How much does it cost to buy crypto on paypal
There are various different types of crypto wallets. The most common type is a custodial wallet, which is when you leave your crypto on the exchange where you bought it. This option is popular because it means investors don’t need to worry about lost passwords or understanding crypto storage. However, it can bring additional risks — particularly if your exchange fails or gets hacked. As a result, many long-term investors prefer to move their digital assets to a non-custodial wallet that they control.
The Coinbase Wallet is a standalone app, so you can use it even if you’re not a Coinbase customer. It is easy to connect the Coinbase Wallet to your Coinbase account. One thing to watch out for is that the wallet may not support all the tokens you can buy on the exchange.
In June, PayPal launched limited wallet functionality for U.S. customers. It gives customers a lot more flexibility in how they manage their digital assets, including moving crypto to external addresses and sending it to friends and family, without fees. It isn’t a full wallet, but it does mean U.S. customers can withdraw assets without first converting them into dollars.
PayPal also has a Checkout with Crypto function, which lets you use your cryptocurrency assets to pay with certain merchants. PayPal will convert your crypto into a fiat currency such as dollars to make the payment.
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- PayPal lets US users buy, sell, or hold bitcoin, bitcoin cash, ethereum, and litecoin.
- You’ll need $1 to get started, and transaction fees and exchange rates (including spread fees) will apply.
- PayPal’s “Checkout with Crypto” feature allows investors to use crypto as payment.
- Click here to get started with PayPal’s cryptocurrency services.
PayPal Holdings, Inc. is an electronic money transfer platform offering financial services to consumers and merchants in more than 200 markets around the globe.
Its cryptocurrency services have been available since 2020, but in March 2021, PayPal expanded those offerings with its launch of the “Checkout with Crypto” service.
As long as you’re a PayPal user with crypto assets in the US, you can buy, sell, hold, and/or checkout with cryptocurrencies like Bitcoin and Ethereum. All trades, however, must be executed in USD (i.e., its crypto offerings may not be best for you if you need to use fiat currencies other than US dollars).
How to invest with PayPal
In order to purchase cryptocurrencies, you’ll have to complete a one-time registration process.
To invest in crypto using the PayPal app:
- Click on crypto from your PayPal dashboard
- Hit the buy button (PayPal will ask you to verify your identity)
- If you’re still uncertain about crypto and PayPal’s offerings, you can review its educational articles to learn more.
Another thing to note is that you can only hold cryptocurrencies you’ve purchased through PayPal. You can’t currently transfer cryptocurrencies in and out of your account.
PayPal also has maximum dollar limits for crypto transactions. There’s a $100,000 maximum dollar limit for weekly crypto purchases and no yearly limit for purchases over a 12-month period.
PayPal: Account custody considerations
Though PayPal says that you own each cryptocurrency you buy on the platform, it doesn’t offer private keys for those assets. In the world of cryptography and crypto wallets, private keys function as heavily encrypted access codes that give you protected access to all of your crypto products.
Crypto services Electrum and Coinbase both offer private keys, which are one of two keys that popular cryptocurrencies like Bitcoin rely on when it comes to transactions. The other is a public key. As the name implies, public keys are publicly known and typically used for identification purposes.
Part of the allure of private keys in cryptocurrency investing is that — like a personal bank account number — they protect your assets from being compromised. A public key doesn’t mean the public get access to your assets — it just allows PayPal to access your cryptocurrency holdings in order to execute trades and purchases. But this means that should PayPal’s security be compromised, so could any cryptocurrency assets it has permission to access.
Though PayPal offers buyer protection on cryptocurrency transactions, its no-private-key rule could be a downside for those who want complete custody over the crypto assets they buy, sell, or hold through PayPal.
PayPal cryptocurrency investing features
Cryptocurrencies are virtual assets that utilize a highly encrypted blockchain technology. These assets are also commonly used as forms of payment for goods or services, but they’re heavily volatile since their prices rapidly fluctuate. PayPal currently offers four types: Bitcoin (including bitcoin cash), ethereum, and litecoin.
