PayPal has taken a significant step in demonstrating the practicality of digital currencies for business transactions by completing its first business-to-business (B2B) payment using its proprietary stablecoin, PYUSD.
I have to admit that this story initially passed my by, but I think its actually an important update.
The payment, made on 23 September 2024, involved an invoice from Ernst & Young LLP and was processed through SAP SE’s digital currency hub, a platform that enables instant, around-the-clock payments using digital currencies.
While the transaction amount was not disclosed, the event marks a milestone in PayPal’s push to showcase the benefits of stablecoins in the corporate world.
Launched in 2023, PYUSD is a stablecoin tied to the US dollar, designed to offer the advantages of digital currencies without the volatility associated with cryptocurrencies like Bitcoin or Ethereum.
As of October 2024, PYUSD has grown to a market capitalisation of $700 million, becoming one of the largest stablecoins in circulation.
While stablecoins have gained traction in consumer payments, PayPal’s recent B2B transaction illustrates their potential in streamlining corporate transactions.
Jose Fernandez da Ponte, PayPal’s Senior Vice President of Blockchain, Cryptocurrency, and Digital Currency, emphasised that stablecoins can revolutionise cross-border payments, which are often slow, costly, and reliant on multiple intermediaries.
By enabling faster settlement times and lower transaction costs, PYUSD and similar stablecoins offer an efficient alternative for businesses, particularly in countries with volatile currencies.
PayPal has been expanding its crypto services in recent years, allowing merchants to buy, hold, and sell cryptocurrency from their business accounts.
The company aims to prove that stablecoins are not only viable but beneficial for businesses, as the payments industry continues to grapple with crypto-related scrutiny in the wake of scandals like FTX.
As businesses worldwide seek to reduce costs and improve the speed of cross-border transactions, PayPal’s successful deployment of PYUSD highlights the growing role of stablecoins in the future of digital payments, making them an attractive option for enterprises looking to bypass traditional banking systems.
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