PayPal is set to launch a new rewards program this summer that will allow U.S. users to earn a 3.7% annual reward on their PayPal USD (PYUSD) stablecoin balances.
As reported by Bloomberg, rewards will be credited daily in PYUSD, with monthly payouts. Users can then utilize the rewards for payments, transfers, or convert them into cash.
This new initiative is part of PayPal’s strategy to encourage the use of its stablecoin for everyday transactions. According to Jose Fernandez da Ponte, PayPal’s head of blockchain and crypto, the goal is to make stablecoins a viable option for faster, more cost-effective payments, whether for online shopping or international money transfers.
While stablecoins, including PYUSD, are primarily used in crypto trading at present, PayPal views them as a critical component for revolutionizing payment systems. Despite PYUSD’s current valuation of around $873 million, it still lags behind dominant players like Tether (USDT), which is valued at approximately $145 billion. Only six stablecoins surpass the $1 billion mark, according to CoinGecko.
Fernandez da Ponte emphasized that PayPal’s stablecoin efforts are part of a long-term, 10-year plan, aimed at integrating PYUSD into more of its products to enhance payment speed and reduce costs. PayPal’s CEO, Alex Chriss, echoed this vision, noting the potential for stablecoins to help drive down payment system expenses.
Since the launch of PYUSD, competition has intensified with firms like Robinhood, Revolut, Stripe, and Fidelity entering the stablecoin market. Circle has also made strides with its cross-border payment network using stablecoins.
Unlike other stablecoin rewards, PayPal’s 3.7% return on PYUSD is not directly tied to Federal Reserve interest rates or asset-backed yields. Instead, PayPal is investing in the program to drive PYUSD’s adoption and increase its value.
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