Along with Tesla and Microstrategy, PayPal is one of the biggest crypto-friendly companies.
Just how “pro crypto” is PayPal?
Well, if you have a PayPal account in the USA, you could buy big-name tokens like Ethereum.
While that may sound fantastic to newcomers, many crypto purists aren’t impressed with PayPal’s “Buy Crypto” feature.
Why?
Unfortunately, you don’t have full custody over the coins you purchase on PayPal’s app.
So, you could get price exposure to Ethereum on PayPal, but you can’t use your Ether on Web3.
Confused?
Don’t worry.
In this post, I’ll go over everything you need to know before buying Ethereum on PayPal.
I’ll also share a few other convenient ways to snag some gwei.
How Do You Buy Ethereum On PayPal?
PayPal makes it so simple to buy Ethereum.
First off, you need to create an account on PayPal.com.
Click the “Sign Up” button on the top right of PayPal’s website and enter your phone number.
After you enter the 2FA code sent to your phone, you’ll have to input standard info like your name, email, and home address.
You’ll also have to set up a PayPal password.
Once you’ve completed your application, you should fund your PayPal account.
PayPal makes it super easy to connect with your bank and transfer funds.
Of course, if you know someone else who has PayPal, they could send you some USD.
Just be sure your “PayPal pal” has the email address associated with your account.
Now that you’ve got some cash, it’s time to purchase crypto!
Click PayPal’s “Crypto” tab on the home page.
Here, you’ll find four cryptocurrencies to choose from:
Click the “Ethereum” tab to reveal a price graph and current price estimate.
If you feel comfortable buying at these rates, hit the blue “Buy” button.
You’ll have to enter how much Ethereum you want to buy in terms of USD.
After that, you could pay for Ethereum using your PayPal account or a linked bank account.
Be sure to review PayPal’s transaction fees before confirming your purchase.
You should immediately see the Ethereum you bought in your PayPal crypto tab.
How Much Are Ethereum Trading Fees On PayPal?
PayPal has a transparent fee structure for buying and selling cryptos.
For anything between $1 – $24.99, you’ll pay a $0.50 transaction fee.
If you buy between $100.01 – $200 in Ether on PayPal, expect to pay 2 percent in fees.
This fee lowers to 1.8 percent for crypto orders between $200.01 and $1,000.01, and 1.5 percent for anything above $1,000.01.
Please note: PayPal also charges a “conversion spread” fee that could vary depending on market conditions.
Currently, PayPal works with the NY-based Paxos Trust Company for its crypto custody.
So, the prices you see on PayPal’s crypto exchange come from Paxos’s market feed.
Whenever you buy Ethereum on PayPal, you must accept Paxos’s quoted rate.
In case you were wondering, PayPal currently allows users to buy $100,000 of crypto per week.
Could You Pay With Ethereum Using PayPal?
As long as a merchant accepts PayPal, you could use your Ethereum to make a purchase. Just click the “Checkout With Crypto” button before paying.
With this option, you could pay with tokens like Ethereum rather than USD.
PayPal will instantly convert your Ether into USD and send it to the merchant’s PayPal account.
Note: You still can’t mix-and-match cryptos in your account to use this “Checkout With Crypto” feature.
For instance, you can’t use Ether and Litecoin to buy something.
Also, since PayPal is converting your Ethereum to fiat currency, you’re not technically paying with ETH.
Ironically, if a vendor were truly accepting Ethereum in a private wallet, you wouldn’t be able to use your PayPal Ether.
You could only “Checkout with Crypto” if you’re on PayPal’s platform.
What Are The Pros Of Buying Ethereum With PayPal?
PayPal makes it ridiculously easy to get exposure to Ethereum.
Trust me; you don’t have to be tech-savvy to add some Ether to your PayPal portfolio!
In addition to convenience, buying Ethereum on PayPal is super secure.
As mentioned above, PayPal partners with Paxos for its crypto custody.
In case you haven’t heard, Paxos is a pretty big deal in crypto.
Why?
Well, they’re one of the most legit centralized stable coin issuers.
Unlike Tether, Paxos is US-based, and it has gone through multiple audits.
Of course, PayPal also has an excellent track record for safety and customer support.
As a bonus perk, you could use the crypto in your PayPal to make real-world purchases.
So, if you like spending your crypto like dough, this may be the way to go.
Lastly, PayPal will send you your 1099 forms when tax season rolls around.
While crypto taxes are always annoying, PayPal makes it easier to remain compliant.
What Are The Downsides To Buying Ethereum With PayPal?