While you won’t have to pay fees for simply holding crypto in your account, you’ll need at least $1 to get started. PayPal also charges the following transaction fees (these vary based on purchase amount):
- $1-$24.99 purchase amount: $0.50 USD
- $25-$100 purchase amount: 2.30%
- $100.01-$200 purchase amount: 2.00%
- $200.01-$1000.01 purchase amount: 1.80%
- $1000.01+ purchase amount: 1.50%
For instance, if you bought $75 worth of bitcoin, you’d have to pay a 2.30% asset-based transaction fee. However, there are also other fees involved.
PayPal charges a spread, or margin, between the market price it earns from its trading service provider and the exchange rate between USD and crypto assets shown to each customer. The company says this “spread” fee applies to all crypto transactions, including its new Checkout with Crypto service.
PayPal will disclose both the applicable exchange rate and the spread (typically 0.50%) for each transaction, according to its website.
Fees also apply for personal transactions or transfers where currency conversions are involved. Right now, only customers in the US and US territories (excluding Hawaii) can buy, sell, or hold cryptocurrencies on PayPal.
Is PayPal the right crypto platform for you?
This depends on your preferences. PayPal could be a good option for existing customers who regularly use the platform for money transfers and other services. Whether you’re using cash or crypto, you can hold either in your account without any additional charges.
But note that PayPal’s new checkout feature doesn’t actually let you pay with cryptocurrencies. The new service converts your existing crypto assets into US dollars to complete any purchases.
Another thing to keep in mind is that PayPal charges small transaction fees (you can think of them as mini commissions) and exchange rates (including spread fees) when you buy or sell cryptocurrencies.
Additional considerations: PayPal’s selection of cryptocurrencies — bitcoin (including bitcoin cash), ethereum, and litecoin — might be limited for investors looking for a wider range of cryptocurrencies or other securities like stocks or ETFs. If you meet this description, consider our list of the best online brokerages for every type of investor.
Rickie Houston is a senior wealth-building reporter for Business Insider, tasked with covering brokerage products, investment apps, online advisor services, cryptocurrency exchanges, and other wealth-building financial products. He is also a Certified Educator in Personal Finance (CEPF).
Previously, Rickie worked as a personal finance writer at SmartAsset, focusing on retirement, investing, taxes, and banking topics. He’s contributed to stories published in the Boston Globe, and his work has also been featured in Yahoo News.
He graduated from Boston University, where he contributed as a staff writer and sports editor for Boston University News Service.
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It is easier than ever to buy cryptocurrency — all you have to do is pull out your phone and open an app.
PayPal is one of a few popular mobile and online payments platforms now allowing users in the U.S. to buy, sell, and hold cryptocurrencies with as little as $1 invested. But if you’re looking to add cryptocurrency to your portfolio, you should think carefully about which platform you use — and whether you should be investing in crypto at all.
Even the most common and time-tested coins — Bitcoin and Ethereum — are still highly volatile. That’s why experts recommend investing no more than 5% of your portfolio in crypto at all, and never letting it get in the way of things like saving for emergencies or paying down high-interest debt.
If you do decide to invest, where you buy your crypto can have important implications worth thinking about ahead of time. It may be easy to buy crypto with an app you already use — and trust the security measures of — like Paypal, but there are limitations compared to traditional cryptocurrency trading platforms.
Here’s what you need to know before buying crypto on PayPal and how to figure out whether it makes sense for you.
What You Need to Know Before Buying Crypto on PayPal
Any PayPal user can buy, sell, and hold crypto. You can also use crypto at checkout for select purchases, but it’s generally a bad idea to use any cryptocurrency as a form of payment. As with other long-term investments, experts recommend buying and holding your crypto long term.
PayPal protects eligible purchases from fraud if you check out with crypto.
PayPal, along with other apps like Venmo and Robinhood, are making crypto more accessible, which is a major draw for many beginner investors. But increased accessibility can also increase your risk.
