PayPal Launches Crypto Payment Service with 90% Fee Reduction for U.S. Merchants

PayPal has launched a cryptocurrency payment platform, "Pay with Crypto," offering U.S. merchants a 90% reduction in transaction fees compared to traditional international payment methods. The service enables businesses to accept payments in over 100 cryptocurrencies, including Bitcoin, Ethereum, and stablecoins, with transactions processed through popular digital wallets like Coinbase and MetaMask. Merchants will pay a flat 0.99% fee per transaction until July 31, 2026, a stark contrast to conventional cross-border credit card processing rates of 2.5-3.5% [1]. The platform also allows instant conversion of crypto payments into stablecoins or fiat currencies, mitigating exposure to price volatility while maintaining fast, borderless transactions [3].

The initiative positions PayPal to tap into a $3+ trillion global cryptocurrency market, connecting merchants to over 650 million potential crypto users. Alex Chriss, PayPal’s President and CEO, emphasized the service’s role in addressing challenges such as high international payment costs and complex integrations for businesses expanding globally. The company’s financial stability—reflected in a 41.4% gross profit margin and "good" financial health rating—supports this strategic expansion into digital assets [3]. However, the service will not be available to New York residents until approval from the state’s Department of Financial Services is secured.

Merchants adopting the platform can earn 4% annualized returns on PayPal USD (PYUSD) balances, though the company notes this yield is subject to change. This dual benefit of low fees and passive income aligns with PayPal’s broader strategy to integrate traditional finance with crypto-native tools, such as its "PayPal World" initiative, which unifies five major digital wallets into a single ecosystem [3]. The service also reflects the company’s efforts to simplify crypto adoption by resolving technical barriers like wallet compatibility, a historic hurdle for merchant participation.

PayPal’s 0.99% fee structure represents a critical advantage in cross-border commerce, particularly for small businesses burdened by high transaction costs. Analysts remain divided on the long-term impact of the move. Truist Securities maintains a "sell" rating, while RBC Capital has reiterated an "outperform" rating, citing confidence in PayPal’s monetization strategy [3]. The company’s partnerships with Anthropic (for AI-integrated payment tools) and sports conferences (for athlete payment management) further illustrate its expansion beyond e-commerce into specialized financial sectors.

The service’s rollout underscores PayPal’s ambition to dominate a rapidly evolving market. By combining cost efficiency, user accessibility, and financial incentives, the platform could accelerate merchant adoption across PayPal’s existing network. However, risks such as the lack of FDIC or SIPC coverage for crypto assets and regulatory uncertainties remain key challenges. The 90% fee reduction, coupled with instant settlement capabilities, positions PayPal to capture a significant share of cross-border e-commerce and small business transactions [4].

Sources:

[1] [PayPal Drives Crypto Payments into the Mainstream](https://newsroom.paypal-corp.com/2025-07-28-PayPal-Drives-Crypto-Payments-into-the-Mainstream,-Reducing-Costs-and-Expanding-Global-Commerce)

[2] [PayPal launches crypto payment solution with reduced transaction fees](https://www.investing.com/news/company-news/paypal-launches-crypto-payment-solution-with-reduced-transaction-fees-93CH-4155425)

[3] [PayPal’s Pay with Crypto Service](https://www.stocktitan.net/news/PYPL/pay-pal-drives-crypto-payments-into-the-mainstream-reducing-costs-lc9bb46ffmqh.html)

[4] [PayPal launches Pay with Crypto service for US merchants](https://www.streetinsider.com/Corporate+News/PayPal+launches+Pay+with+Crypto+service+for+US+merchants/25103715.html)