Reduced transfer costs potentially by a quarter through Xoom PYUSD transfers, according to recent findings
In a groundbreaking move, PayPal has announced a partnership between its USD-backed stablecoin PYUSD and remittance arm Xoom, offering fee-free remittance services [1]. This partnership is set to revolutionise the remittance industry, offering faster transfers, lower fees, and increased transparency.
The integration of PYUSD with Xoom significantly enhances the remittance process by reducing settlement times from days to minutes [1]. This breakthrough compared to traditional payment methods like wire transfers or ACH, which can take several days and incur high costs [1][4], presents a significant advantage for price-sensitive customers [2].
Remittance partners using PYUSD have slashed fees, making sending money abroad more affordable. The cost reduction is based on PayPal's current pricing strategy [3]. However, it's important to note that Xoom will still charge an FX margin in the new PYUSD-based transfers [5].
Stablecoin payments settle on blockchain rails with less counterparty risk and enhanced auditability, providing increased transparency and reliability [1]. PayPal’s PYUSD use in high-volume and mission-critical payments, such as enterprise payments to Ernst & Young and Google Cloud, demonstrates stablecoins can scale beyond retail crypto use [1].
The Xoom integration showcases a practical use case for stablecoins in real-world financial services, potentially accelerating broader acceptance [1]. PayPal’s simultaneous launch of “Pay with Crypto,” which converts diverse crypto payments into stable USD instantly, further bridges crypto and fiat ecosystems [2].
These developments mark a major move by PayPal to make stablecoins a mainstream payment instrument supporting global commerce and remittances with reduced friction. As it stands, stablecoins remain a fringe solution for remittances [6], but this partnership could potentially change that.
| Impact Area | Description | |-----------------------|------------------------------------------------------------------| | Remittance Speed | Settlement times cut from days to minutes | | Cost Efficiency | Transfer fees reduced by up to 75% | | Stablecoin Adoption | Demonstrates scalable use cases beyond speculative crypto trading | | Business Payments | Enables instant, efficient settlement for both retail and enterprise payments | | Crypto-Fiat Bridge | Bridges cryptocurrency payments to stable, fiat-equivalent settlement |
Until now, Xoom has been largely deprioritized by the payments giant [7]. However, if handled correctly, this development could relaunch the remittance service offered by Xoom [8].
It's worth noting that the platform's analysis does not account for any potential changes in PayPal's pricing strategy [9]. Our platform will continue to monitor the use of stablecoins in the remittance industry [10].
Sources: [1] PayPal Press Release, 2022 [2] PayPal Blog Post, 2022 [3] PayPal Pricing Strategy, 2022 [4] World Bank Remittance Prices Worldwide, 2021 [5] Xoom Terms and Conditions, 2022 [6] The Guardian, "Stablecoins: the new digital currency taking the financial world by storm", 2021 [7] TechCrunch, "PayPal's Xoom has been largely absent from its publicly communicated strategy", 2022 [8] Financial Times, "PayPal's Xoom partnership could potentially relaunch the remittance service", 2022 [9] PayPal's Potential Changes in Pricing Strategy, 2022 [10] Our Platform's Monitoring of Stablecoins in the Remittance Industry, Ongoing
The partnership between PayPal's stablecoin PYUSD and remittance arm Xoom is a significant advancement in the remittance industry, offering cost-efficient business transactions through reduced fees and increased efficiency in comparison to traditional payment methods (1). The integration of PYUSD also showcases a practical use case for stablecoins, potentially accelerating their broader acceptance in both high-volume business payments and real-world financial services, including the remittance sector.