“If you have a PayPal balance on your phone, and you’re curious about cryptocurrency, you can open PayPal, click crypto and in two seconds own a few hundred dollars worth of cryptocurrency,” says Julian Morris, a certified financial planner at Concierge Wealth Management in Boston. “They just make it really, really easy.”
Given the value of the cryptocurrency market, there is a case for owning a little bit of it, says David Yermack, a finance professor at the New York University Stern School of Business who researches cryptocurrency. But it shouldn’t be your main focus.
“The tried-and-true formula for success in investing always involves diversification — not putting all your eggs in one basket, but trying to own a little bit of many things,” he says.
How to Buy Crypto on PayPal
To buy crypto from PayPal, you’ll need to set up an account. If you already have a PayPal account, all it takes to buy crypto is clicking a button that says “crypto” and choosing which coins you’d like to buy.
You can purchase four types of crypto on the PayPal app: Bitcoin, Ethereum, Litecoin, and Bitcoin Cash. However, experts recommend sticking to Bitcoin and Ethereum if you’re a new investor.
To complete your purchase, you’ll need to have available funds, a linked debit card, or a linked bank account. You can spend as little as $1 or as much as $100,000 a week. Like many crypto exchanges, there’s a fee for buying and selling crypto on PayPal, which varies depending on how much you buy.
PayPal Crypto Fees
Purchase or Sale AmountPayPal Fee$1 – $24.99$0.50$25 – $1002.30%$100.01 – $2002.00%$200.01 – $1,0001.80%$1,000.01 and up1.50%
You also have to verify your identity, fill out a W-9, and agree to the PayPal terms and conditions. If you decide to make a purchase with crypto, PayPal will automatically convert it into the U.S. dollar at no additional cost.
Alternatives to Buying Crypto on PayPal
Investing in crypto using PayPal is simple — especially if you already use the app for online payments. But it has limitations.
The crypto you buy through PayPal is not the same as buying crypto on an exchange like Coinbase or Gemini. When you buy crypto from a traditional exchange, you have the option to transfer it to a wallet for secure storage or to someone else — a key distinction when it comes to full crypto ownership.
That’s not the case with PayPal. You can’t transfer crypto from your account to other accounts on or off PayPal, and you have to sell your crypto on PayPal to make a withdrawal, which you’ll also be responsible for reporting on your tax return.
If you want full control over your coins, a cryptocurrency exchange may be a better choice. While they can be more complicated to navigate as a beginner, you’ll have more flexibility with your coins and potentially pay fewer fees. You can use these exchanges to trade one crypto for another (like using Bitcoin to buy Ethereum) or buy crypto using regular currency, like the U.S. dollar.
Still, PayPal can make sense for new investors who want to experiment with a small crypto balance on a familiar platform. Even for those well-versed in traditional investment options like stocks and index funds, crypto investing using exchanges can be complicated. For example, personal finance expert Suze Orman recently told NextAdvisor that she purchased $5,000 in Bitcoin on PayPal instead of a traditional exchange because “it was just easy to do it.”
If you’re a new investor with a few dollars to spare, PayPal can be a good place to start. Investing in a small portion of your portfolio in Bitcoin on a platform you already trust can make sense for beginners, especially if you don’t anticipate adding large amounts you might want more control over (like your own wallet storage) later.
There’s no wrong or right way to invest in crypto — it ultimately depends on your personal preferences. What matters more is taking the time to learn about crypto before investing in it. “Before you click a ‘buy’ button, you just want to be prepared,” says Morris. “And if you want to be a prepared investor, you certainly need to do a lot of research.”
Remember, any crypto investment is volatile, and you should only invest what you’re prepared to lose. “If you’re going to own it, you only want to own a little bit as part of a very diversified portfolio,” says Yermack.
You should also prioritize other important aspects of your finances, such as having an emergency fund or paying down high-interest debt, before investing in crypto — whether it’s through PayPal or not.
And whatever platform you choose, take time to learn about smart crypto investing for the long-term, keeping your coins secure, and how to deal with the volatile price fluctuations.