PayPal Crypto and PYUSD: What Merchants Need to Know in 2026

PayPal is no longer just a card and wallet company. It runs its own dollar stablecoin, PYUSD, lets US customers buy and hold crypto, and since mid-2025 lets US merchants accept payments from more than 100 cryptocurrencies through its “Pay with Crypto” checkout. For a merchant, the question is not whether PayPal does crypto, but what you get and what you give up when crypto runs through PayPal instead of straight to your own wallet. If you are weighing stablecoins in general, our comparison of USDC vs USDT is a good companion to this guide.

This article explains PayPal’s crypto products, how the merchant checkout works, what it costs, where the money actually goes, who is excluded, and how it compares with a non-custodial crypto gateway.

PayPal’s Crypto Products at a Glance

PayPal’s crypto offering has grown in stages since 2020.

The common thread is custody. Whatever happens inside a PayPal account happens on PayPal’s books. The crypto is held for you, and your access depends on your account being in good standing.

What PYUSD Is

PYUSD, or PayPal USD, is a dollar stablecoin that PayPal launched in August 2023. It is issued by Paxos Trust Company, a New York-regulated trust company, and backed by dollar deposits, short-term US Treasuries and similar cash equivalents. Each PYUSD is designed to be redeemable for one US dollar.

PYUSD started on Ethereum and has since expanded to Solana and several other networks. In March 2026, when PayPal extended PYUSD access to 70 countries, its market capitalization was about $4.1 billion, with roughly 72.6% of supply on Ethereum. That makes it a meaningful but still small stablecoin next to USDT and USDC, which are measured in tens of billions or more.

What makes PYUSD different is distribution, not technology. It lives inside PayPal and Venmo, where millions of people already have accounts, so a customer can hold PYUSD without ever installing a separate crypto wallet. For merchants that already use PayPal, it is the stablecoin that is easiest to receive without changing providers.

Under the GENIUS Act, which takes effect on January 18, 2027, US payment stablecoins come under a federal framework with strict reserve and disclosure rules. As a coin issued by a US-regulated trust company, PYUSD is positioned to operate within that framework. Our GENIUS Act explainer covers what the law requires.

Pay with Crypto: How the Merchant Checkout Works

PayPal announced Pay with Crypto for US merchants in July 2025. The idea is to let customers pay with crypto held in outside wallets, not just with crypto stored in PayPal.

From the customer’s side, the flow looks like this:

1. The customer chooses PayPal at checkout and selects the option to pay with crypto.
2. They connect a supported wallet, such as Coinbase, MetaMask, Exodus, Kraken, OKX, Binance or Phantom, and pick a coin.
3. They approve the payment from their wallet.

From the merchant’s side, PayPal converts the payment and settles it to the merchant’s PayPal account, in US dollars or in PYUSD. The merchant never handles the original coin. In that sense, Pay with Crypto is less about accepting crypto and more about accepting customers who hold crypto, with PayPal standing in the middle.

That design has advantages. Merchants get dollars, reconciliation stays inside the familiar PayPal dashboard, and there is no volatility exposure. It also has costs, which are covered in the next sections.

PYUSD vs USDC vs USDT for Merchants

If you are going to accept stablecoins, it helps to know how PYUSD compares with the two coins your customers are more likely to hold.

For most merchants, the practical answer is to accept the coins customers actually hold. PYUSD is convenient for PayPal and Venmo users, USDC is the broadest US-issued option, and USDT remains the default in many international markets.

Fees: Promotional and Standard Rates

When PayPal launched Pay with Crypto, it advertised a transaction rate of 0.99% for crypto payments, running until July 31, 2026, and promoted it as much cheaper than international card processing.

That promotion has now ended. Third-party guides report the standard Pay with Crypto rate after the promotion as 1.5%. We could not confirm the current figure on PayPal’s own pricing page, so check your merchant account’s fee schedule before relying on it.

PayPal fees as published or reported in 2025-2026. Check your current PayPal merchant pricing.

Remember that the headline fee is not the whole cost. With PayPal, you also accept PayPal’s account terms, including its ability to hold funds, which matters more for some businesses than a fraction of a percent.

Where the Money Goes: Settlement and Custody

With PayPal, every step of a crypto payment ends in PayPal’s custody.

• The customer’s crypto leaves their wallet and is converted by PayPal and its partners.
• The merchant’s proceeds arrive as a balance in a PayPal business account, in dollars or PYUSD.
• Access to that balance follows PayPal’s user agreement, including holds, reserves and account limitations.

PayPal has also offered rewards on PYUSD balances held in eligible accounts, which can make holding PYUSD inside PayPal attractive. Note that under the GENIUS Act, the issuer itself may not pay interest to holders. Rewards offered by a platform such as PayPal sit in a different category, which regulators are assessing case by case.

