Is PayPal making a move to establish its own virtual currency?
It seems to be much more than a possibility — more of a probability — based on a patent application by eBay, the parent company of payment services giant PayPal.
eBay applied for the patent in summer 2012 which envisions “gift tokens”, a peer-to-peer money-transfer system with similarities to the bitcoin ecosystem.
The patent application 20130339188 was published on December 19, 2013.
“A gift can be given from a user of a payment provider (more than likely PayPal) to a gift recipient,” the application states. “The recipient can be a member of the user’s family, a friend, or any other person or entity.”
The recipient can use the token to purchase a product by using a checkout through the payment provider. The purchase can be made without requiring the user to create a payment-provider account.
“The use of security tokens in electronic commerce is known,” eBay states in its patent application. “Such a token can be used to authenticate a customer and to facilitate payment for a purchase. A customer possessing a token can be assumed to be authorized to make a purchase using a payment provider account for which the token was issued.”
During a purchase transaction, the patent states, the customer can present the token to the merchant. “The token can be presented either along with or in place of a password,” eBay said.
Both software and hardware gift tokens can be used to make purchases.
“Software tokens are typically stored in an electronic device, such as a computer or cellular telephone,” the patent application states. “Hardware tokens can be embodied in a hardware device, such as a USB device or a smart card.”
PayPal boasts of 100 million active accounts in 190 markets and 25 currencies.
PayPal President David Marcus actually owns bitcoins and has said recently that the cryptocurrency could revolutionize e-commerce. He envisions bitcoin’s acceptance, but said PayPal has no plans to adopt bitcoins now because of the virtual currency’s instability — wide price swings and lack of a non-virtual regulatory infrastructure.