"Because of the volatility of the cryptocurrencies," the merchants were seeing swings in crypto that threatened the viability of their businesses, Rainey told "Mad Money" host Jim Cramer.
"If you're a merchant and you have, let's say, a 10 percent margin on a product that you sell and you accept bitcoin, for example, and the very next day it moves 15 percent, you're now underwater on that transaction," Rainey said in the exclusive interview.
"So what happens, or what was happening, is they were immediately moving that to a more stable currency," the CFO continued.
The start of 2018 has been difficult for bitcoin and ethereum, two leading digital currencies. Both had their worst first-quarter price performances in history, with bitcoin losing over $119 billion in value in three months.
But while some market-watchers still ardently back crypto, Rainey told Cramer that PayPal will proceed with a bit more caution.
"You could have something that appeals to consumers, but if merchants don't accept it, it's of little value," Rainey said. "Right now, we don't see a lot of interest from our merchants. But if it's something that stabilizes in the future and is a better currency, then we'll certainly support that."
Disclosure: Cramer's charitable trust owns shares of PayPal.