The US stablecoin space is getting more competitive week-by-week. A day before Ripple launched its own stablecoin offering, PayPal enhanced its own activity in the space.
Xoom, the company’s cross-border money transfer subsidiary, is now offering its users the option to fund money transfers to overseas recipients using US dollars converted from the PayPal USD (PYUSD), its US dollar-pegged stablecoin launched last year.
The stablecoin payment option went live for US customers on 4 April. PYUSD in PayPal customers’ Cryptocurrency Hub can then be converted into dollars and used to send money cross-border to around 160 countries.
Jose Fernandez da Ponte, Senior Vice President of the Blockchain, Cryptocurrency, and Digital Currency Group, PayPal, said: “When we decided to bring PayPal USD to market, we had two objectives we wanted to achieve: create something that had a stable value to maximise user confidence and ensure it had utility for commerce and payments.
“Enabling US users of Xoom the option to fund cross-border money transfers using PYUSD builds on our goal of driving mainstream adoption of cryptocurrencies while also offering an easy way to securely send money to friends and family at a lower cost.”
PayPal states that its stablecoin cross-border payment option has been released to meet consumer demand. Customers are seeking more cost-effective options for cross-border payments, the firm believes, citing the World bank’s Q3 2023 report.
This has influenced the firm’s decision not to adopt transaction fees for the Xoom overseas stablecoin payments offering. However, transactions not conducted in USD will be subject to a transaction exchange rate including a currency conversion spread.
Whilst consumer demand may be on PayPal’s mind, competition may also be a key factor. Stablecoins are growing in popularity and PayPal is not the only company to incorporate the digital assets into its payment offerings.
For example, as noted above, Ripple Labs – operator of the Ripple payment protocol and currency exchange – also announced the launch of its own stablecoin today, which like PYUSD is also pegged 1:1 with the US dollar.
With stablecoins becoming an increasingly important element of the global payments network, the assets are also playing a bigger role in PayPal’s operations. Kicking off 2024 with a bang, PayPal Ventures conducted its first ever investment entirely with PYUSD, investing in Mesh.
