PayPal Offers 3.7% on PYUSD

PayPal is about to turn its dollar-backed stablecoin into a savings vehicle. Beginning this summer, U.S. users on PayPal and Venmo will earn up to 3.7% annual reward simply for holding PYUSD in their balances, the payments giant announced on Tuesday.

From payments rail to yield engine

PYUSD, launched last August, was pitched as a bridge between everyday commerce and blockchain rails. So far the token has found modest success—about $873 million circulates across Ethereum and Solana—yet it still trails far behind USDT and USDC. PayPal’s new program aims to tilt the playing field by marrying the predictability of a bank account with the flexibility of on-chain dollars.

• Rewards accrue daily and pay out monthly—no staking, lock-ups or fees.
• Holders can spend PYUSD at millions of merchants, zip it to friends on Venmo, blast it abroad via Xoom or withdraw to self-custody wallets.
• Interest is funded from PayPal’s own float, similar to how fintechs pay yield on stored balances.

“We’re building the most useful digital dollar on the internet,” CEO Alex Chriss said. He hinted that upcoming integrations—vendor payouts, bill pay, loyalty programs—will weave PYUSD even deeper into PayPal’s 428-million-strong ecosystem.

Why 3.7% matters

Traditional checking accounts still average under 0.5% APY, while many U.S. money-market funds hover around 5%. By dropping PYUSD squarely in the middle, PayPal offers a “good enough” yield with near-instant liquidity and none of the hoops of DeFi farming. For crypto-curious newcomers already comfortable with Venmo, that calculus could be compelling.

The move comes as Congress debates the STABLE and GENIUS Acts, bills that could unlock a $2 trillion stablecoin market by 2028, according to Standard Chartered. Meanwhile, Robinhood is reportedly building its own token, Stripe just relaunched USDC settlements, and retail giants from Walmart to Mercado Libre are experimenting with in-house digital dollars. PYUSD’s headline rate is both a marketing hook and a defensive moat.

Competitive pressure on issuers

Tether’s USDT dominates with $145 billion in supply and no explicit reward program; Circle’s USDC ($62.7 billion) offers institutional yield via its Treasury portal but not to retail. PayPal’s step could force rivals to share more of their reserve interest—especially if regulators green-light broader consumer disclosures on how issuers monetize customer deposits.

The compliance angle

Because PayPal is already a licensed money-transmitter, the reward looks more like cash-back than an investment product. That avoids securities-law entanglements that have plagued some yield-bearing tokens. Still, the company will need to demonstrate transparent reserve management to satisfy watchdogs—and reassure users after the flash failures of other high-yield crypto schemes.

With a single announcement, PayPal reframes stablecoins as savings accounts you can spend. If consumers bite, PYUSD could vault from fringe utility token to everyday digital cash, nudging the entire industry toward higher standards—and higher yields.