The biggest issue with buying Ether on PayPal is that you don’t control your crypto.
Currently, PayPal doesn’t offer a way to transfer your Ethereum off its platform.
Heck, you can’t even send Etherum to another PayPal user.
So, if you buy Ethereum on PayPal, you’re only speculating on the price in USD terms.
Since you can’t take Ethereum off of PayPal, you can’t use it on hot sites like Uniswap, Axie Infinity, or Open Sea.
If your goal is to use Ether on Ethereum, PayPal isn’t for you.
Also, since you don’t hold your private keys on PayPal, you have to trust that PayPal will safeguard your crypto.
Of course, since PayPal and Paxos are well-respected companies, it’s unlikely they’ll default.
Then again, crazier things have happened.
The only way to know you have Ethereum is to take it off of an exchange and put it in a private wallet like MetaMask.
By the way, you can download MetaMask on this link.
You can also watch my complete Metamask tutorial:
To be fair, PayPal says it’s working on new services like a non-custodial crypto wallet.
Unfortunately, we don’t know when this wallet will get released.
So, if you want to use your Ethereum today, you must look into a centralized crypto exchange.
Could You Buy Ethereum With Venmo?
Like its parent company PayPal, Venmo has a snazzy new “Buy Crypto” feature.
In fact, if you’re familiar with PayPal’s crypto hub, you’ll notice Venmo’s crypto portal is virtually identical.
For those who have a Venmo app, you can find the “Crypto” feature by clicking on the hamburger menu.
When you’re on Venmo’s crypto page, you’ll see it offers the same four cryptos on PayPal.
Venmo also follows the same fee structure as on PayPal’s platform.
Just remember that you can’t send your Ethereum out of Venmo after you buy it.
Currently, you can only buy, sell, or hold Ether on Venmo.
Is There Another Way To Buy Ethereum With PayPal?
Interestingly, you could buy Ethereum with PayPal but not on it.
Let me explain.
First, open your Coinbase account.
For those who aren’t already on Coinbase, please follow this link.
After signing up for Coinbase, you could link your PayPal account via Settings.
Once Coinbase connects to your PayPal, you could use funds in your PayPal to buy digital assets like Ethereum.
The benefit of buying crypto on Coinbase is that you could transfer tokens to a private wallet.
Once you send Ethereum to a private external wallet, you’re in full custody of your assets.
However, there’s a significant downside to using PayPal on Coinbase:
Fees.
Coinbase charges the highest fees for buying cryptos with PayPal.
How high?
About 4 percent plus total transaction fees.
That’s right: the 3.99 percent fee is solely for using PayPal on Coinbase.
So, while it’s possible to buy Ethereum with PayPal on Coinbase, it’s not cost-effective.
I’d recommend researching the more advanced Coinbase Pro platform for better trading rates.
Although you can’t use PayPal on Coinbase Pro, it has way lower fees.
You could learn more about the pros and cons of using Coinbase in my recent article, “Coinbase vs. Gemini.”
Is It Good To Buy Ethereum With PayPal?
A lot of crypto investors aren’t super enthused about PayPal’s current “crypto exchange.”
I get that.
Since you can’t take tokens like Ether off of PayPal, users don’t enjoy full crypto custody.
You have to rely on a third-party—i.e., PayPal—to secure your Ethereum.
Also, since you can’t take Ethereum off of PayPal, you can’t use it in DeFi.
Although most people buy Ether as an investment, there are so many cool things you could do with it online.
For instance, you could buy NFTs, join play-to-earn games, or trade on decentralized exchanges.
If you buy Ethereum on PayPal, all you can do is hold it or sell it.
However, that doesn’t mean buying Ethereum on PayPal is the “wrong move” for every investor.
Sure, you can’t do as much with Ether on PayPal, but it’s a convenient way to bet on Ethereum’s price action.
If you happen to have some funds in your PayPal rather than a crypto exchange, you may have an easier time “buying the dip” on PayPal.
Also, PayPal claims it will introduce many exciting features to its crypto platform in the future.
Who knows? You may be able to withdraw Ethereum from PayPal in a few years.
Until then, I’d recommend most crypto investors look elsewhere to buy Ethereum—especially if they want to use Ether in hot dApps like Uniswap.
As convenient and secure as PayPal is, nothing beats the security of holding crypto in an external wallet.
Speaking of crypto wallets, you should check out my comparison of two hot ETH-compatible apps: “MetaMask vs. Trust Wallet.”
Looking for the best cryptocurrency exchanges?
Want to learn how I make money using crypto? Check out my favorite node project here.
