Xoom Enables PayPal USD as a Funding Option for Cross-Border Money Transfers
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Insights
Integrating a stablecoin as a funding source for cross-border transactions marks a strategic move by Xoom, potentially attracting a new segment of users comfortable with digital currencies. The elimination of transaction fees when using PayPal USD (PYUSD) to fund transfers could disrupt the traditional remittance market, where fees are a significant revenue stream. By offering a lower-cost alternative, Xoom is positioning itself competitively against other remittance services. This could lead to increased transaction volumes, positively affecting PayPal's revenue in the long term. However, the impact on short-term earnings may be muted as the company forgoes transaction fees to build market share.
Additionally, the use of a stablecoin pegged to the USD reduces the volatility often associated with cryptocurrencies, which might encourage adoption among users who are risk-averse. The success of this initiative will depend on the seamless integration of cryptocurrency transactions within the existing financial ecosystem and regulatory compliance. Xoom's strategy could set a precedent for other financial services companies to follow, potentially leading to broader acceptance of digital currencies in everyday transactions.
The introduction of PYUSD as a funding mechanism for remittances is a notable development in the cryptocurrency space, as it represents a practical use case for stablecoins beyond speculative investment. Stablecoins like PYUSD offer the benefits of blockchain technology, including transparency, security and speed, while maintaining price stability. This move by Xoom could serve as a catalyst for increased utility of stablecoins in financial services.
However, the reliance on stablecoins also introduces new layers of complexity, including the need for robust security measures to prevent fraud and hacking. Additionally, regulatory scrutiny is likely to increase as financial transactions increasingly incorporate digital currencies. Companies operating in this space will need to navigate a rapidly evolving regulatory landscape to ensure compliance and maintain user trust.
The decision by Xoom to allow users to fund transfers with PYUSD aligns with consumer trends favoring digital and mobile solutions for financial transactions. Given that the World Bank reported a global average cost of over 6% for sending $200, Xoom's fee-free option is competitively priced and addresses a clear market pain point. This could lead to a shift in consumer behavior, with users potentially choosing Xoom over competitors for cost savings.
Market research would suggest that a focus on cost efficiency in remittances can significantly influence consumer choice, particularly in markets with price-sensitive customers. Xoom's initiative could prompt competitors to re-evaluate their fee structures and explore the integration of digital currencies into their services. The broader implication is a potential increase in the adoption rate of financial technology solutions, reshaping the remittance industry landscape.
Xoom users will pay no transaction fees when using PayPal USD to fund eligible transfers to friends and family abroad
Xoom's new option comes at a time when consumers are seeking cost-effective options for cross-border payments. According to the World Bank's Q3 2023 report, the global average cost of sending
By introducing the option to fund cross-border money transfers with USD converted from PYUSD, Xoom now offers an easy and reliable way for
"When we decided to bring PayPal USD to market, we had two objectives we wanted to achieve: create something that had a stable value to maximize user confidence and ensure it had utility for commerce and payments," said Jose Fernandez da Ponte, Senior Vice President of the Blockchain, Cryptocurrency, and Digital Currency Group, PayPal. "Enabling
How to Fund Xoom Transactions using PYUSD
- Tap the "Send Money" button
- Select the destination country
- Choose how the money will get to your recipient (options vary by country)
- Enter your recipient's account or mobile wallet information, or choose a pickup location, and add your recipient's personal information
- Select PYUSD as your way to pay and confirm the sale of your PYUSD to USD to cover your Xoom transaction (the USD sale proceeds will go to your PayPal Balance and be used to complete the transaction)
- Review the details of your Xoom transaction and slide to send (recipients will receive funds in the fiat currency selected by the sender)
Transactions that are not completed in USD are subject to a transaction exchange rate, which includes a currency conversion spread.
A pioneer in digital remittances, Xoom is a fast and easy way to send money, pay bills and reload phones for friends and family in approximately 160 countries globally. With Xoom, customers can access a fast and reliable way to send money, by simply downloading the Xoom or PayPal mobile app, or visiting Xoom.com or PayPal.com.
About PayPal
PayPal has been revolutionizing commerce globally for more than 25 years. Creating innovative experiences that make moving money, selling, and shopping simple, personalized, and secure, PayPal empowers consumers and businesses in approximately 200 markets to join and thrive in the global economy. For more information, visit https://www.paypal.com, https://about.pypl.com/ and https://investor.pypl.com/.
PayPal, Inc. is licensed to engage in virtual currency business activity by the
- PayPal USD is not currently available to residents of
Hawaii . - Issuance of and custody of PayPal USD is performed by Paxos Trust Company, LLC. Learn more in PayPal's Cryptocurrency Terms, and in the Paxos Terms that also apply to PYUSD.
- Transactions received in a currency other than USD are subject to an exchange rate, which includes a spread.
CONTACT: Reema Nimkar, rnimkar@paypal.com
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SOURCE PayPal Holdings, Inc.
FAQ
How can U.S. Xoom users fund money transfers using PYUSD?
What benefits does the new funding option provide?
Who mentioned the objectives behind creating PayPal USD?