Main Points:
- Up to 90% Fee Reduction: Pay with Crypto charges just 0.99%, versus 1.5–3.5% for credit cards and 1% for Coinbase Commerce.
- Wide Crypto & Wallet Support: Over 100 cryptocurrencies supported; integrations with Coinbase, MetaMask, OKX, Phantom, Kraken, Exodus.
- Instant Conversion: Auto‑conversion from crypto to PYUSD or fiat for merchants, enabling immediate settlement and revenue access.
- Access to 650M Users: Connects merchants to a $3 trillion market and 650+ million crypto holders.
- Competitive Edge: Significantly undercuts Binance Pay’s 0.80% fee and Coinbase Commerce’s 1% fee, positioning PayPal as a leader in crypto payments.
Introduction
PayPal’s announcement on July 28, 2025, of its new “Pay with Crypto” service marks a pivotal moment in the mainstream adoption of cryptocurrency payments. By slashing transaction fees by up to 90% compared to traditional international credit card processing, PayPal aims to dismantle the high‑cost barriers that merchants face in cross‑border commerce. Built on the back of PayPal’s existing crypto infrastructure, including its PYUSD stablecoin, this service empowers businesses of every size to tap into a global base of over 650 million crypto users and a market valued at more than $3 trillion.
Background of “Pay with Crypto”
PayPal first ventured into cryptocurrency in 2020, enabling customers to buy, hold, and sell digital assets within their PayPal wallets. The 2023 launch of its dollar‑backed stablecoin, PYUSD, further solidified its crypto credentials. “Pay with Crypto” extends this journey into merchant payments, transforming PayPal’s platform from a consumer‑centric wallet into a full‑fledged crypto payment rails provider.
Key Features
1. Ultra‑Low Fees
Merchants will pay a flat 0.99% fee per transaction during the first year—up to 90% less than typical credit card fees (1.5–3.5%) and slightly below Coinbase Commerce’s 1% charge. This structure promises higher profit margins and immediate access to revenue.
2. Broad Crypto & Wallet Compatibility
Support spans 100+ coins, including Bitcoin, Ethereum, USDT, USDC, XRP, BNB, and Solana. Major wallets like Coinbase, OKX, Binance, Kraken, Phantom, MetaMask, and Exodus can connect seamlessly through PayPal’s API.
3. Instant Conversion & Settlement
Upon payment, crypto is instantly converted into PYUSD or fiat and credited to the merchant’s PayPal balance. This bypasses volatility risk and eliminates settlement delays typical of on‑chain transactions.
4. Global Reach
By leveraging PayPal’s existing network, merchants gain exposure to a vast pool of over 650 million crypto holders worldwide, opening new revenue streams and customer segments.
Figure 1: Transaction Fee Comparison
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Figure 1: A comparison of average credit card processing fees (≈2.5%), Coinbase Commerce (1%), Pay with Crypto (0.99%), and Binance Pay (0.8%).
Market Impact
The introduction of “Pay with Crypto” comes amid intensifying competition in crypto payments. Coinbase Commerce has led with its 1% fee, while Binance Pay charges 0.80% per transaction. PayPal’s 0.99% rate undercuts traditional gateways such as Visa and Mastercard, whose interchange fees alone average around 2% in the U.S.—contributing to total costs of up to 3.5% for merchants.
Moreover, the recent Reuters‑reported partnership between Coinbase and PayPal around PYUSD, which includes fee waivers for PYUSD, signals a broader shift toward stablecoin adoption in payments. This alliance has seen PYUSD’s market cap climb to $872 million, although it still trails USDC’s $238 billion.
Competitive Landscape
Several players vie for dominance in crypto payments:
- Coinbase Commerce (1% fee): Well‑established, straightforward API, and deep liquidity.
- Binance Pay (0.80% fee): Low fees, but restricted to Binance‑linked wallets and limited merchant tools.
- Stripe (under pilot): Testing crypto payouts with fees around 1.5%.
- Square’s Cash App: Crypto support but primarily consumer‑focused, lacking merchant integrations.
By integrating into PayPal’s merchant ecosystem—already encompassing millions of businesses—PayPal instantly gains a competitive advantage in reach and trust.
Technical Integration
Merchants integrate with “Pay with Crypto” via PayPal’s RESTful API. A typical flow:
- Order Initiation: Customer selects “Pay with Crypto” at checkout.
- Wallet Selection: Customer picks from connected wallets (e.g., MetaMask).
- On‑Chain Payment: Customer signs and broadcasts transaction.
- Instant Conversion: PayPal routes the crypto through exchanges (e.g., Coinbase), converting to PYUSD or fiat.
- Settlement: Funds settle instantly into merchant’s PayPal balance.
PayPal’s SDKs and plugins for major e‑commerce platforms (Shopify, WooCommerce, Magento) simplify setup, reducing integration complexity to under an hour for experienced developers.
Future Outlook & Trends
The launch of PayPal’s crypto payment solution aligns with several broader trends:
- Regulatory Momentum: U.S. stablecoin regulation is advancing in Congress, potentially formalizing requirements for issuers like PayPal and Circle.
- DeFi Integration: PayPal may extend “Pay with Crypto” into decentralized finance—allowing merchants to hold settlement funds in DeFi protocols to earn yield before payout.
- Cross‑Border Expansion: Following the U.S. rollout, PayPal plans to expand to Europe and Asia by 2026, leveraging regional partnerships and adapting to local regulations.
- NFT & Tokenized Assets: Long‑term roadmap includes support for tokenized assets (e.g., NFTs) as payment instruments, unlocking new e‑commerce experiences.
Dan Schulman, PayPal’s CEO, has emphasized the importance of lowering financial barriers and democratizing access to digital currencies—underscoring PayPal’s commitment to a purpose‑driven approach to innovation.
Conclusion
PayPal’s “Pay with Crypto” represents a watershed in the evolution of merchant payments. By delivering unprecedented fee reductions, seamless wallet integrations, and instant settlement, it lowers the barrier for businesses to accept crypto payments and tap into a $3 trillion market. This service not only intensifies competition among crypto gateways but also validates the role of stablecoins and on‑chain transactions in mainstream commerce. As PayPal expands beyond U.S. borders and explores DeFi and tokenized assets, “Pay with Crypto” is poised to reshape how merchants and consumers interact in the digital economy.
