PayPal's New Crypto Payments for U.S. Merchants Cut Cross-Border Fees by Up to 90% via 0.99% Rate

PayPal Inc. (PYPL) has introduced a new feature enabling U.S. merchants to accept payments in over 100 cryptocurrencies, including Bitcoin, Ethereum, and stablecoins. The "Pay with Crypto" service automatically converts incoming cryptocurrencies into U.S. dollars via PayPal’s stablecoin, PYUSD, before depositing the funds into a merchant’s account. This process, which occurs in seconds, allows businesses to avoid exposure to crypto price volatility while benefiting from reduced transaction costs for cross-border sales [1]. The expansion aligns with PayPal’s strategy to integrate digital currencies across its platform, aiming to enhance global commerce and reduce fees for merchants.

The service’s fee structure is a key differentiator: PayPal charges 0.99% for the first year, dropping to 1.5% after July 31, 2026. This rate is notably lower than traditional credit card processing fees, which typically range from 1.57% for domestic transactions to higher rates for international payments [1]. CEO Alex Chriss highlighted the move as a response to the “incredible pressure” businesses face when expanding globally, particularly the costs and complexities of cross-border transactions. By converting cryptocurrencies to PYUSD on an exchange, businesses avoid the need to manage crypto holdings or navigate price fluctuations. PayPal’s stablecoin, issued by Paxos Trust Company and backed by U.S. dollar deposits and Treasury bonds, maintains a $1 peg. However, it remains unavailable to New York residents due to regulatory hurdles and lacks FDIC insurance [1].

The initiative mirrors broader fintech trends, with competitors like Shopify and Stripe also integrating stablecoin solutions. PayPal’s advantage lies in its extensive merchant network and regulatory clarity for PYUSD, which received approval from the Securities and Exchange Commission earlier this year [1]. The company emphasizes use cases such as a Guatemalan customer purchasing from an Oklahoma-based business, where crypto could eliminate delays and high costs associated with traditional international transfers. With over 20 million small businesses in its existing merchant base, PayPal aims to lower technical barriers to crypto adoption by handling compliance and conversion complexities [1].

Analysts note that the success of the service hinges on merchant and consumer adoption. While cost savings are compelling for cross-border transactions, many users remain accustomed to traditional payment methods. PayPal’s ability to simplify crypto payments without requiring technical expertise may tip the balance, but the market will need time to assess whether the benefits outweigh the learning curve [1]. The rollout underscores PayPal’s aggressive push into digital assets, leveraging its regulatory compliance framework and existing infrastructure to capture a growing segment of the fintech market. As competition intensifies, the company’s focus on cost efficiency and user experience could position it as a leader in mainstream crypto adoption for e-commerce.

Source: [1] [PayPal Launches Crypto Payments for US Merchants] (https://bravenewcoin.com/insights/paypal-launches-crypto-payments-for-us-merchants-slashing-cross-border-fees-by-up-to-90)