Money Without Borders: Crypto and P2P Cross-border Payments

Globally, individuals are becoming more financially interconnected with one another than ever before. Nevertheless, the transfer of funds to individuals in other countries — what we call peer-to-peer (p2p) cross-border payments — is a large and growing industry that remains flawed yet full of opportunity.

For people to pay how they want, being able to send money locally, regionally, and globally with ease is vital. PayPal believes in the long-term opportunity of crypto to address fundamental issues that have made transfers at times difficult, costly, and time consuming. However, we know that belief isn’t enough to spur the widespread use of crypto. For crypto to become adopted, it must prove 1) immediately useful to people who are currently facing issues and 2) more efficient than the current system.

Cross-border p2p payments is one of the highest-opportunity ecosystems for crypto to prove immediately useful. In support of that opportunity, Xoom — PayPal’s overseas money transfer service — will charge no fees when users make transfers funded with PYUSD. This new funding option could help Xoom users collectively save millions of dollars a year in cross-border transaction fees.

Crypto must evolve from being a philosophically-driven alternative to traditional finance into an indispensable tool for simple, affordable global commerce. Bringing together Xoom and PYUSD allows us to take the first step in that direction — starting with p2p cross-border transactions.

Cross-border Payments and Xoom: A Global Snapshot

In the broad ecosystem of cross-border payments, some industries are more acutely impacted by high fees and inefficient operations. Sending money across borders is especially vulnerable to inefficiencies — historically, money sent from high to low- and middle-income countries (LMICs) are hit with costly fees and long settlement times.

In 2023, p2p cross-border payments to LMICs reached $669bn USD — an increase of 3.8% from last year. The average cost of p2p transfers originating in the United States was 5.7%, but the worldwide average cost to send money was 6.2%. Globally, the cost of p2p cross-border transfers differed between digital (4.6%) and in-store payments (6.9%). With digital payments accounting for 30% of p2p cross-border transfers, this means that globally in 2023 p2p international transfers resulted in $ 9.23bn USD in costs (WorldBank).

Xoom has been facilitating p2p cross-border payments for PayPal users since 2015. Today, Xoom is offered in over 160 destination countries, serving as a vital artery for the flow of funds between family and friends who rely on those funds for their livelihoods. PayPal knows that getting money sent across borders is only half the battle; many people still need to withdraw that money as physical cash. That is why Xoom recipients can withdraw transfers in over 350,000 cash pickup locations globally.

When sending money to friends and family, every cent counts.

Crypto, PYUSD, and the Future of P2P Cross-border Payments

PayPal believes that crypto offers a novel financial rail that can improve payment processes across various industries, including p2p cross-border payments. That future — in which the cross-border payments ecosystem at large is powered by stablecoin transactions and offers innate lower cost and improved efficiencies — will take time to build. The first step is to encourage more people to use crypto in a way that 1) delivers a distinct benefit, and 2) offers a smooth experience.

PayPal has an opportunity to take that first step by offering people a tangible, simple, and highly useful service — p2p cross-border transactions for 0% transfer fees* when using PYUSD to fund USD transfers on Xoom.

When funding overseas p2p transactions with PYUSD, Xoom recipients will not be charged any transaction service fees — helping users collectively save millions of dollars annually. Additionally, users will continue to send and receive money in the Xoom channels they’re used to, while recipients will still be able to benefit from over 350,000 cash out locations in their local currency.

Summarized more succinctly; use PYUSD to fund Xoom transfers and pay 0% transfer fees.* It is, for all intents and purposes, that simple.

Globalizing Crypto with P2P Payments

Yes, PayPal believes strongly in the broader value propositions of decentralization and financial sovereignty. But when it comes to helping people send money to friends and family across borders, we’re focusing singularly on giving people a useful, cost-effective service that we confidently know improves their daily lives. For us, that means giving people cheap ways to send money to others overseas today, while also building for a more holistic blockchain-powered cross-border financial ecosystem in the future.

Put in other words, with crypto, PayPal can do what we do best — offer people what they want from a payments company. Which is, unsurprisingly, their money.

* Transactions received in a currency other than USD are subject to an exchange rate.

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