San Jose, CA, United States (4E) – The Braintree unit of EBay, Inc, one of its electronic payments subsidiaries, is studying the use of Bitcoin in their payments systems. This was confirmed by an individual with knowledge of the matter. Braintree provides payment services for online and mobile only start up firms providing assistance in the payment of goods. It is now deep in discussions with Coinbase Inc, a bitcoin payment service provider.
According to EBay spokesperson Jennifer Hakes, in an email done yesterday, “We do believe that bitcoin will play an important role in payments in the future but we have nothing to announce.” For Coinbase’s part, its spokesperson, John O’Brien declined to make any comment on the matter.
Amongst the services that can be paid using Bitcoins are Airbnb rentals as well as Uber car rides. A deal where a well-established payment service provider integrates virtual currency would mean a step towards the ideal where cash and credit cards would be replaced by the virtual currency.
Overstock.com Inc is one of the largest retailers that accept bitcoin in their transactions. The company struck a deal with Coinbase to make these transactions possible. Now, Overstock is expecting that bitcoin purchased sales to be between USD6 million to USD8 million in 2014, averaging USD1 million a month by the end of the year. Other companies have followed suit, such as Dish Networks Corp, Expedia Inc and even Dell Inc. Now, there are 63,000 businesses that accept bitcoins as legal currency for goods and services.
The discussions are in line with policy direction laid out by EBay CEO John Donahoe, during an interview with CNBC last June. He said, “I think there’s no doubt that digital currency is going to play an important role going forward, and at PayPal, we’re going to have to integrate digital currencies into our wallet.”
What EBay does allow though is the sale of bitcoin in its marketplaces in both the UK and the US. It still does not allow the payment of other goods and services using bitcoin instead of credit cards or cash.
Bitcoins are programs resulting from computers solving mathematical problems. Upon its creation, bitcoins can be traded in currency exchanges or used as items of value to exchange goods and/or services from merchants or individuals that accept it as tender.
There have been issues as of late as to the valuation of the virtual currency. At its highest value, bitcoins were traded at USD1000 per unit but recent issues, such as the collapse of major indexes, have caused the value to fall to half of that previous high watermark. According to Coindesk Inc’s price index, the total value of all bitcoin is pegged at USD6.7 billion.
Should the deal push through, it would relieve some pressure from PayPal, EBay’s main payment processing system, as it is caught in stiff competition from other companies in the same line of business. One of its biggest competitors is Amazon, who had is utilizing recently acquired company Local Register for its mobile payments services.