Reduced transfer expenses by a quarter possible through Xoom PYUSD transactions
PayPal Integrates Stablecoin PYUSD with Xoom for Fee-Free Remittances
PayPal has announced a groundbreaking partnership between its stablecoin PYUSD and remittance service Xoom. This collaboration aims to offer fee-free remittance services, a move that could significantly reduce remittance costs and accelerate adoption of PYUSD.
The partnership is based on market-leading FX pricing data, including live and historic datasets covering pricing and speeds across over 24,000 corridors globally. PayPal's current pricing strategy was used as a benchmark in the analysis of the potential cost savings offered by the partnership. The analysis suggests that this integration could reduce remittance costs via Xoom by 25% compared to traditional transfers, based on PayPal's current pricing strategy.
In pilot tests involving Xoom remittance partners in the Philippines and Africa, the use of PYUSD slashed settlement times from days to minutes and dramatically lowered transaction fees. This efficiency gain is due to PYUSD being a blockchain-based, U.S. dollar-backed stablecoin, allowing payments to settle quickly at minimal cost, compared to expensive, slow traditional wire transfers which often incur excessive fees and processing delays.
By offering a more cost-effective and immediate transfer option, the PYUSD integration with Xoom can enhance user experience and trust, encouraging broader adoption of Xoom’s remittance services, especially in markets demanding lower-cost, faster international payments. Furthermore, incorporating stablecoins aligns with PayPal’s broader strategy to modernize payments through digital assets without requiring users to hold volatile cryptocurrencies, as PYUSD maintains a stable dollar peg.
Until recently, Xoom had been largely deprioritized by PayPal, but this partnership could relaunch Xoom. However, it's important to note that Xoom will still charge an FX margin in addition to the fee-free service.
As it stands, stablecoin is a fringe solution for remittances. This development could position PayPal as a leader in combining traditional remittance services with blockchain technology to disrupt costly legacy payment systems. Our platform will continue to monitor the use of stablecoins in the remittance industry.
[1] Source: PayPal Press Release [2] Source: PayPal Q2 2021 Earnings Call Transcript [3] Source: PayPal Investor Presentation, Q2 2021 [4] Source: PayPal Blog Post, "Introducing PayPal's New Crypto Services"
The integration of PYUSD, PayPal's stablecoin, with Xoom's remittance service is expected to encourage broader adoption of Xoom’s services, especially in markets demanding lower-cost, faster international payments. This strategic move is aligned with PayPal’s broader strategy to modernize payments through digital assets without requiring users to hold volatile cryptocurrencies.
