What Is PayPal Pay with Crypto? Fees, PYUSD, and Merchant Guide 2025

PayPal Pay with Crypto represents a significant advancement in digital payment technology, enabling merchants to accept over 100 cryptocurrencies while automatically converting them to USD or PYUSD. This innovative payment solution addresses critical pain points in global commerce, including high transaction fees, slow settlement times, and currency volatility, making it an attractive option for businesses seeking to expand their payment options and reduce operational costs.

Key Takeaways

PayPal Pay with Crypto offers several compelling advantages for U.S. businesses in 2025. The platform supports over 100 cryptocurrencies, instantly converting them to fiat currency or PYUSD with a promotional merchant fee of just 0.99%, approximately 90% cheaper than traditional credit card processing fees. Merchants can earn 4% annual percentage yield (APY) on PYUSD balances, effectively transforming payment processing into a yield-bearing asset. Despite these advantages, consumer adoption remains relatively low, with only approximately 2% of U.S. consumers using cryptocurrency for payments. However, mobile-first users and emerging markets across Southeast Asia and Latin America are driving significant growth in crypto payment adoption, suggesting a promising trajectory for this payment method.

What Is PayPal Pay with Crypto and Why Does It Matter for Merchants?

PayPal Pay with Crypto is a merchant-focused checkout solution that enables businesses to accept digital assets including Bitcoin (BTC), Ethereum (ETH), Tether (USDT), and more than 100 other cryptocurrencies. The system automatically converts these payments into USD or PYUSD, PayPal's U.S. dollar-backed stablecoin, providing merchants with currency stability while accepting digital payments. This feature leverages PayPal's extensive user base of over 650 million crypto holders globally, offering seamless integration with 100+ cryptocurrencies.

The significance of this technology for merchants, particularly in Vietnam, Southeast Asia, and other emerging markets, lies in its ability to address three fundamental business challenges. First, it dramatically reduces transaction costs, with PayPal cryptocurrency fees charging only 0.99% for the first year compared to typical cross-border card fees that often exceed 2.5-3%. Second, it accelerates settlement speed, with funds transferring in minutes rather than days through traditional banking channels. Third, it provides currency stability by settling transactions as PYUSD, allowing merchants to avoid cryptocurrency volatility while gaining access to fixed income through 4% APY on their balances.

How Does PayPal Pay with Crypto Work in 2025?

In 2025, PayPal Pay with Crypto operates through a streamlined process that allows merchants to accept over 100 digital currencies while receiving instant settlement in USD or PYUSD. When customers reach checkout, they select cryptocurrency as their payment method, and PayPal performs a real-time exchange to convert the digital assets. The converted funds arrive directly in the merchant's account with no exposure to price volatility, making the system both low-risk and globally accessible.

The platform supports an extensive range of cryptocurrencies, including major assets like Bitcoin (BTC), Ethereum (ETH), Tether (USDT), XRP, BNB, and Solana (SOL), among many others. Customers can pay using leading wallet providers such as major centralized exchanges, popular DeFi wallets like MetaMask, and various self-custody solutions including Phantom and Exodus. The payment process is remarkably simple: shoppers select "Pay with Crypto by PayPal" at checkout, connect their preferred wallet, and confirm the transaction. Merchants require no additional setup beyond enabling the feature in their PayPal Business dashboard, making it a truly plug-and-play solution.

The conversion mechanism from cryptocurrency to fiat or stablecoin happens automatically and instantaneously. After a customer completes a crypto payment, PayPal immediately converts the tokens using centralized or decentralized liquidity sources to either PYUSD or USD. Settlement lands in the merchant's PayPal account within minutes, eliminating the operational delays typical of crypto-to-fiat conversions. If merchants elect to receive PYUSD, they can earn up to 4% APY on their balance while it remains within the PayPal ecosystem, combining payment processing with passive income generation.

What Are the Fees and Benefits for Merchants Using PayPal Pay with Crypto?

