On Thursday, PayPal made changes to its user agreement that encompassed a wide variety of measures that the company is taking to adjust to certain shifts in the market. Aside from removing Pay After Delivery and a couple of minor agreement adjustments, PayPal also decided to create a new fee structure.
“We’re removing the variable rate pricing for sending money to friends and family members who have PayPal accounts in a country other than the United States when you send money using PayPal balance or your bank account and introducing a new flat fee of $2.99 or $4.99 per transaction depending on the recipient’s country,” PayPal wrote in its policy update notice.
These changes will only occur on US-based accounts. Users in Europe and other parts of the world will not experience these fees.Currently, paying nearly three dollars to send money to someone is astronomical in comparison to many cryptocurrencies, especially in Tether or Ripple, the latter of which costs mere pennies.
To add insult to injury, sending money to certain countries now warrants a five-dollar transaction fee, which is a step above Bitcoin’s own fee since February. In comparison, one could send Bitcoin for under a dollar.
Although PayPal is shooting itself in the foot after hiking its fees, it’s important to note that the company also has its own cryptocurrency ambitions. Right after CEO John Rainey trashed the cryptocurrency market, the company filed a patent for a new crypto transaction system that would allow people to send funds to one another without having to wait for the blockchain to do its work and verify everything.
This would work by setting up temporary wallets for users in which private keys are set up. Once the keys are exchanged after a transaction takes place, the wallets can update their balances before the blockchain confirms the payment. In essence, it would work in the same manner as the Lightning Network.
If PayPal wants to remain competitive against the growing cryptocurrency market, it would probably have to intensely reconsider its position in order to come up with an alternative to its current model.