Apple nudges PayPal deeper into bitcoin

AFP/Getty Images EBay CEO John Donahoe has long expressed interest in Bitcoin

SAN FRANCISCO (MarketWatch) -- EBay is taking a bet that digital currencies like bitcoin lead a new wave of payments in the future. And its doing this just ahead of the launch of Apples new, potentially eBay-rivaling, payments service.

The San Jose, Calif.-based company on Tuesday announced agreements with leading bitcoin payment processors BitPay, Coinbase and GoCoin to enable PayPal merchants to accept the currency.

eBay EBAY, +0.36% will gradually widen its support of bitcoin, said Scott Ellison, PayPals senior director of corporate strategy, at first rolling out the capability only to merchants in North America.

The announcement comes at a critical point for PayPals merchants business as mobile payments continue to evolve.

Apple Pay, Apples AAPL, -0.87% new one-touch payment service, is set to spring to life next month in some 220,000 stores across the country.

While its unclear whether bitcoin will play a part in Apple Pay, Apple did lift its ban on bitcoin apps earlier this year, and it will eventually open up Apple Pay to developers, potentially enabling third-party interaction between bitcoin and Apple Pay.

I think PayPal recognizes they are at risk on a number of fronts and is becoming far more aggressive about meeting a wider variety of customer needs as a result than they otherwise would be, said Rob Enderle, principal analyst at the Enderle Group.

Analysts have been bullish on Apple Pay so far, particularly how debit and credit card transactions conducted through the platform will enhance Apples bottom line and transform the mobile-payments market.

EBays shares fell as much as 2.5% to an intraday low on Sept. 9, the day Apple Pay was announced at a lavish event in Cupertino. On Tuesday, they closed up 0.51% to $52.74 after spiking as much as 1.5% earlier in the day.

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Apple nudges PayPal deeper into bitcoin