PayPal CEO Dan Schulman has predicted that the growth of digital currencies ranging from Bitcoin to a widely discussed digital dollar is about to cause changes to the financial system to go into overdrive.
Calling the existing financial infrastructure inefficient and in need of change, Schulman told TIME:
“In the next five to 10 years, you’re going to see more change in the financial system than you have over the past 10 to 20 years.”
Schulman said international remittances cost an average of 2.8% — noting that the “take rate” can be four times that for the less affluent, while the wealthy pay less than one tenth.
PayPal launched a cryptocurrency service in November, allowing customers to buy, sell and trade four cryptocurrencies — Bitcoin, Ethereum, Bitcoin Cash and Litecoin — directly from their accounts. By February, the service had “greatly exceeded” the company’s expectations, Schulman said.
On March 30, it allowed U.S. customers to begin using their crypto to directly buy products and services from its network of 29 million merchants around the world. That is being rolled out to other countries.
Schulman said that the move into crypto took six years, waiting for it to become more mainstream before trying to connect with customers and regulators. At the time, he said, cryptocurrencies “were too volatile to be a viable currency. And it was still a little bit too much of people not really understanding what they were going to get into.”
Bad Actors or Bad Privacy?
In discussing how PayPal protects customers from bad actors and cyber-theft, Schulman revealed that PayPal’s use of Big Data profiles of its customers gives it an immense amount of information about its customers — likely more than many realize:
“[I]t’s not your username and password that’s giving you permission to do that. It is 130 different variables that we look at on every single transaction, in milliseconds, to be sure that it’s you. It’s this idea of Big Data of really understanding who you are, not who you said you are. Things like two-factor authentication, that’s grade-school stuff. It needs to be much, much more sophisticated than that.”