PayPal, a prominent player in the payment industry, has announced the introduction of a stablecoin tied to the U.S. dollar.

“Reserves for PayPal USD are fully backed by U.S. dollar deposits, U.S. Treasuries and similar cash equivalents, and PayPal USD can be bought or sold through PayPal at a rate of $1.00 per PayPal USD,” Paypal said in a press release in August 2023.

Today, we’re unveiling a new stablecoin, PayPal USD (PYUSD). It’s designed for payments and is backed by highly liquid and secure assets. Starting today and rolling out in the next few weeks, you’ll be able to buy, sell, hold and transfer PYUSD. Learn more https://t.co/53RRBhmNHx pic.twitter.com/53ur2KmjU7

— PayPal (@PayPal) August 7, 2023

This move marks a significant milestone as it signifies the first instance of a major fintech company adopting digital currencies for the purpose of transactions and fund transfers.

According to Paypal, the new stablecoin, dubbed Paypal USD,  is 100% backed by U.S. dollar deposits, short-term U.S Treasuries and similar cash equivalents. PayPal USD is redeemable 1:1 for U.S. dollars and is issued by Paxos Trust Company.

Eligible PayPal customers will not only be able to make transfers using the stablecoin, they will also be able to make purchases. PayPal will also allow customers to convert “supported cryptocurrencies” into or from PYUSD, the company said.

Paypal indicated that the stablecoin is designed to reduce friction for in-experience payments in virtual environments, facilitate fast transfers of value to support friends and family, send remittances or conduct international payments, enable direct flows to developers and creators, and foster the continued expansion into digital assets by the largest brands in the world.

“Most of the current volume of stablecoins is used in web3-specific environments – PayPal USD will be compatible with that ecosystem from day one and will soon be available on Venmo,” Paypal said.

As an ERC-20 token issued on the Ethereum blockchain, PayPal USD will be available to an already large and growing community of external developers, wallets and web3 applications, can be easily adopted by exchanges, and will be deployed to power experiences within the PayPal ecosystem.

Paypal says from September 2023, Paxos will publish a public monthly Reserve Report for PayPal USD that outlines the instruments composing the reserves. Paxos will also publish a public third-party attestation of the value of PayPal USD reserve assets.

“The attestation will be issued by an independent third-party accounting firm and conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants (AICPA).”

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Congolese startup, Vault Pay, has been selected for the Y Combinator Summer 2023 (S23) class making it the third African startup selected for the cohort.

The payments firm has become part of the S2023 group alongside ChowCentral, a Nigerian food delivery startup, and Eden Care, a healthcare startup that became the first Rwandan startup to join the highly-acclaimed accelerator program when it was announced in July 2023.

According to a statement released on Y Combinator’s site, Vault Pay, located in the Democratic Republic of Congo, is actively developing essential payment infrastructure for the Central African region. This venture was established in 2023 by Ntambwa Basambombo and Christel Ilaka.

Utilizing its infrastructure, the startup provides immediate payment options, user-friendly banking services, and tailored solutions distributed via telecommunications networks. As stated by its creators, Vault Pay’s objective is to ‘facilitate effortless integration and unparalleled possibilities by empowering telecommunications companies to directly dispense banking services.’

“With secure data exchange, real-time transactions, and synchronized operations, we create a harmonious partnership between banks and telcos, amplifying the reach and impact of financial services,” VaultPay indicated.

Y Combinator is one of the most attractive fellowship and accelerator programs for teams that are building in technology, having supported several enterprises including Stripe, Coinbase, Twitch, InstaCart and AirBnB.

When a company is accepted into the program, YC invests a total of $500, 000 in them. African startups that have been backed by YC, have gone on to raise $1.5 more billion.

Some notable Y Combinator alumni include:

• Flutterwave
• Paystack
• Kobo360
• Cowrywise
• MarketForce
• WaystoCap
• WorkPay
• Healthlane
• Trella
• 54gene
• CredPal
• NALA, and
• Breadfast

In 2022, a total of eight African startups were admitted to Y Combinator’s summer batch, with six being fintech companies and the remaining two being food delivery startups.

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