The trade-off is control. A PYUSD balance in your PayPal account is not the same as PYUSD in a wallet you control. You cannot move it until PayPal releases it, and if your account is limited, your crypto proceeds are limited with it.

Limits, Holds and Who Is Excluded

Several restrictions are worth knowing before you plan around PayPal’s crypto checkout.

The holds deserve emphasis. PayPal’s funds-availability policy allows it to hold payments for up to 21 days, for example for new sellers or higher-risk categories, and to apply reserves. Those rules do not disappear because a customer paid with crypto. Our guide to why PayPal holds your money explains the triggers and how to avoid them.

PayPal Crypto vs a Non-Custodial Crypto Gateway

The real choice for most merchants is between a custodial route, where a platform receives and converts the crypto for you, and a non-custodial route, where the payment goes straight to your own wallet.

Neither model is better for everyone. If you already rely on PayPal, want only dollars and sell mostly to US customers, PayPal’s checkout keeps things simple. If you sell internationally, operate in a category that payment platforms dislike, or simply do not want a third party between you and your revenue, a non-custodial gateway gives you more control. Our explainer on custodial vs non-custodial gateways goes deeper into the trade-offs.

Setting Up PayPal Crypto as a Merchant: What to Check

If you decide to turn on Pay with Crypto, a short checklist avoids surprises later:

1. Confirm eligibility. Your business must be US-based and outside the excluded states, with a verified PayPal business account in good standing.
2. Check the current rate on your merchant fee page now that the 0.99% promotion has ended, and compare it with your card rate.
3. Decide what to receive. Choose between dollars and PYUSD. Dollars avoid any crypto exposure; PYUSD can be moved on-chain if you need to pay others in stablecoins.
4. Review funds availability. Find out whether your account is subject to holds or reserves, because crypto proceeds follow the same rules.
5. Update your refund policy. Refunds on crypto payments are handled differently from card refunds, so tell customers how they work before they pay.
6. Train your support team on the questions crypto customers ask: which wallets work, how long confirmation takes, and what happens if they send the wrong amount.
7. Track performance. Watch what share of customers choose crypto and whether average order values differ, to decide whether to expand or adjust the option.

Network Fees: What Your Customers Pay

Whichever checkout you use, the customer pays a blockchain network fee to send the payment. That fee depends heavily on the network, and it affects whether customers complete small orders.

Measured from live network data on October 22, 2026.

The counter-intuitive point is that Tron, long described as the cheap option, is now the most expensive common route for USDT. Showing low-fee networks first at checkout helps conversion on smaller orders.

What PayPal’s Move Means for the Market

PayPal’s entry into crypto checkout matters beyond its own customers.

It normalizes crypto at checkout. When one of the most recognized payment brands in the world offers a crypto option, customers start to expect it elsewhere too. That helps every merchant who accepts crypto, whatever provider they use.

It pushes fees down. PayPal marketed its crypto rate as dramatically cheaper than international card processing. That framing makes it easier for merchants to justify crypto acceptance internally, and it puts pressure on every provider to keep crypto fees low.

It makes stablecoins mainstream. PYUSD inside PayPal and Venmo puts dollar stablecoins in front of people who would never install a crypto wallet. Over time, that means more customers who are comfortable paying in stablecoins.

It does not change custody. PayPal’s model is still the classic platform model: customers pay PayPal, and PayPal pays you. The more payment volume flows through any single platform, the more that platform’s account decisions matter to your business. That is the trade-off to keep in mind as PayPal’s crypto products grow.

Which Option Fits Your Business

A few quick scenarios:

• US store already on PayPal, US customers, wants only dollars: PayPal Pay with Crypto is the least effort.
• International store, or customers in many countries: a non-custodial gateway that accepts stablecoins and major coins worldwide will reach more buyers.
• High-risk category or a history of payment holds: avoid adding more exposure to a single platform’s account terms; receive crypto directly.
• Business that wants to hold stablecoins as working capital: receive USDC or USDT directly into your own wallet, where they are fully under your control.

Many businesses do both: keep PayPal for customers who expect it, and add a direct crypto option for everyone else. Bcon Global’s pricing is a flat 1% with funds going straight to your wallet, which makes the comparison easy.

PayPal has built a credible crypto stack: a regulated dollar stablecoin, a crypto checkout for US merchants, and the distribution of a company with hundreds of millions of accounts. For merchants already inside PayPal’s ecosystem, it lowers the barrier to selling to crypto holders.

What it does not change is who controls the money. Every crypto payment through PayPal ends as a balance in a PayPal account, governed by PayPal’s rules. If you want the benefits of crypto payments without a platform standing between you and your revenue, a non-custodial gateway that settles straight to your own wallet is the alternative worth comparing.