PayPal Holdings Inc completed its first business payment using its proprietary stablecoin as a way to demonstrate how digital currencies can be used to improve often-clunky commercial transactions.

PayPal paid an invoice to Ernst & Young LLP on Sept 23 using PYUSD, the stablecoin the firm launched last year, relying on an SAP SE platform to complete the transaction. SAP’s platform, known as the digital currency hub, allows enterprises to send and receive digital payments instantly, around the clock. The invoice amount wasn’t disclosed.

Stablecoins are cryptocurrencies usually designed to track traditional currencies one-to-one. PYUSD, which has a current market capitalization of almost US$700 million , tracks the US dollar. While the consumer-facing benefits of stablecoins often dominate conversations, this payment demonstrates other use cases for the digital currency, according to Jose Fernandez da Ponte, PayPal’s senior vice president of its blockchain, cryptocurrency and digital currency group. 

“The enterprise environment is very well-suited for it,” he said. “It’s a very rational conversation to have with the CFO.”

Business-to-business transactions — especially those that cross borders — can be drawn out, expensive and, in some cases, risky, given the requisite reliance on third parties. The speed and availability of settlement with this use case is far more attractive, Fernandez da Ponte said.

Some businesses have long paid each other with stablecoins like Tether, particularly when the payments had to cross borders. Stablecoin payments can mean faster settlement, and some businesses — particularly in countries with volatile traditional currencies — prefer holding stablecoins. The option has become increasingly popular as service providers work to make it easier for businesses to use the tokens. Earlier this year, the payments platform BVNK, which supports PayPal’s stablecoin, started letting businesses send US dollars to its platform via the Swift global banking system, then make subsequent payments in stablecoins to clients and partners around the world.

San Jose, California-based PayPal said last month that it’s now permitting merchants to buy, hold and sell cryptocurrency from their business accounts, building on what the firm had already provided in digital assets, including its stablecoin and consumer crypto offerings.

While digital currencies have many selling points for consumers and businesses, the crypto industry has faced backlash following the downfall of Sam Bankman-Fried and his FTX exchange in 2022.

For this business transaction, PayPal was drawn to established partners in their respective industries to demonstrate the utility of stablecoin-enabled business payments, Fernandez da Ponte said.

“PayPal, SAP, EY — those are names that are very, very well-established,” he said.

  - Bloomberg