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Payments leader PayPal is introducing its proprietary stablecoin PYUSD to facilitate cross-border money transfers without incurring transaction fees.
The company based in Silicon Valley revealed this new feature on Thursday, utilizing its money transfer service Xoom. According to the announcement, the service will be accessible to users in the US starting April 4.
This feature allows users to convert PYUSD stablecoin in their linked PayPal accounts to USD and utilize it as a funding source for sending money to recipients across 160 countries worldwide. Transactions funded with the stablecoin will not incur any Xoom transaction fees, it stated.
Jose Fernandez da Ponte, senior vice president of crypto at PayPal, highlighted the importance of establishing a stable value to enhance user trust. He also pointed out the significance of its functionality for commerce and payments.
“Providing U.S. users of Xoom the ability to fund cross-border money transfers using PYUSD aligns with our objective of promoting mainstream cryptocurrency adoption while also offering a straightforward method to securely send money to friends and family at a reduced cost.”
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Xoom will convert PYUSD to USD without imposing a crypto sale fee when a US user opts for the stablecoin. Subsequently, the recipient will receive funds in the fiat currency selected by the sender to ensure a seamless transaction at both ends.
Additionally, the announcement indicated that a transaction exchange rate applies for transactions not executed in USD.
Last year, PayPal’s Xoom service collaborated with Visa Direct, enabling US users to send money directly to debit card holders.
In comparison to traditional international remittances, cryptocurrency transactions are significantly more cost-effective as they eliminate intermediaries and associated fees. Nonetheless, cryptocurrencies like Bitcoin and Ripple have emerged as transformative forces, offering numerous benefits over conventional methods.
As per the Bank of International Settlements’ (BIS) report on stablecoins in cross-border payments, this asset class has surfaced as a promising solution to the challenges faced by traditional payment systems.
Since stablecoins, unlike Bitcoin, are tied to a stable asset, they maintain a relatively consistent value, providing a dependable means of exchange, the report stated.
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