This post is also available in: frFrançais deDeutsch pt-brPortuguês ruРусский

Payments giant PayPal has placed limitations on unverified users, as well as made adjustments to fees, increasing cryptocurrency’s relative competitive advantage.

In a recent update to its policies, PayPal, which was recently dropped as eBay’s primary payments provider, has changed its functionality for users who have not yet had all their identifying information verified. They will now be restricted from sending to other users and making payments, and will be limited to being transferred to a linked bank account or debit card until the user has established full verification:

“We’re changing the balance functionality for your PayPal account depending on whether we have been able to verify identifying information that you provide to us.

  • If we have not verified your identifying information, a balance in your PayPal account can generally only be held in your PayPal account and transferred to a linked bank account or debit card.
  • If we have verified your identifying information, a balance in your PayPal account can be held in your PayPal account, transferred to a linked bank account or debit card, used to make purchases or send money to others.”

This move gives an edge to cryptocurrencies, which can be used without restriction or permission, gaining a distinct advantage among customers stuck waiting to complete verification processes.

Fees, particularly for international transfers, dwarf those of Dash

In addition to restrictions on unverified users, PayPal has also updated its fee structure, increasing the fee to the $3-5 range at a minimum:

“For business accounts, we are changing the fee charged for our faster withdrawal option to an eligible debit card linked to your PayPal account to 1% of the transferred amount.

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. However, when you send money using your credit card, debit card, or PayPal credit you will be charged the new flat fee per transaction depending on the recipient’s country + 2.9% of the transaction amount + a fixed fee based on the currency.”

This fee structure makes PayPal significantly more expensive than most cryptocurrencies. Bitcoin’s present median transaction fee is 15 cents, although during the December-January months it ranked much higher than even PayPal’s reaching as high as $34 at its peak. Dash, meanwhile, has maintained consistently low median transaction fees, remaining in the low single-cent range during last year’s peak months and now ranking at under 1/10 of a cent per transaction. This means that a customer using Dash could transact potentially thousands of times for the cost of a single PayPal transfer.

Dash aims to outdo payments systems and national currencies alike

Cryptocurrency is uniquely positioned to out-compete both payments systems and traditional currencies. Dash in particular has risen in value over 400 times since the beginning of last year, and due to its limited and diminishing inflation rate will likely continue to rise in value against currencies that can be inflated at will. Additionally, Dash can over extremely low transaction fees and permanently settled payments in 1.3 seconds on a transparent and permanent ledger that can be viewed by anyone, something no current financial system can compete with. These attributes have contributed to Dash’s rise in areas of the world such as Venezuela that have experienced significant currency crises.