It's converted by Coinbase. Whatever the charge is, they sell that amount worth of your holdings plus fees.

So in this case rather than just pay cash it's paying cash with a little bit extra for coinbase? Is there any genuine value to justify this extra cost?

Everyone charges a fee. This is just a different provider. The proposition is that conversions are seamless so you don't have to worry about manually cashing out assets for payment and you can stay invested until the time of sale.