In a bid to increase widespread adoption of PayPal’s PYUSD stablecoin, Coinbase has announced the removal of all attached fees when handling the digital currency.
This comes following the expansion of PayPal and Coinbase’s partnership with the cryptocurrency exchange, committing to zero fees attached to USD-PYUSD conversions for retail and institutional customers.
Coinbase will leverage its blockchain capabilities to expand the support of stablecoins like PYUSD to PayPal’s vast merchant customer base, seeking to promote the benefits of settling transactions with the stablecoin that offer greater speed and convenience.
PayPal and Coinbase also revealed that they collaborate on new use cases that explore use cases on-chain utilising PYUSD in various environments.
Brian Armstrong, CEO of Coinbase, said: “We’re excited to be partnering with PayPal. Their more than 430 million consumer and merchant accounts offer an unprecedented opportunity to increase stablecoin adoption globally.”
PayPal first launched PYUSD in August 2023, becoming the first financial service provider to have its own native stablecoin.
The move provided competition to a market that is still largely dominated by Tether’s USDT and Circle’s USDC. PayPal opted to partner with Coinbase to expand the growth of PYUSD to its institutional customers.
With PayPal’s stablecoin being 1:1 backed with the US dollar, it maintains its stability and therefore becomes a viable payment option for existing and new investors entering the digital assets space.
Stablecoins are surging in popularity and interest across the traditional finance sector due to their stable nature and payment benefits that include faster transaction settlement times, lower remittance and attached fees, and their ability to enhance cross-border settlement in seconds.
PayPal and Coinbase are aiming to be at the forefront of this new wave of stablecoin adoption, with transaction volumes soaring by 250% between 2023-2024, with the two companies aiming to take the “payments revolution forward”.
Jose Fernandez da Ponte, PayPal’s SVP of Blockchain, Crypto and Digital Currencies, added: “This combination of being able to connect the consumer bases of PayPal and Coinbase, bringing our merchants to the table, bringing (Coinbase’s) institutional access to the table – we think that it creates a really, really powerful combination.
“Definitely there will be cases for payments where people will make a choice between PYUSD and USDC, and we want to make sure that we establish PYUSD as the best stablecoin for payments.”
A far cry from fiat standards
Coinbase’s removal of attached fees for PYUSD may come as a surprise to many within the traditional finance space, which is often relied upon by some of the largest players.
Mastercard and Visa placed attached transaction fees, also known as interchange fees, on their debit and credit cards to gain a share of each payment from both customers and businesses.
However, many financial institutions across Europe have become increasingly disgruntled with these attached fees, particularly as they have grown by up to 25% since 2017, with regulators in the UK calling for Visa and Mastercard to halt their growth as it is impeding business growth and market competition.
Whilst European figureheads are now looking to promote the adoption of alternative payment methods to drop the dependence on Visa and Mastercard debit and credit cards, the removal of PYUSD attached fees may open a new avenue for businesses and customers to adopt stablecoins instead.
Now under the guidance of the Markets in Crypto Assets (MiCA) regulation, Europe has the framework and guidelines ready for potential wider adoption of stablecoins and digital assets if consumers begin to favour alternative payment methods over traditional credit and debit cards.