PayPal's cryptocurrency payment system offers substantial cost savings and operational advantages for merchants. The introductory PayPal cryptocurrency fees structure is particularly attractive, with a promotional rate of 0.99% valid for the first year of service. After the promotional period, the fee is projected to rise to 1.5%, which still represents significant savings compared to typical cross-border credit card fees of 1.75-3%. PayPal estimates that this feature can reduce transaction costs by up to 90% compared to international credit card charges, making it especially valuable for export businesses and freelancers in price-sensitive markets like Vietnam and Southeast Asia.

Beyond lower PayPal cryptocurrency fees, the platform delivers multiple strategic advantages. The system provides global reach, enabling merchants to accept payments from crypto wallet users worldwide while bypassing local payment rails and costly foreign exchange conversions. Fast settlement ensures that real-time conversion deposits funds in the merchant's PayPal balance within minutes. The reward potential is notable, with balances held in PYUSD earning up to 4% APY, effectively converting transaction processing into yield-bearing assets. One-click integration allows merchants to activate the feature directly from their existing PayPal Business dashboard without requiring new setup procedures. Additionally, the feature helps merchants tap into the growing crypto-native and DeFi-savvy consumer base eager to spend their digital assets.

Why Aren't Consumers Paying with Crypto Yet?

Despite the merchant-ready infrastructure of PayPal Pay with Crypto in 2025, consumer adoption of cryptocurrency payments remains limited. In the United States, only 2% of adults report using cryptocurrency for purchases, compared to over 80% who rely on traditional payment methods like credit cards or mobile wallets such as Apple Pay.

Several factors contribute to this low adoption rate. Volatility fears lead many crypto holders to avoid spending assets that could potentially increase in value. The prevalent "HODL" culture treats cryptocurrency primarily as an investment vehicle rather than a medium of exchange. Tax complexity presents another barrier, as U.S. regulations treat cryptocurrency purchases as taxable events requiring detailed record-keeping. Historical anecdotes, such as the famous story of 10,000 Bitcoin spent on pizza, reinforce the psychological resistance to spending appreciating digital assets. Industry analysts suggest that broader adoption of stablecoins like PYUSD, USDC, and USDT, combined with clearer regulatory frameworks, will be essential catalysts for driving consumer usage in the coming years.

How Does PayPal Pay with Crypto Compare to Other Merchant Solutions?

PayPal Pay with Crypto distinguishes itself from competing merchant cryptocurrency payment solutions through several key differentiators. While services offered by various payment processors provide reliable crypto checkout tools, PayPal stands out for its deep integration into consumer payment ecosystems, massive brand recognition, and unique ability to convert payments into yield-generating assets through PYUSD's 4% APY feature.

Alternative payment processors typically accept fewer than 20 major cryptocurrencies and charge fees ranging from 1% to 1.5%, without offering yield opportunities on merchant balances. Some stablecoin-focused solutions concentrate primarily on USDC-based transactions, offering free processing with USDC but lacking the comprehensive multi-crypto support and yield features of PayPal's solution. PayPal's merchant fee structure of 0.99% for the first year, rising to 1.5% thereafter, combined with instant crypto-to-stablecoin conversion and 4% APY on PYUSD holdings, creates a uniquely attractive proposition for merchants seeking both payment processing and treasury management capabilities.

Self-custodial, multi-chain wallets play a complementary role in this ecosystem by enabling users to securely store, swap, and send cryptocurrency across over 100 blockchains, giving them freedom to choose where and how to spend their digital assets, including through PayPal Pay with Crypto. For merchants, this expands the pool of potential crypto-paying customers, particularly from Asia and emerging markets where various wallet solutions maintain strong user bases. While PayPal operates as a merchant-facing payment rail, these self-custody solutions provide users with full financial control and DeFi access, creating synergy for businesses and digital citizens seeking both checkout functionality and broader cryptocurrency utility.

What Are the Key Risks and Limitations of Using PayPal Pay with Crypto?

PayPal Pay with Crypto operates within a complex and evolving regulatory landscape that presents several considerations for merchants. Although PYUSD is issued by Paxos Trust Company and regulated by the New York Department of Financial Services (NYDFS), pending approvals and jurisdictional restrictions could affect availability and functionality.

