Stablecoins are a type of cryptocurrency designed to keep their value steady, usually by being tied to traditional assets like the US dollar, commodities, or other financial instruments. 

Unlike Bitcoin (BTC) or Ethereum (ETH), which can swing wildly in price, stablecoins aim to stay predictable—making them more practical for daily transactions, remittances, and savings. 

One of these stablecoins pegged on the USD is the Paypal USD. So, how does it work, and where can you buy it? Continue scrolling to find out.

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Key takeaways

• Stablecoins are cryptocurrencies created to maintain a steady value.
• PYUSD is pegged to the US dollar, making it reliable and a great option for payments and money transfers.
• PYUSD can be used anywhere PayPal is accepted, which includes millions of merchants worldwide.
• You can send PYUSD to friends, family, or businesses just like you would with regular PayPal payments.

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What Is PayPal USD (PYUSD)?

You might know PayPal as the ubiquitous digital payment platform that pioneered internet payment, making it accessible, secure, and convenient. In its illustrious history, PayPal has introduced many products, one of the latest being the PayPal USD (PYUSD). 

For crypto enthusiasts, this was a significant move that bridges mainstream finance(old order) and crypto(new order) closer together. It’s PayPal’s way of giving users a reliable, easy-to-use digital currency that fits into its existing payment ecosystem.

How does PYUSD work?

Here’s how: 

1. Issuance and redemption 

PYUSD operates on a simple system:

• Buying PYUSD: You can purchase PYUSD directly through PayPal using US dollars. For every PYUSD bought, an equivalent amount of USD is set aside in reserve.
• Redeeming PYUSD: If you ever want to cash out, you can convert your PYUSD back into USD. When you do, those tokens are removed from circulation, and you get the equivalent amount in dollars.

💡This 1:1 backing keeps the system transparent and ensures that PYUSD holds its value.

2. Blockchain integration  

PYUSD runs on two major blockchain networks:

• Ethereum: A powerhouse in the crypto world, Ethereum gives PYUSD security, transparency, and broad compatibility with other tokens and decentralized apps (dApps).
• Solana: Known for its speed and low fees, Solana makes PYUSD more practical for everyday transactions, especially microtransactions.

Because PYUSD is built on public blockchains, every transaction is recorded. This ensures transparency and makes integrating with various DeFi platforms, wallets, and services easy.

What are the benefits of PYUSD?

PYUSD comes with the following benefits:

• Stability without the headaches: PYUSD is pegged to the US dollar, so you don’t have to worry about price swings. It’s reliable, making it a great option for payments and money transfers.
• Seamless PayPal integration: If you already use PayPal, PYUSD fits right in. Whether you’re shopping online or sending money, it works just like other PayPal payment methods—except with the added benefits of crypto.
• Practical uses: PYUSD isn’t just another digital token—it does things:

• Online shopping: Use PayPal anywhere it is accepted, including millions of merchants worldwide.
• E-Commerce transactions: PYUSD makes online shopping smoother by combining crypto stability with PayPal’s trusted network—no price fluctuations, no headaches—just fast, easy payments.
• Remittances (sending money abroad): Sending money internationally? PYUSD could save you time and fees compared to traditional banking methods. Since PayPal already has a global reach, cross-border transactions become much more efficient.
• DeFi & beyond: While PYUSD is mainly designed for PayPal transactions, it’s built on blockchain, which has potential in decentralized finance (DeFi). It could be used for lending, borrowing, and earning interest in DeFi applications. For now, though, its primary use remains within PayPal’s ecosystem.

PayPal USD vs. other stablecoins

1. Comparison with Tether (USDT)

Tether (USDT) has been the go-to stablecoin for crypto traders, but it’s long been dogged by questions about transparency and regulation. 

Paypal USD coin base, issued by Paxos—a company under the watchful eye of the New York Department of Financial Services (NYDFS)—takes a different approach. 

Tether, by contrast, has operated with less oversight and has been criticized for inconsistent reporting on what backs its reserves.

Speaking of reserves, PYUSD is fully backed by U.S. dollar deposits, Treasuries, and cash equivalents, with monthly attestations to prove it. Tether’s backing has been more of a mixed bag, including commercial paper and other assets that have sometimes raised eyebrows about its stability.

2. Comparison with USD Coin (USDC)

PYUSD has more in common with USD Coin (USDC) than Tether, as both emphasize transparency and regulatory compliance. 

