PayPal has announced a significant step in its global payments strategy by tapping Xoom to facilitate cross-border payments using its stablecoin, PayPal USD (PYUSD), as of November 19. This initiative is specifically designed to broaden access to PYUSD in key markets across Asia and Africa, enabling PayPal to settle transactions outside of traditional banking hours.
Global Payment Expansion
The integration of Xoom is intended to address the need for more agile and accessible financial services in regions where conventional banking systems may not fully meet the demand. By utilizing Xoom, PayPal aims to leverage PYUSD to provide a more efficient payment solution, particularly in areas with less developed financial infrastructure.
PayPal’s approach involves collaboration with regional financial service providers such as Cebuana Lhuillier and Yellow Card. These partnerships are crucial for handling PYUSD disbursements effectively. Chris Maurice, CEO of Yellow Card, highlighted the transformative impact of stablecoins like PYUSD, noting that they are poised to revolutionize the payments landscape by enhancing the efficacy of money movement through robust stablecoin and payments infrastructure.
Launched in 2023 and backed one-to-one by US dollars, PYUSD is issued by Paxos Trust Company, a U.S.-regulated crypto custodian. This stablecoin competes with other regulated, dollar-backed stablecoins, offering a secure and stable means of transaction for users.
PYUSD operates as an Ethereum-compatible ERC-20 token and is the only stablecoin integrated into PayPal’s payment infrastructure. Its design is conducive to easy adoption by external developers, wallets, and Web3 applications, making it a versatile tool for cryptocurrency exchanges.
PayPal has undertaken several initiatives to expand the utility and adoption of PYUSD:
- Collaborated with Anchorage Digital to launch a rewards program for clients who custody PayPal USD stablecoins.
- Extended PYUSD onto the Solana blockchain in cooperation with Crypto.com, Phantom, and Paxos to facilitate wider user adoption.
- Partnered with MoonPay and Polymarket to enable direct cryptocurrency purchases and user engagement with a crypto betting platform via PayPal accounts.
Prominent platforms like Coinbase also incentivize users to hold stablecoins, offering an annual percentage yield of approximately 5.2% on USDC, with Coinbase having an equity stake in Circle, the issuer of USDC.
Despite these efforts, PYUSD has not yet reached the market capitalization of leading dollar-pegged stablecoins such as USDt (Tether) and USDC, which dominate with significant market shares.
| Stablecoin | Market Capitalization |
|---|---|
| USDt | $128 billion |
| USDC | $37 billion |
| PYUSD | Not specified |
PayPal’s utilization of Xoom for PYUSD payments represents a forward-looking approach to financial technology, offering a glimpse into the future of how digital currencies might be more widely adopted in global finance. This initiative not only broadens PayPal’s reach but also sets a new standard for the integration of stablecoins into everyday financial transactions.
Decentralized Finance Goes Mainstream
PayPal’s use of PYUSD through Xoom could serve as a watershed moment for decentralized finance, especially in traditionally underserved regions. By enabling more accessible and efficient financial transactions, PayPal is not just improving existing systems but is also paving the way for a broader adoption of financial technology that supports real-world applications. This strategy could significantly enhance global financial inclusivity, allowing more people to engage in economic activities regardless of their geographical or financial status.
Featured image credit: Sam Barnes via Flickr
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