How to Buy Bitcoin With PayPal
You can also buy Bitcoin through the payment processor PayPal Holdings, Inc. (PYPL). There are two ways to purchase bitcoin using PayPal. The first and most convenient method is to purchase cryptocurrencies using your PayPal account that is connected to a payment mechanism, such as a debit card or bank account. The second option is to use the balance of your PayPal account to purchase cryptocurrencies from a third-party provider. This option is not as convenient as the first because very few third-party sites allow users to purchase Bitcoin using the PayPal button.
Four cryptocurrencies—Bitcoin, Ethereum, Litecoin, and Bitcoin Cash—can be purchased directly through PayPal.5 With the exception of those who live in Hawaii, residents of all states can either use their existing PayPal accounts or set up new ones. You can also use your cryptocurrencies to purchase products and services through the "Checkout with Crypto" feature.6To set up a crypto account with PayPal, the following information is required: name, physical address, date of birth, and tax identification number.It is not possible to use a credit card to purchase Bitcoin using PayPal. During the buying process, PayPal will display a price for the cryptocurrency. But that price is subject to rapid change due to the volatility of cryptocurrency markets. It is a good idea to make sure that you have more than the price you budgeted for the purchase in your bank account.
When you buy bitcoin directly from PayPal, it makes money off the crypto spread or the difference between bitcoin's market price and the exchange rate between USD and the cryptocurrency. The company also charges a transaction fee for each purchase. These fees depend on the dollar amount of the purchase. For example, a flat fee of $0.50 is charged for purchases between $100 and $200. Thereafter, the fee is a percentage of the overall dollar amount. For example, a fee of 2% of the total amount is charged for crypto purchases between $100 and $200.7
One disadvantage of purchasing cryptocurrencies through PayPal is that you cannot transfer the crypto outside the payment processor's platform. Therefore, it is not possible for you to transfer your purchased bitcoin from PayPal's wallet to an external crypto wallet or your personal wallet.
The other disadvantage of using PayPal is that very few exchanges and online traders allow the use of the payment processor to purchase payment. eToro is among the few online traders that allows the use of PayPal to purchase bitcoin on its platform.
How to Buy Bitcoin With a Credit Card
The process for purchasing Bitcoin with credit cards is similar to the one for buying cryptocurrency with debit cards or through automated clearing house (ACH) transfers. You will need to enter your credit card details with the exchange or online trading firm and authorize the transaction. In general, however, it is not a good idea to purchase bitcoin with credit cards. There are a couple of reasons for this.
First, not all exchanges allow bitcoin purchases using credit cards due to associated processing fees and the risk of fraud. Their decision to do so may work out in the best interests of customers. This is because credit card processing can tack additional charges onto such transactions. Thus, in addition to paying transaction fees, you will end up with processing fees that the exchange may pass onto you.
The second reason is that credit card purchases can be expensive. Credit card issuers treat bitcoin purchases as cash advances and charge hefty fees and interest rates on such advances. For example, American Express and Chase both count purchases of cryptocurrencies as cash advance transactions. Thus, if you purchase $100 worth of Bitcoin using an American Express card, you will pay $10 (current cash advance fee for such transactions) plus an annual percentage fee of 25%. What's more, the credit card company also limits you to $1,000 worth of bitcoin purchases per month.8
An indirect method of purchasing bitcoin using a credit card is to get a Bitcoin Rewards credit card. Such cards function like your typical rewards credit card except they offer rewards in the form of bitcoin. So, they invest cash back earned from purchases into bitcoin. An example of a Bitcoin Rewards card is the BlockFi Bitcoin Rewards Credit Card.9 Beware, however, that the annual fee on these cards may be steep and there may be additional costs associated with the conversion of fiat currencies into crypto.
Although exchanges like Coinbase or Binance remain some of the most popular ways of purchasing Bitcoin, they are not the only method. Below are some alternate ways to purchase the cryptocurrency.