The move could potentially enable PayPal's 152 million registered accounts to transact using the virtual currency, spurring wider use and acceptance of bitcoin.
PayPal will integrate bitcoin into Braintree, which provides payment capabilities on websites and in mobile apps. EBay acquired Braintree for $800 million in cash last year to expand its mobile-transactions business. PayPal and Braintree will work with bitcoin payment-service provider Coinbase Inc. to enable payments in the virtual currency.
PayPal merchants using Braintree will be able to accept bitcoins.
Dish Networks Corp., Overstock.com Inc. and Expedia Inc. also accept the virtual currency.
Bitcoins has become the most popular virtual currency. It relies on a public ledger and cryptography to record transactions and protect ownership.