PayPal PYUSD Stellar Integration – Reinventing Cross-Border Payments with Dollar-Backed Stablecoin

PayPal is doubling down on blockchain innovation by integrating its dollar-pegged stablecoin, PayPal USD (PYUSD), with the Stellar blockchain, pending approval from the New York Department of Financial Services (NYDFS). Announced on June 11, 2025, this move aims to transform cross-border remittances and working-capital solutions, introducing “PayFi” (Payments Finance) to streamline global transactions. With Stellar’s lightning-fast settlements and near-zero fees, PayPal is positioning PYUSD to compete in the $150 trillion global payments market, making financial services faster, cheaper, and more accessible for merchants, small businesses, and consumers worldwide.

Launched in August 2023, PayPal USD (PYUSD) is a dollar-backed stablecoin issued by Paxos Trust Company, a regulated financial institution. Currently live on Ethereum and Solana, PYUSD is fully backed by a reserve of U.S. dollars, Treasury securities, and other cash equivalents, ensuring 1:1 redeemability. As of June 2025, PYUSD’s market cap has surged to nearly $1 billion, reflecting growing adoption among PayPal’s 400 million users. PayPal also introduced a yield program, offering up to 3.7% APY on PYUSD holdings for U.S. users, with rewards accessible via a waitlist. This incentive, combined with its integration into PayPal’s wallet, has made PYUSD a compelling option for digital payments and savings.

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The Stellar Integration

The decision to integrate PYUSD with Stellar is a strategic leap for PayPal. The Stellar blockchain, known for its speed (transactions settle in 3–5 seconds), low fees (less than $0.01 per transaction), and global reach, is purpose-built for cross-border payments. Unlike Ethereum’s higher gas fees or Solana’s focus on DeFi, Stellar’s infrastructure supports real-world use cases like remittances, micropayments, and supply-chain financing. PayPal’s “PayFi” vision leverages PYUSD on Stellar for:

• Cross-Border Remittances: Enabling near-instant, low-cost transfers for migrant workers and families, competing with traditional services like Western Union.

• SME Working Capital: Providing small businesses with instant access to funds for payroll or inventory via tokenized dollars.

• Supply-Chain Payables: Streamlining payments between global suppliers and merchants with transparent, trackable transactions.

This integration, pending NYDFS approval, will allow PayPal users to send PYUSD seamlessly across borders, tapping into Stellar’s network of over 8 million accounts and 200+ global partners.

PayPal’s move to Stellar expands its crypto footprint, positioning it as a leader in decentralized finance infrastructure. By building on Stellar, PayPal bridges traditional finance and Web3, offering users a stablecoin that’s both accessible and regulator-friendly. Paxos, the issuer, operates under strict NYDFS oversight, ensuring compliance with anti-money laundering (AML) and consumer protection standards. This regulatory rigor enhances trust, distinguishing PYUSD from less-regulated stablecoins. The integration also aligns with PayPal’s broader strategy to embed crypto into everyday payments, leveraging its massive user base and merchant network to drive adoption. As Jose Fernandez da Ponte, PayPal’s SVP of Digital Currencies, stated, “Stellar’s infrastructure empowers us to deliver real payments for real merchants with global reach.”web:paypalcom+2

Competitive Landscape

PYUSD enters a crowded stablecoin market dominated by Tether (USDT, $120 billion market cap) and Circle’s USDC ($35 billion market cap). Unlike USDT, which has faced scrutiny over reserve transparency, PYUSD benefits from Paxos’s audited reserves and NYDFS oversight. Compared to USDC, which operates across multiple blockchains, PYUSD’s integration with Stellar gives it an edge in low-cost, high-speed remittances. Ethereum-based stablecoins often face gas fees of $1 to $10 per transaction, while Stellar’s sub-cent fees make PYUSD more viable for micropayments and cross-border transfers. By combining PayPal’s brand trust with Stellar’s efficiency, PYUSD could carve out a niche in embedded finance and global payments.

What’s Next?

If NYDFS approval is granted, PYUSD on Stellar could roll out to PayPal’s U.S. users by late 2025, with global expansion to follow. Merchant acceptance will be key, enabling businesses to receive PYUSD for goods and services directly in PayPal’s ecosystem. Wallet integration will allow users to hold, send, and earn rewards on PYUSD seamlessly. PayPal is also exploring deeper DeFi use cases, such as tokenized lending and supply-chain financing, which could leverage Stellar’s smart contract capabilities. Future yield programs, potentially offering higher APY, are in development to incentivize adoption. By embedding PYUSD into its 200,000+ merchant network, PayPal aims to make stablecoins a mainstream payment tool.

PayPal’s PYUSD Stellar integration marks a pivotal moment for stablecoins, blending blockchain’s efficiency with traditional finance’s trust. By leveraging Stellar’s low-cost, high-speed network, PayPal is poised to revolutionize cross-border payments and embedded finance, from remittances to SME working capital. If regulatory approval and ecosystem adoption align, PYUSD could redefine how millions transact globally.

FAQ –

What is PayPal PYUSD Stellar Integration?
PayPal is integrating its dollar-backed stablecoin, PYUSD, with the Stellar blockchain to enable fast, low-cost cross-border payments and PayFi use cases, pending NYDFS approval.

How does PYUSD on Stellar benefit users?
It offers near-instant transactions with fees under $0.01, ideal for remittances, small business financing, and supply-chain payments.

Is PYUSD regulated?
Yes, PYUSD is issued by Paxos under NYDFS oversight, with reserves fully backed by dollars and cash equivalents.

How does PYUSD compare to USDT and USDC?
PYUSD combines PayPal’s brand trust, Paxos’s regulatory compliance, and Stellar’s low fees, making it competitive for payments but smaller in market cap than USDT ($120B) and USDC ($35B).