USDC, managed by Circle and backed by Coinbase, is one of the most trusted stablecoins in the industry. It strictly adheres to U.S. regulations. Like PYUSD, it’s fully supported by cash and short-term Treasuries, with regular attestations and audits to keep things above board.

That said, USDC has a broader presence in institutional finance and DeFi, thanks to its support across multiple blockchains like Ethereum, Solana, and Polygon. PYUSD, at least for now, is primarily an Ethereum-based stablecoin, which limits its reach in comparison. 

What sets PYUSD apart?

PYUSD’s most significant selling point? Its direct link to PayPal’s 435+ million users and its seamless fit into the broader payments industry. 

Another key advantage is regulatory oversight. With Paxos and the NYDFS keeping tabs, PYUSD is fully backed by highly liquid assets, sidestepping the trust issues that have plagued some other stablecoins. 

By prioritizing payments over pure crypto speculation, PYUSD could help bridge the gap between traditional finance and digital assets, encouraging businesses and consumers to use stablecoins for actual transactions rather than just trading.

How to use PayPal USD for purchases and transfers

Below is a step-by-step guide to setting up your account, purchasing PYUSD, and managing it securely.

1. Setting up a PayPal account

If you don’t already have a PayPal account, here’s how to get started:

Create your account

• Head to PayPal’s website or download the PayPal app from the App Store (iOS) or Google Play Store (Android).
• Click Sign Up and choose between a Personal Account (for everyday use) or a Business Account (for merchants).
• Enter your email, create a password, and fill in your details (name, address, phone number).

Link a payment method.

• Add a debit card, credit card, or bank account. You’ll need this to buy PYUSD or make transactions.

Verify your account

• Check your email for a confirmation link from PayPal and click it.
• If prompted, complete identity verification by submitting an ID or proof of address.

Once your account is set up, you’re ready to buy PYUSD!

2. Buying PYUSD

Since PYUSD is a stablecoin pegged to the U.S. dollar (1 PYUSD = $1), buying it is straightforward.

Here’s how to do it:

1. Log in to your PayPal account via the website or app.
2. Navigate to the Crypto section:
   • In the app, tap on the Finance tab, then select Crypto.
   • On the website, go to Wallet and click Crypto.
3. Search for PayPal USD (PYUSD).
4. Enter the amount you want to buy (e.g., $50 worth of PYUSD).
5. Choose a funding source—PayPal balance, linked debit card, or bank account.
6. Review the transaction details (including any applicable fees).
7. Click Buy, and the PYUSD will be added to your PayPal wallet.

3. Storing and managing PYUSD

After purchasing PYUSD, you can store and manage it within your PayPal account.

Viewing your balance

• Your PYUSD is automatically stored in your PayPal Wallet under the Crypto section.

Managing your PYUSD

• Send PYUSD: You can transfer PYUSD to other PayPal users or external wallets (if supported). Just go to Crypto, select PYUSD, and hit Send.
• Convert PYUSD: Swap PYUSD back to USD or another cryptocurrency by selecting Sell or Convert in the Crypto section.
• Use for purchases: If a merchant accepts PYUSD, you can choose it as your payment method at checkout.

Security tips

• Enable Two-Factor Authentication (2FA): Add an extra security layer in Settings > Security.
• Use a strong password: Avoid common passwords and consider using a password manager.
• Monitor transactions: Regularly check your account for suspicious activity.
• Beware of scams: Never share your PayPal login or wallet details.
• Keep your App updated: New updates often include security enhancements.

How to buy PYPLUSD on paxful

While you can’t buy PYPLUSD directly on Paxful, you can trade your crypto for it on our marketplace. Here’s a quick step-by-step guide:

• Get a wallet that supports PYPLUSD: Paxful’s account doesn’t support PYPLUSD yet, so you’ll need an external wallet that does.
• Add funds to your Paxful account: Top up your account and head over to the marketplace.
• Start a trade: In the marketplace, choose “Sell Bitcoin/Ethereum/USDT/USDC” from the menu. Then, select “PayPal USD (PYPLUSD)” as your payment method.
• Pick a reliable trade partner: Browse through potential trade partners and pick one that offers a fair rate. When you find a good match, click “Sell” to review their terms.
• Agree and start the trade: If everything looks good, enter the amount you want to sell and hit “Sell now” to begin the trade.
• Share your wallet information: Use the chat to send your trade partner your crypto wallet address and ask them to send the right amount of PYUSD.
• Wait for escrow and verify: Once the trade begins, your crypto will go into escrow until both parties fulfill their end of the bargain. Make sure the PYUSD is credited to your external wallet before releasing the crypto from escrow.