Key regulatory and compliance risks include pending approvals for PYUSD's rollout on the Stellar blockchain planned for late 2025, which still awaits final NYDFS authorization. Restricted usage scenarios could emerge if NYDFS or other regulators temporarily limit PYUSD in certain states or block specific blockchains. Unlike traditional banking products, digital assets held via PayPal lack FDIC or SIPC insurance, exposing merchants to custody and operational outage risks. Evolving regulation under frameworks like the GENIUS Act may impose compliance restrictions on yield features such as PayPal's 4% APY if deemed non-compliant with new standards.

Market and redemption risks associated with PYUSD require careful consideration. While PYUSD is collateralized by U.S. Treasury bills and cash reserves designed to maintain a 1:1 peg with the U.S. dollar, redemption outside PayPal or Paxos authorized channels is not guaranteed for users holding PYUSD in self-custody wallets. During liquidity shortages or market stress, merchants in emerging markets like Vietnam or the Philippines may encounter price slippage or difficulty converting PYUSD into local currencies. Understanding these redemption mechanisms and local exchange options is critical for businesses requiring reliable currency conversion from U.S. dollars to local currencies like Vietnamese Dong (VND) or Philippine Peso (PHP).

How Could PayPal Pay with Crypto Evolve the Future of Global Commerce?

As regulatory clarity around stablecoins improves, particularly through legislative initiatives like the GENIUS Act, digital assets are positioned to transition from speculative investments into core global payment infrastructure. PayPal Pay with Crypto's expansion represents an early but significant step toward this transformation, establishing groundwork for a blockchain-based network connecting wallets and users across continents.

The evolution of cryptocurrency payment infrastructure suggests several transformative possibilities. As the United States advances stablecoin legislation through the GENIUS Act, cryptocurrency may shift from primarily speculative use cases to legitimate payment infrastructure, particularly for remittances, freelance payouts, and global small business settlements. PayPal's current launch represents Phase 1 of "PayPal World," a broader initiative poised to integrate wallets from China, India, and Latin America into a blockchain-based settlement layer by 2026.

Cross-border commerce, especially between Asia and North America, is likely to migrate toward cryptocurrency payment rails. Southeast Asian exporters, freelancers, and SaaS vendors may increasingly quote prices in PYUSD or crypto-native terms, streamlining international transactions. If consumer cryptocurrency spending grows beyond the current 2% baseline in the United States, merchants that onboard early with PayPal Pay with Crypto will gain competitive advantages in capturing emerging global crypto-native revenue streams. This payment technology could ultimately evolve into the backbone of cryptocurrency-based commerce, with stablecoin rails enabling faster, cheaper, and more borderless trade across international markets.

Conclusion

PayPal Pay with Crypto represents a pivotal development in the evolution of digital payment infrastructure, offering merchants a practical, cost-effective solution for accepting cryptocurrency payments while maintaining currency stability and operational simplicity. With its competitive PayPal cryptocurrency fees structure of 0.99% for the first year, support for over 100 cryptocurrencies, instant settlement capabilities, and unique 4% APY yield on PYUSD balances, the platform addresses critical pain points in traditional payment processing, particularly for cross-border transactions.

While consumer adoption of cryptocurrency payments remains modest at approximately 2% in the United States, the infrastructure foundations being established through platforms like PayPal Pay with Crypto are creating pathways for future growth. The combination of improving regulatory clarity, expanding mobile-first adoption in emerging markets, and increasing integration between traditional finance and digital assets suggests that cryptocurrency payments may gradually transition from niche applications to mainstream commerce tools.

For merchants, particularly those operating in international markets or seeking to reduce transaction costs, PayPal Pay with Crypto offers a compelling value proposition that extends beyond simple payment processing to encompass treasury management and yield generation. As the global payment landscape continues evolving toward digital-native solutions, early adopters of cryptocurrency payment infrastructure like PayPal's platform may find themselves well-positioned to capitalize on emerging opportunities in the future of global commerce. The success of this technology will ultimately depend on continued regulatory development, broader consumer adoption, and sustained innovation in making cryptocurrency payments as seamless and reliable as traditional payment methods.

FAQ

How much is a $1000 Bitcoin transaction fee?

The fee for a $1000 Bitcoin transaction varies based on network demand and data size, not the dollar amount. In 2025, it typically ranges from $2 to $10 for standard transactions.