PayPal Expands PYUSD to Stellar for Faster, Cheaper Transactions

PayPal is set to expand the reach of its stablecoin, PayPal USD (PYUSD), by integrating it with the Stellar blockchain network. This move, pending regulatory approval from the New York State Department of Financial Services, aims to enhance the speed and cost-efficiency of transactions involving PYUSD. The Stellar network is renowned for its rapid and low-cost transaction capabilities, making it an ideal platform for expanding the utility of PYUSD.

Once the integration is complete, users will enjoy more options for accessing and utilizing PYUSD through digital wallets and connections to local banking systems and cash networks. This expansion is not only about increasing consumer access but also about opening new liquidity channels and facilitating faster, more efficient capital flows for small and medium-sized businesses. By leveraging Stellar’s real-time settlement features, businesses can access instant working capital in PYUSD to manage various operational needs, such as paying suppliers or covering expenses. This approach, known as Payment Financing or “PayFi,” is particularly beneficial for businesses dealing with delayed payments or upfront costs.

Liquidity providers on the Stellar network will also play a crucial role in supporting these financing needs, potentially earning returns by funding real-world economic activities. This integration follows the initial launch of PYUSD on the Ethereum blockchain in August 2023, its subsequent availability on Solana in late 2023, and its expansion to Cardano earlier this year. PayPal’s move to integrate PYUSD with Stellar is part of its broader strategy to drive adoption and expand the role of PYUSD in global payments.

In February, PayPal announced plans to enable PYUSD payouts via its Hyperwallet platform by the end of the second quarter of this year, targeting cross-border payments for vendors and freelancers. Additionally, Coinbase, the largest U.S. crypto exchange, recently waived fees for PYUSD transactions and introduced seamless 1:1 USD redemptions, improving access for merchants and institutional users. To further incentivize adoption, PayPal will offer a 3.7% annual yield, paid monthly, to U.S. users holding PYUSD in PayPal or Venmo wallets.

May Zabaneh, Vice President of the Blockchain, Cryptocurrency, and Digital Currency Group at PayPal, emphasized the potential of stablecoins in combining blockchain technology with the stability of fiat currency. She noted that cross-border payments are a key area where digital currencies can provide real-world value, and collaborating with Stellar will advance the use of this technology, benefiting all users. The expansion to Stellar will grant PYUSD users access to its extensive network of on and off ramps, providing additional access through digital wallets and connecting to local payment systems and cash networks. This will enhance how people can use PYUSD in their everyday financial activities, from payments to remittances to merchant services.

Denelle Dixon, Chief Executive Officer of the Stellar Development Foundation, shared that Stellar is designed for fast, low-cost, and trusted global payments at scale. By bringing PYUSD to over 170 countries, the collaboration aims to transform stablecoins into practical financial tools that millions of everyday users and merchants can utilize. Together, PayPal and Stellar are working to bring stable digital currency to small businesses and individuals in emerging markets worldwide.

PYUSD on Stellar can also enhance liquidity and financing opportunities through Payment Financing or 'PayFi', an emerging innovation in digital finance. Small and medium-sized businesses facing delayed receivables or pre-funding requirements can access new sources of real-time working capital, disbursed in PYUSD. This capital can be used to pay suppliers, manage inventory, or address other operational needs with instant settlement on Stellar. Liquidity providers can fund these opportunities and earn potential, sustainable benefits from real-world economic activity.

The integration of PYUSD on Stellar can drive efficient modernized money movement, cost transparency, and minimize settlement delays by unlocking better borderless financial flows. However, it is important to note that the use and exchange of digital assets, including stablecoins such as PYUSD, may involve complex risks. These include network and custody risks, third-party reliance, redemption and market risk of fiat-backed stablecoins, regulatory uncertainty, and the lack of FDIC/SIPC protection. Users are advised to review and understand all applicable terms and conditions before using PYUSD.

PayPal USD is issued by Paxos Trust Company, a fully chartered limited purpose trust company licensed to engage in Virtual Currency Business Activity by the New York State Department of Financial Services. Reserves for PayPal USD are fully backed by U.S. dollar deposits, U.S. Treasuries, and similar cash equivalents, and PayPal USD can be bought or sold through PayPal and Venmo at a rate of $1.00 per PayPal USD. The Stellar network is a decentralized, fast, scalable, and uniquely sustainable blockchain built for financial products and services, offering builders smart contracts functionality and a protocol optimized for payments.