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PayPal Stablecoin Money Transfers Promise to Make Sending Money Internationally Easier 

Last Updated April 5, 2024 2:14 PM
Shraddha Sharma
Last Updated April 5, 2024 2:14 PM
By Shraddha Sharma
Verified by Peter Henn

Key Takeaways

  • PayPal enables US users to use PayPal USD stablecoin for international transfers.
  • As per the press release, the transfer will occur through Xoom with no transaction fees.
  • The move aligns with PayPal’s crypto plans and low-cost remittance solutions.

PayPal has announced a new feature that promises US users to send money abroad with low-cost options. As well as Xoom, PayPal will use its own stablecoin, PayPal USD (PYUSD), to compete with traditionally high remittance costs.

Cheaper Cross-Border Transfers 

PayPal will allow US users, excluding Hawaii residents, to fund international transfers using PayPal USD, the company’s native stablecoin. The offer comes as a part of the services offered by PayPal’s dedicated money transfer service called Xoom. According to a recent announcement , users can convert PYUSD to US dollars within PayPal to send money to loved ones in about 160 countries worldwide without incurring any transaction fees.

The company notes that the global remittance market incurs high transaction costs. According to reports from the World Bank, the average cost to send $200 globally stands just above 6%. By removing Xoom’s transaction fees for transfers funded via PYUSD, PayPal is providing a cost-effective alternative to traditional remittance channels.

Users with sufficient PYUSD in their PayPal accounts can select the stablecoin as the funding source on the platform, converting it to USD without a crypto sale fee. Recipients abroad will receive the funds in their chosen currency.

Growing Stablecoin Market

PayPal’s foray into stablecoin-based transfers aligns with its larger plans to participate in the cryptocurrency market. However, in November 2023, the United States Securities and Exchange Commission (SEC) issued a subpoena to PayPal concerning PYUSD. It has also been under regulatory radar to verify that it is fully backed by dollar reserves.

Jose Fernandez da Ponte, Senior Vice President of the Blockchain, Cryptocurrency, and Digital Currency Group, PayPal, said: “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’s move comes during a good time for the stablecoin market. Ripple recently estimated that the stablecoin market is worth around $150 billion. With projections of the market surpassing $2.8 trillion by 2028, major players are entering. As a result, Ripple, keen to secure its share, launched its own USD-backed stablecoin.

As per a report by Nikkei , Sony Bank is piloting a new stablecoin pegged to legal tender like the yen, exploring its use in fee-reduction for payments and transfers among individual users.

Crypto is Borderless, Low Cost

Initiatives by companies like PayPal and Ripple want to facilitate international money transfers with low transfer costs. By tapping into the stablecoin market, PayPal is not only challenging traditional high-cost remittance services but also getting a share of the blooming stablecoin market.  

According to PayPal’s announcement, the launch is designed to help users bypass the traditionally high fees associated with international transfers.

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