Digital Transactions Authoritative, insightful and timely information for payments professionals
PayPal Holdings Inc. early Monday launched Pay with Crypto, a cross-border payment option that instantly converts cryptocurrencies to stablecoins or fiat currencies. The new payment option provides merchants and consumers a unified platform that connects fiat and digital payments and supports more than 100 cryptocurrencies and crypto wallets, such as Coinbase and MetaMask.
The new service will enable merchants to reach more than 650 million crypto users globally, according to the crypto data aggregator, CoinGecko, PayPal says.
To help make the new payment option an attractive alternative to other cross-border payment options, PayPal says it is charging a transaction fee of 0.99%. Merchants also have the option of holding proceeds from cross-border transactions in PayPal USD, a stablecoin issued by Paxos Trust Company for PayPal, and earn 4% on those monies when held in their PayPal wallet. PayPal launched the stablecoin in August 2023.
“Cross-border transactions have been ripe for disruption for some time, especially with stablecoins,” says Aaron McPherson, principal at the advisory firm AFM Consulting. “The service also allows direct connections, versus having to connect through a bank or other intermediaries.”
In addition, charging a transaction rate of less than 1% could make Pay with Crypto a more attractive option for cross-payment payments than Western Union, MoneyGram, or wire transfers, McPherson says.
Pay with Crypto builds on PayPal’s introduction last week of PayPal World, a series of partnerships that will connect digital wallets outside the United States to its platform and enable interoperability with PayPal and Venmo wallets at the point of sale.
“PayPal, like Visa and Mastercard, is looking to expand its use cases by leveraging the network for more than just retail [purchases],” says McPherson. “Stablecoin is a hot market right now, and there is a lot of interest in the crypto and stablecoin space among big banks like JP Morgan Chase, as well as Visa and Mastercard.”
