Digital Payment War Intensifies As PayPal Battles Apple

There has been a lot of debate late last year which is continuing in relation to the use of digital currency with many around the world seeing this as an attempt to remove cash payments. While many businesses have stopped using cash moving to digital payments, much of this shift is moving towards the implementation of blockchain technology to facilitate digital payments.

I International Monetary Fund put out a statement showcasing the power of blockchain technology and the rise of Central Bank Digital Currencies (CBDCs) which are Stablecoins pegged to native currency.

Digital payments in the future will solely be facilitated by crypto currency and even those anti-crypto people will be using it, they just won’t know about it. Although Cash still remains a powerful tool in payment. As someone who is also starting a small business, I find when I do a cash transaction I get the whole amount rather than all these little fees the banks and all the middle men help themselves to. This will be a major issue moving forward if digital currencies are to be rolled out.

Competition between PayPal Apple and many other online platforms might be about to make all those digital payments cheaper.

In August, PayPal introduced PYUSD, a stablecoin that garnered attention for its potential in the Web3 space. However, recent developments indicate that PayPal has set its sights beyond the crypto realm, using PYUSD strategically to make a substantial investment in Mesh, a company specialising in digital transaction security and efficiency. This move is seen as a proactive step by PayPal to fend off competition, particularly from the likes of Apple Pay.

PayPal Ventures Into Crypto

On Monday, PayPal Ventures announced a USD 6.5 million investment in Mesh, with a notable twist USD 5 million of the investment was paid out in PYUSD. This marks PayPal Ventures' first known crypto investment since May 2023 when it invested in Magic Labs, a service focused on secure digital wallet solutions.

Mesh is currently developing a product that facilitates the seamless movement of crypto between different financial accounts and wallets making it a valuable addition to PayPal's strategic investments.

The decision to invest in PYUSD instead of traditional fiat currency raises questions but Mesh's co-founder and CEO, Bam Azizi, shed light on the rationale. Azizi emphasized that PYUSD outshines alternative payment methods like wire transfers due to its 24/7 availability and low cost. He expressed excitement about the investment, highlighting that it provides an opportunity for Mesh to showcase the security and robustness of its API while aligning with PayPal's vision.

Galaxy, another investor in Mesh, drew a parallel between Mesh and Plaid, focusing on its strengths to read, write and transfer capabilities. This strategic investment in PYUSD demonstrates PayPal's commitment to exploring the potential of stablecoins in enhancing digital transaction efficiency and security.

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PYUSD's Position in the Stablecoin Landscape

Despite its fanfare at release, PYUSD has faced challenges in gaining traction in the stablecoin market. Recent proposals for PYUSD deployments on DeFi protocols Aave and Curve indicate an effort to expand its utility. However, as of now, PYUSD holds the eleventh position in stablecoin market capitalization, lagging behind pioneers like USDT and USDC. The slow adoption is attributed to factors such as not being a first mover and the attractiveness of established stablecoins with deep liquidity.

PYUSD's current position raises questions about its priority within PayPal's broader strategy. While its market capitalization has nearly doubled since December, the lack of prominence in PayPal's recent announcement video, focusing mostly on AI, has left some speculating about the future of PYUSD. New PayPal CEO Alex Chriss's promise to "shock the world" with new products did not include any mention of PYUSD, adding to the uncertainty surrounding its future trajectory.

PayPal Has Work Ahead

PayPal's strategic investment in Mesh using PYUSD reflects a nuanced approach to secure its position in the highly contested landscape of digital transactions. The decision to invest in a stablecoin, particularly one developed in house, underlines PayPal's commitment to remaining a head of the curve in it’s field using the potential of blockchain technology.

As the competition intensifies, with Apple Pay and other digital payment giants making strides, PayPal's utilization of PYUSD demonstrates its adaptability and determination to stay ahead in the rapidly evolving fintech ecosystem.

While challenges persist, the ongoing developments suggest that PYUSD might play a more significant role in PayPal's future endeavours than initially perceived. As the financial landscape continues to evolve, PayPal's strategic moves will undoubtedly shape the trajectory of PYUSD and its impact on the broader digital payment space.

Who will win the digital payment war? Online time will tell, but PayPal seems to be vying for a top spot in the future.

Image sources provided supplemented by Canva Pro Subscription. This is not financial advice and readers are advised to undertake their own research or seek professional financial services.

Posted Using InLeo Alpha