In the latest integration of digital assets with mainstream financial services, PayPal has introduced a platform called “Pay with Crypto.” This service enables merchants to accept payments in over 100 cryptocurrencies.
Connecting Wallets for Enhanced Accessibility
The Pay with Crypto platform allows consumers to connect their existing crypto wallets from major platforms such as Coinbase Wallet, MetaMask, Kraken, and OKX. This move unlocks access to a large market of 650 million crypto users. Currently, the service is available to all U.S. users except those in New York.
Addressing Cross-Border Payment Issues
The main driver behind PayPal’s launch is the need to address inefficiencies in cross-border payments, often plagued by delays and high fees. According to PayPal, merchants will pay a 0.99% transaction fee on crypto payments—a rate they claim is 90% lower than the average credit card processing fee.
Inclusive Borderless Commerce
This crypto launch follows last week’s unveiling of another cross-border-focused solution: PayPal World. This platform allows PayPal and Venmo wallets to connect with leading global wallets, such as India’s Unified Payment Interface (UPI) and China’s WeChat Pay, potentially extending to Latin America’s Mercado Pago.
Users can send payments to recipients using these systems even if the recipient does not have a PayPal account. While PayPal World and Pay with Crypto are currently separate systems, Alex Chriss, President and CEO of PayPal, emphasized that both launches signify the “future of inclusive, borderless commerce.”
Yields for Merchants
Digital assets play a crucial role in PayPal’s new payments paradigm. A key component is PayPal’s stablecoin, PYUSD, through which all transactions on the platform are automatically converted into PYUSD or fiat currency at checkout.
Though PYUSD was launched about two years ago, it has seen significant growth since the beginning of the year, with its market cap increasing by approximately 80%. This momentum is expected to continue due to PYUSD’s central role in PayPal’s crypto platform. However, it also faces competition from new entrants like Stripe’s stablecoin.
The immediate conversion to PYUSD benefits merchants as they can accept crypto payments without exposure to volatility and potentially earn a yield. According to Chriss, “The business can accept crypto for payments, increase their profit margins, pay lower transaction fees, get near instant access to proceeds, and grow funds stored as PYUSD at 4% when held on PayPal.”
