Kraken Enters Payments Sector Challenging PayPal Venmo

Kraken, a leading digital asset exchange, has announced its entry into the payments sector, directly challenging established players such as PayPal and Venmo. This strategic move is aimed at expanding Kraken's offerings beyond its core digital asset trading business, positioning the firm to compete in the broader payments landscape. By introducing peer-to-peer payment services, Kraken seeks to leverage its existing user base and technological infrastructure to provide a seamless and secure payment experience.

Kraken’s new financial app, called Krak, will allow users and businesses to send money, including crypto and regular currencies, across borders without incurring high fees. This tool is designed to work with both crypto and fiat, supporting over 300 assets from the start. However, users will only be able to send money to other Krak users or transfer funds to their own bank accounts, making it more controlled and potentially safer for users still hesitant about crypto transfers.

Kraken’s Co-CEO Arjun Sethi revealed that Krak will soon include physical and virtual debit cards, allowing users to spend money directly from the app. Additionally, credit cards and loans are also in development. Sethi emphasized that Kraken is not trying to profit off user transactions. “I want to make this free to every customer worldwide for this very specific value proposition,” he said. Krak won’t be charging fees or lending against customer funds. Instead, Kraken aims to bring in new users who may not currently trade crypto but want access to its benefits.

Krak will also offer rewards on certain crypto balances, with users able to earn up to 10%, depending on the asset. For example, those holding USDG—a stablecoin from the Global Dollar Network, which Kraken is part of—can earn up to 4.1% on their holdings. Sethi compared the approach to YouTube’s early days, stating that these products already exist for his customers for free, and he monetizes them differently, pointing to exchange liquidity and other services as the real revenue sources.

Kraken’s move into the payments sector comes at a time when other major players are also targeting the crypto-payments space. Coinbase launched a new e-commerce payments system designed to handle USDC transactions and slot into current platforms without disruption. This system promises lower costs, faster transactions, and instant access to a global customer base. Circle, the issuer of USDC, rolled out a separate network to handle cross-border payments, further heating up the market. JPMorgan also revealed a pilot for tokenized US dollar deposits, called JPMD, that will run on the Base chain, marking a significant change in how money can move.

Kraken’s entry into the payments sector is a strategic move that positions the firm to compete with established players like PayPal and Venmo. By offering peer-to-peer payment services, Kraken can leverage its existing user base and technological infrastructure to provide a seamless and secure payment experience. This move reflects the growing trend of digital asset exchanges diversifying their services to capture a larger share of the financial services market and underscores the increasing integration of cryptocurrencies into mainstream financial activities.