamas, there's not a consensus that a CBDC will work in Australia, or even if one is needed. In October, RBA official Tony Richards said the use case for a digital currency is unclear, though he did make an potential exception for bank to bank transactions similar to the new RBA test.

Taking requests

Milan-based payment services firm Sia has launched a real-time payment rail that anticipates greater uptake of open banking in Europe.

Called "Request to Pay," it uses the European Payments Council Scheme to allow a payee to send a request through different channels, in real time, to a payer who can approve and send the payment quickly upon receiving the request. These parties will increasingly use API connections to link third parties to banks under PSD2, with Italy's Banca Sella being among the initial banks to sign on.

SIA recently added an additional upgrade to support real-time payments by teaming with Italian e-money firm Flowe to power real-time payments through Flowe's virtual and physical debit card.

Lightning lease

The cryptocurrency Lightning Network's innovation lab has opened a marketplace that allows Lightning users to lease, buy and sell access to liquidity, which marketplace participants can then use to fund payments on the network.

Lightning hopes to improve capital allocations, a common problem on the network since node operators often do not have an easy way to determine where outbound liquidity should be allocated, explains Coindesk. Businesses or individuals can use the network to either buy excess crypto from another party's storage, or sell to that party based on need.

The network hopes to reduce costs and speed for payment processing by moving these payments into a distinct layer of software that resides on the underlying bitcoin software.

Crypto debit

Bitcoin marketplace Paxful and crypto fintech Ternio have teamed to issue a crypto-supporting debit card.

Both a plastic and virtual card will be initially available in the U.S. and will enable users to convert cryptocurrency to U.S. dollars, execute payments, obtain a checking account and withdraw cash from ATMs.

Like many cryptocurrency cards or payment products, there is a conversion to traditional currency before any transaction, though that does create a large addressable market. Paxful estimates more than 45 million merchants and ATMs will support its debit card.

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