PayPal is to launch a cryptocurrency service, initially allowing consumers in the US to spend a range of currencies when making purchases with millions of online merchants globally.

The move, first reported by Reuters, is set to provide a huge boost for people using Bitcoin, Ether, Bitcoin Cash and Litecoin for everyday transactions, being able to convert their holdings into fiat currencies at the point of sale.

The company said that all of its 29 million merchants will have access to the service in the coming months, according to Reuters.

“This is the first time you can seamlessly use cryptocurrencies in the same way as a credit card or a debit card inside your PayPal wallet,” PayPal head Dan Schulman told Reuters ahead of a formal announcement.

Last October the company allowed PayPal users to buy, sell and hold cryptocurrencies. The nod of approval from a mainstream financial company helped boost the rally in digital asset prices.

Checkout with Crypto builds on the ability for PayPal users to buy, sell and hold cryptocurrencies, which the San Jose, California-based payments company launched in October.

Since the start of this year, Bitcoin has nearly doubled in value – itself buoyed by financial firms who see it being increasingly adopted and potentially providing a hedge against inflation.

It follows Tesla’s chief executive Elon Musk saying that the company will now be directly accepting Bitcoin from consumers wishing to purchase cars.

Last month the car company announced that it had invested $1.5bn (£1.09bn) in the notoriously volatile cryptocurrency, sending it to a record high.

PayPal hopes its service can address concerns about the volatility of the cryptocurrency by the settling the transaction in fiat cash, meaning merchants won’t have to accept the risk themselves.

“We think it is a transitional point where cryptocurrencies move from being predominantly an asset class that you buy, hold and or sell to now becoming a legitimate funding source to make transactions in the real world at millions of merchants,” Mr Schulman said.

The company said it will not charge a transaction fee for people using a cryptocurrency at checkout, and that only one type of coin could be used with each purchase.

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