PayPal expands crypto P2P to include Bitcoin, Ethereum, & stablecoins

Key Takeaways

Why did PayPal expand P2P support for crypto assets and stablecoins? 

To stay competitive and make it frictionless for users to send money as easily as texts or emails. But the stablecoin angle signals a larger trend that most legacy players are embracing. 

What’s the end-goal for its crypto positioning? 

PayPal executives billed the update as a way to ‘bring in non-crypto users.’ While great for user convenience and cost, the cut-throat payment competition is set to get more aggressive.  

Payment systems are going through a major shift, with stablecoins and crypto taking the center stage.

In its latest update, PayPal said that it will let users send or request money via chats, texts, emails, etc, to PayPal, Venmo, and crypto wallets as part of its P2P ecosystem expansion. 

“This will make it more convenient for PayPal users in the U.S. to send Bitcoin, Ethereum, PYUSD, and more.”

This is part of a larger trend as legacy players are forced to embrace stablecoins, which are cheaper and faster.

Apart from PayPal, other firms like Stripe, Visa, Western Union, and MoneyGram have either adopted or plan to roll out stablecoin and crypto support. 

Betting big on stablecoins?

Betting big on stablecoins? 

For context, some cross-border payment corridors in parts of Africa and Asia cost as much as 12% for transfers and can take over three days to settle via legacy payment rails. 

In contrast, stablecoins cost pennies to just over a dollar with near-instant transfers. In fact, the World Bank estimated that stables could cut the high remittance cost by over 90%.  

Source: World Bank

According to a recent report by AMBCrypto, most of the crypto-focused payment providers like BitPay and Yellow Card recorded an uptick in preference for stablecoins for remittances. 

But apart from legacy players making inroads into the segment, crypto platforms are also expanding to the cross-border payment segment, thanks to stablecoin adoption. 

Like Binance Pay and Bybit Pay, Kraken crypto exchange recently unveiled ‘Krak’ for global payments. But these platforms support many assets, including stablecoins from USDC and USDT. 

For PayPal, however, it was unclear whether other rival stablecoins would be supported on its P2P apart from its PYUSD. 

But David Weber, head of PYUSD, noted that the update would ‘bring in non crypto users.’

Source: X

As of press time, PYUSD was the 10th largest stablecoin by market cap ($1.25 billion). On the contrary, USDC had a market size of $72 billion (second-largest) while USDT topped the list with $170B. 

In fact, since the stablecoin law GENIUS Act passage, the overall market was close to hitting $290 billion for the first time, with about +$40 billion growth over the same period.