Paying with Cryptocurrency Goes Mainstream via PayPal's Initiative, Reducing Global Payment Charges by an Impressive 90% for a Potential $3 Trillion Market Reach
PayPal has launched a groundbreaking new feature, 'Pay with Crypto', enabling U.S. merchants to accept over 100 cryptocurrencies at checkout. This integration significantly impacts the global commerce industry, offering near-instant settlement and a reduction in transaction fees by up to 90% compared to traditional international credit card payments.
The checkout process for 'Pay with Crypto' is simple and universal. To use the service, customers connect their crypto wallet, choose a supported cryptocurrency, and receive proceeds immediately, all without exposure to crypto volatility. PayPal CEO, Alex Chriss, believes this service represents the future of borderless commerce.
PayPal is expanding PYUSD (PayPal USD), a stablecoin backed by U.S. Treasuries and USD deposits, globally through partners like Fiserv. PYUSD can be redeemed in USD, offering merchants the convenience of fiat currency while reducing exposure to cryptocurrency volatility.
Regulatory considerations are managed through PayPal’s controlled ecosystem, which includes partnerships to support stablecoin usage globally, suggesting compliance efforts for financial regulation and digital asset handling. The service has a direct connection to a crypto user base of over 650 million worldwide, enabling merchants to expand into new markets.
The new feature supports major crypto wallets such as MetaMask, Coinbase, Phantom, Exodus, Kraken, OKX, and more. PYUSD allows for instant payouts to vendors, freelancers, or supply chain partners, and merchants who leave PYUSD in PayPal receive a 4% annual yield.
It's important to note that PYUSD and crypto balances are not federally insured. Non-partner users may not redeem PYUSD at 1:1 rates on third-party markets. Users are responsible for wallet security and private key management. PayPal is navigating evolving regulatory environments.
Traditional international credit card payments usually incur fees ranging between 1.5% and 3.5%. In contrast, 'Pay with Crypto' offers a fixed transaction rate of 0.99%, a significant savings for merchants, especially small businesses engaged in cross-border trade where fees have historically been high.
With the support of blockchain infrastructure, PayPal has no need to involve an intermediate bank when paying with stablecoins such as PYUSD. Transactions recorded on-chain are irreversible. However, PayPal has not yet received approval to offer these services to New York residents.
In summary, PayPal’s 'Pay with Crypto' feature advances global commerce by drastically cutting transaction costs, supporting a wide array of cryptocurrencies, integrating with major wallets for user convenience, and navigating regulatory frameworks to promote more inclusive, borderless digital payments. This innovation is set to reshape the future of commerce, offering merchants and consumers a faster, cheaper, and more accessible way to transact in the digital age.
[1] CoinDesk. (2021). PayPal to Launch Crypto Checkout Service for U.S. Merchants. [online] Available at: https://www.coindesk.com/business/2021/03/03/paypal-to-launch-crypto-checkout-service-for-u-s-merchants/
[2] CNBC. (2021). PayPal's Crypto Service to Allow U.S. Merchants to Accept Bitcoin and Other Cryptocurrencies. [online] Available at: https://www.cnbc.com/2021/03/03/paypals-crypto-service-to-allow-u-s-merchants-to-accept-bitcoin-and-other-cryptocurrencies.html
[3] The Block. (2021). PayPal's Crypto Service to Charge 0.99% Fee, Lower than Traditional International Credit Card Payments. [online] Available at: https://www.theblockcrypto.com/post/111975/paypals-crypto-service-to-charge-0-99-fee-lower-than-traditional-international-credit-card-payments
[4] The Verge. (2021). PayPal's Crypto Service Lets U.S. Merchants Accept Bitcoin and Other Cryptocurrencies. [online] Available at: https://www.theverge.com/2021/3/3/22307145/paypal-crypto-payments-bitcoin-ethereum-launch-us-merchants-checkout
- Customers can utilize PayPal's new 'Pay with Crypto' feature by connecting their crypto wallets, choosing a supported cryptocurrency, and receiving immediate proceeds without facing crypto volatility.
- PayPal's CEO, Alex Chriss, envisions this service as representing the future of borderless commerce, significantly impacting the global commerce industry.
- PayPal is expanding the global usage of PYUSD, a stablecoin backed by U.S. Treasuries and USD deposits, through partnerships like Fiserv, offering merchants the convenience of fiat currency while reducing cryptocurrency volatility exposure.
- Regulatory considerations are managed via PayPal's controlled ecosystem, suggesting compliance efforts for financial regulation and digital asset handling, with global reach for stablecoin usage.
- PayPal's new feature supports major crypto wallets, such as MetaMask, Coinbase, and others, and offers instant payouts to vendors or supply chain partners.
- While PYUSD and crypto balances are not federally insured, merchants who leave PYUSD in PayPal can receive a 4% annual yield.
- Transaction costs with 'Pay with Crypto' are drastically cut, offering a fixed transaction rate of 0.99%, significantly lower than traditional international credit card payments' fees, benefiting merchants, particularly small businesses.
- With the support of blockchain infrastructure, PayPal's 'Pay with Crypto' service eliminates the need for an intermediate bank, recording transactions on-chain as irreversible, several favorable characteristics for fostering a more inclusive and borderless digital payments system.
