PayPal is enhancing its Xoom money transfer application by allowing users to conduct remittances without any fees when using its stablecoin, PYUSD. This initiative is part of PayPal’s strategy to increase its presence in the global remittance market and to promote the usage of PYUSD, which was introduced last year. Unlike the standard 2% fees typically charged in the industry, transactions using PYUSD on Xoom will be exempt from these charges, although users will still incur costs related to the foreign exchange spread.
Jose Fernandez da Ponte, Senior Vice President at PayPal, explained in a Fortune interview that Xoom’s fee waiver for PYUSD transactions is aimed at providing a seamless and cost-effective option for sending money internationally. Xoom operates in 160 countries and offers more than 350,000 cash pickup locations worldwide. According to Fernandez da Ponte, the success of digital currencies hinges on ease of use for both consumers and merchants, along with offering tangible benefits such as convenience or financial savings.
Despite the dominance of other stablecoins like Tether’s USTD and Circle’s USDC, which hold market caps of approximately $100 billion and $30 billion respectively, PayPal’s PYUSD ranks seventh with a market cap of about $225 million. Fernandez da Ponte believes that although the current business model for stablecoins involves earning interest on reserves, this may not be sustainable in the long term due to fluctuating interest rates. Instead, PayPal aims to benefit from transaction fees and other traditional payment services related to PYUSD.
In anticipation of the evolving stablecoin sector, PayPal has been integrating PYUSD across its platforms, including Venmo, and leveraging it for investments through its venture arm. The company also plans to use PYUSD for payments to its vendors. While the introduction of fee-free PYUSD remittances on Xoom is not expected to significantly affect the supply of PayPal’s stablecoin, it is seen as a step towards broader acceptance of cryptocurrency among recipients of international transfers, potentially opening up new opportunities for PayPal in the future.
