What is “Pay with Crypto” by PayPal?
Pay with Crypto is PayPal’s innovative feature that facilitates blockchain-based transactions for merchants in the United States. This service allows customers to make payments using a wide range of over 100 cryptocurrencies, such as Bitcoin (BTC), Ether (ETH), Solana (SOL), USDC (USDC), Tether’s USDt (USDT), XRP (XRP), and BNB (BNB). When consumers choose to pay with crypto, merchants receive either US dollars or PayPal’s own stablecoin, PayPal USD (PYUSD). The automatic conversion from cryptocurrency to fiat currency ensures that businesses are shielded from market fluctuations, allowing them to enjoy a familiar payout system similar to traditional payment methods.
This payment solution is designed to be flexible and user-friendly, as it supports various wallets, including Coinbase Wallet, MetaMask, Binance, Kraken, Phantom, and Exodus. Shoppers can transact directly without needing to transfer funds into their PayPal accounts first. The process is straightforward: customers connect their external wallets at the time of checkout and make payments seamlessly. By integrating crypto payments directly into PayPal’s existing wallet infrastructure, the company has eliminated previous obstacles. U.S. merchants can now accept international payments with instant settlements and stable payouts, further extending PayPal’s global reach. This initiative marks a significant advancement in PayPal’s efforts to facilitate cryptocurrency transactions for merchants on a large scale.
Over 650 million crypto users to pay with crypto on PayPal?
With the introduction of Pay with Crypto, PayPal is poised to tap into a vast $3 trillion cryptocurrency market, potentially attracting around 650 million crypto users, a considerable increase from its current 426 million account holders. This move allows PayPal to broaden its focus from traditional fiat transactions to accommodate a growing demographic of cryptocurrency enthusiasts. By integrating stablecoin transactions into its existing system, PayPal enhances its capabilities and bridges the gap between digital currencies and everyday commerce. This positions PayPal as a comprehensive digital commerce platform that caters to both conventional consumers and the expanding community of Web3 wallet users.
PayPal enables crypto for merchants (and why it matters)
Merchants stand to gain significantly from the Pay with Crypto feature, as it offers reduced transaction fees, rapid settlement times, opportunities to earn stablecoin interest, and access to international markets. The current promotional transaction fee of 0.99% for PayPal crypto payments, valid until mid-2026, is notably lower than the average card processing fees, which typically range from 1.5% to 3.5%. Even after this promotion ends, the fees are expected to remain competitive, especially for cross-border sellers utilizing PayPal’s services.
Additionally, funds are settled in fiat or PYUSD almost instantly, eliminating the wait of one to three business days commonly associated with traditional transactions. This feature not only protects sellers from price volatility but also enhances their cash flow. Merchants opting to retain their earnings in PYUSD can reportedly earn approximately 4% annual percentage yield (APY), transforming their balances into profitable assets. For small and medium enterprises (SMEs), particularly those operating on a global scale, the combination of quick settlements and lower fees provides a valuable opportunity to access worldwide demand. PayPal’s crypto payment tools are specifically designed to benefit SMEs that have been sidelined by conventional cross-border financing.
Cross-border crypto payments from PayPal; Consumer implications
From a consumer standpoint, using cryptocurrency to pay on PayPal is now as straightforward as using a credit card. At the checkout phase, users can simply select the “Pay with Crypto” option alongside other payment methods. By connecting a compatible wallet, such as MetaMask, Binance, Coinbase Wallet, or Phantom, customers can transact using various cryptocurrencies, including BTC, ETH, or stablecoins. The instant conversion of crypto to fiat ensures that merchants receive a stable payout, while buyers enjoy a seamless, crypto-friendly payment experience without the hassle of manually swapping assets or dealing with market volatility.
This feature effectively transforms digital currencies into practical payment methods, enabling their use beyond mere speculative trading. It is particularly beneficial for users who prefer to utilize non-custodial wallets and wish to make direct payments in cryptocurrency without engaging with centralized exchanges.
PayPal’s broader vision for crypto settlement
PayPal is setting the stage for a global infrastructure that supports cryptocurrency transactions. The forthcoming PayPal World digital wallet alliance, anticipated to launch in fall 2025, aims to connect various wallets across major payment ecosystems, including UPI in India, Tenpay Global in China, Mercado Pago in Latin America, and Venmo in the United States. The objective is to facilitate smooth cross-border crypto payments for nearly 2 billion users.
To achieve this, PayPal is enhancing its collaboration with Fiserv to work towards stablecoin interoperability by integrating its PYUSD stablecoin with Fiserv’s FIUSD. This partnership aims to enable real-time, programmable payments across numerous banks and millions of merchants without incurring additional technological burdens. The PayPal-Fiserv stablecoin collaboration could play a crucial role in making PayPal’s blockchain settlement features widely accessible to the general public.
Risks of PayPal’s stablecoin integration
While PayPal is advancing its cryptocurrency offerings for merchants, the rollout is not yet comprehensive. The PYUSD stablecoin is still awaiting approval from the New York State Department of Financial Services, which currently prevents residents of New York from utilizing PayPal’s crypto payment services that involve this stablecoin.
There are also risks to users. Although PayPal supports over 100 cryptocurrencies, neither PYUSD nor any digital assets held in wallets are insured by the Federal Deposit Insurance Corporation (FDIC) or the Securities Investor Protection Corporation (SIPC). This means users could face potential losses if wallets, custodians, or blockchain systems fail—an important consideration for anyone interested in making crypto payments through PayPal.
Furthermore, while the initial promotional transaction fee of 0.99% is attractive, it is set to expire in mid-2026. After this period, the fee is expected to rise to around 1.5%. Although it will remain competitive, the uncertainty regarding long-term pricing could discourage some merchants from relying on PayPal’s crypto settlement as their primary option.