Using PayPal USD (PYUSD) for transactions

1. Sending PYUSD (within PayPal)

You can send PYUSD to friends, family, or businesses just like you would with regular PayPal payments. Here’s how:

1. Go to send & request in your PayPal account.
2. Enter the recipient’s email address or PayPal username.
3. Select PYUSD as the currency and enter the amount.
4. Confirm the transaction.

💡No Fees – Sending PYUSD to other PayPal users in the U.S. is free.

2. Receiving PYUSD

If someone sends you PYUSD, it appears in your wallet instantly. You can hold it, spend it, or convert it to another currency whenever you want.

Transferring to external wallets

Since PYUSD operates on Ethereum and Solana, you can transfer it to compatible wallets.

1. Go to the Crypto section in your PayPal account.
2. Select PYUSD and choose Transfer Out.
3. Enter the recipient’s Ethereum or Solana wallet address.
4. Confirm the transaction.

💡Tip: Make sure the receiving wallet supports PYUSD before transferring!

Making purchases

You can use PYUSD to pay millions of online merchants that accept PayPal.

1. Select PayPal at checkout.
2. Choose PYUSD as your payment method.
3. PayPal automatically converts it into the merchant’s currency if needed.
4. Confirm the purchase, and you’re done!

Converting to other cryptocurrencies

Want to swap PYUSD for Bitcoin, Ethereum, or another crypto? You can do that within PayPal.

1. Open the Crypto section in your PayPal account.
2. Select PYUSD, then click Convert.
3. Pick the cryptocurrency you want (e.g., Bitcoin, Ethereum).
4. Enter the amount of PYUSD to convert.
5. Confirm the transaction.

Are there fees for using PayPal USD?

When using PayPal USD (PYUSD), fees can vary depending on the type of transaction. Below is a breakdown of potential costs associated with buying, sending, converting, and using PYUSD.

 Free transactions

• Sending PYUSD: Sending PYUSD to friends and family within the PayPal network is free (for U.S. users).
• Receiving PYUSD: If someone sends you PYUSD, you receive it without fees in your PayPal wallet.

Conversion fees

• Converting PYUSD to another currency (e.g., USD, Bitcoin, or Ethereum) may incur a fee.
• For cryptocurrency conversions, PayPal applies a spread (the difference between the market price and the offered exchange rate). The exact rate depends on market conditions.

Fees for transferring to external wallets

If you move PYUSD to an external wallet (like Ethereum or Solana), you must cover blockchain network fees. PayPal doesn’t set these—they depend on the blockchain itself and fluctuate based on activity and gas prices.

Using PYUSD for payments

Paying with PYUSD on PayPal? There are no extra fees there. Whether you buy from an online store or send money, PayPal won’t charge you because you’re using PYUSD.

That said, merchants still pay standard PayPal transaction fees, just like they do for other payment methods. 

Most absorb these costs, but some might factor them into their pricing—they are not PYUSD-specific, just business as usual.

What are the tax implications of using PayPal USD?

Selling or converting PYUSD (swapping it for another cryptocurrency) could have tax implications. PayPal provides account history and gains/losses statements, so you’ll have the info you need when tax time rolls around.

What is the impact of PYUSD on the crypto ecosystem?

PYUSD’s launch and growth could have some significant ripple effects in the cryptocurrency market:

• Wider adoption of digital currencies: PayPal’s massive user base—over 400 million active accounts—gives people easy access to stablecoin without needing to dive deep into the technical stuff.
• Better liquidity and market flow: By adding PYUSD to its platform, the company makes switching between fiat and crypto easier, transactions are speeded up, and market efficiency is improved.
• Credibility for stablecoins: PayPal’s involvement in the stablecoin space helps legitimize digital currencies, which could push other financial institutions to give them a closer look.

User adoption and feedback

For PYUSD to take off, PayPal knows it needs to nail the user experience. That means smooth integration with existing PayPal services, a user-friendly interface, and solid customer support.

PayPal is also keen on listening to its users. Gathering feedback and working with partners will be crucial for fine-tuning PYUSD’s features and ensuring it meets user needs.