In July 2025, PayPal announced “Pay with Crypto,” a checkout tool that lets U.S. merchants accept more than 100 digital currencies — and lets shoppers pay with the coins already sitting in their favorite wallet. The clever part: the merchant doesn’t have to touch crypto at all. PayPal converts the coins the instant a payment clears and settles the business in either PayPal USD (PYUSD) or plain U.S. dollars.
Here’s a plain-English guide to how it works, what it actually costs, and the difference between settling in PYUSD versus cash.
What “Pay with Crypto” Actually Is
Think of it as a new payment button at online checkout — sitting alongside “credit card” and “PayPal” — labeled for crypto. It was announced on July 28, 2025, and is aimed at U.S. businesses that want to tap the roughly $3 trillion crypto market without becoming crypto experts themselves.
Two things make it different from older “buy crypto inside PayPal” features:
- Shoppers can pay from outside wallets. You’re not limited to a balance held inside PayPal. You can connect an external wallet and pay directly.
- Merchants never hold volatile coins. The crypto is converted at the moment of sale, so the business isn’t exposed to Bitcoin’s price swinging overnight.
Which Coins and Wallets Work
On the shopper side, PayPal supports 100+ tokens, including the big names: Bitcoin (BTC), Ethereum (ETH), Solana (SOL), XRP, Tether (USDT), USD Coin (USDC), and BNB, among many others. Payments connect through popular wallets and exchanges rather than requiring a PayPal crypto balance.
Reported supported wallets and platforms include Coinbase, Binance, Kraken, MetaMask, Phantom, OKX, and Exodus. One shopper might pay in USDC from Coinbase; another might send ETH from MetaMask. The merchant sees the same result either way.
How a Transaction Flows, Step by Step
- A shopper picks “Pay with Crypto” at a participating merchant’s checkout.
- They choose a coin and connect their wallet (for example, MetaMask or Coinbase).
- They approve the payment in their wallet.
- PayPal instantly converts the crypto into PYUSD or U.S. dollars.
- The merchant receives funds — in their chosen settlement currency — with same-day access to proceeds.
Because conversion happens at the point of sale, the price lock-in is immediate. The shopper knows exactly how much crypto leaves their wallet, and the merchant knows exactly how many dollars (or PYUSD) they’ll receive.
The Fees: What 0.99% Covers
The headline number is a 0.99% transaction fee charged to the merchant. PayPal is running this as an introductory rate through July 31, 2026, after which it is reported to rise to 1.5%. For context, traditional card and cross-border processing often runs 2.9%–3.5%, so crypto settlement can undercut cards meaningfully — PayPal pitches it as up to 90% cheaper than some international credit card fees.
| Payment method | Typical merchant fee | Notes |
|---|---|---|
| Pay with Crypto (intro) | 0.99% | Through July 31, 2026 |
| Pay with Crypto (standard) | ~1.5% | After the intro period |
| Typical credit/debit card | ~2.9% + fixed fee | Varies by processor |
| Cross-border card payments | ~3.5%+ | Extra international surcharges common |
Note that this fee is a merchant cost. Shoppers generally don’t pay PayPal a separate fee to spend their crypto, though their own wallet or network may charge a gas/transfer fee, and the exchange rate applied at conversion matters.
Settling in PYUSD vs. Cash
This is the decision every merchant has to make. When a crypto payment clears, the business chooses how to receive it:
- Cash (U.S. dollars): You get stable dollars deposited the same day. Simple, predictable, and ideal if you just want sales revenue in your bank account with no crypto exposure.
- PYUSD (PayPal’s stablecoin): You keep the proceeds as PayPal’s dollar-pegged stablecoin. Each PYUSD is designed to be worth $1, so it isn’t volatile like Bitcoin — but holding it unlocks a reward. PayPal has promoted a 4% annual yield on PYUSD balances held with PayPal, credited on an ongoing basis.
Worked Example: A $100 Sale
Say a customer buys $100 of goods and pays in Ethereum during the intro-fee window:
- PayPal converts the ETH to $100 in value at the point of sale.
- The 0.99% fee is about $0.99, leaving roughly $99.01.
- If the merchant settles in cash, ~$99.01 lands in their account the same day.
- If they settle in PYUSD and leave it on PayPal, that ~$99.01 can earn the advertised 4% yield over time — about $3.96 a year on that balance if left untouched.
Compare that to a card processor taking ~2.9% + $0.30 (~$3.20) on the same $100 sale, and the cost gap is clear.
Where It’s Available
Pay with Crypto is built for U.S. merchants, while shoppers around the world can pay them. At launch, availability was reported to exclude businesses in New York, reflecting that state’s distinct crypto licensing rules. Rollout has been phased, so not every checkout shows the option yet — it depends on the merchant enabling it through their PayPal business setup.
Frequently Asked Questions
Do I need a PayPal crypto balance to pay with crypto?
No. The feature is designed so shoppers can connect an external wallet or exchange account — such as MetaMask, Coinbase, or Kraken — and pay directly. You don’t have to pre-load crypto into PayPal first.
Does the shopper get charged the 0.99% fee?
The 0.99% is a merchant-side fee. As a shopper, you generally won’t pay PayPal that percentage, but you may still owe a network/gas fee from your own wallet, and the conversion rate at checkout determines how much crypto you spend. Always review the final amount before approving in your wallet.
Is PYUSD risky to hold compared to cash?
PYUSD is a stablecoin pegged to the U.S. dollar, so it’s built to stay at roughly $1 rather than swing like Bitcoin. That makes it far less volatile than ordinary crypto. It is not, however, a bank deposit, and stablecoin balances aren’t FDIC-insured the way a checking account is — so weigh the 4% yield against that difference before leaving large sums on-chain.
What happens to the crypto price risk?
For merchants, PayPal converts the coin to PYUSD or dollars instantly at the sale, so the business isn’t exposed to price swings after the transaction. The shopper bears normal crypto risk only up to the moment they pay.
The Bottom Line
PayPal’s “Pay with Crypto” lowers the friction on both sides: shoppers spend the 100+ coins they already own, and merchants get stable value — in cash or yield-bearing PYUSD — at a fee that undercuts traditional cards, at least during the 0.99% introductory window through July 2026. If you run a U.S. business, the practical move is deciding your settlement default (predictable cash vs. yield-earning PYUSD) and confirming the option is live in your checkout. If you’re a shopper, just double-check the conversion amount and any wallet gas fee before you approve.
WalletWisp is an informational resource and does not provide financial, investment, or tax advice. Fees, yields, and availability can change — confirm current terms with PayPal before relying on them.
