- You can send payments and transfer stablecoin amounts between PayPal and other wallets
- A dynamic developer community, web3 apps, and wallets can access the new stablecoin
PayPal is introducing a stablecoin for transfers and payments, leading global media reported, citing a company announcement. The stablecoin, PayPal USD (PYUSD), will be issued by Paxos Trust and backed by USD deposits and cash equivalents, such as short-term US Treasury bonds. The payments processor will make the stablecoin available to US customers gradually.
Uses
Eligible US customers of the most recognizable digital payment provider who buy PYUSD will be able to send person-to-person payments using it, transfer stablecoin amounts between PayPal and compatible external wallets, convert any of PayPal’s supported cryptocurrencies to and from PYUSD, and pay for things with PYUSD if they choose it as a payment method at checkout.
The payments processor will disclose the exchange rate and any fees due for the transaction when a customer buys or sells cryptocurrency, including when they check out with crypto. The company stated in a press release:
PayPal USD is designed to reduce friction for in-experience payments in virtual environments, facilitate fast transfers of value to support friends and family, and foster the continued expansion into digital assets by the largest brands in the world. Most of the current volume of stablecoins is used in web3-specific environments – PayPal USD will be compatible with that ecosystem from day one and will soon be available on Venmo.
Poised to go mainstream
A dynamic developer community, web3 apps, and wallets will be able to access the new stablecoin, because it’s compatible with the ERC-20 token standard and issued on the Ethereum Mainnet. PYUSD will be used to improve experiences within the PayPal network and will be easy for exchanges to adopt.
PayPal started letting US users transact in crypto in 2020. A year later, the payments giant announced the new feature Checkout with Crypto, which allowed consumers to pay for items available at millions of online businesses using cryptocurrency. In 2022, PayPal began to let users transfer cryptocurrency from their accounts to exchanges and other e-wallets.
Possible problems
Following regulatory issues, Meta abandoned its plan to introduce Diem, its own stablecoin. PayPal stopped working on PYUSD earlier this year when regulators ramped up scrutiny of crypto-focused companies.
PayPal’s shares rose slightly on the news. Hopefully, they will bring something positive to the stablecoin market as well.
