PayPal's P2P upgrade has a crypto kicker

• Key Insights: PayPal is adding crypto to a new payment tool. 
• What's at Stake: The payment company is trying to build scale for its stablecoin. 
• Forward Look: PayPal is combining AI, crypto and other tools to boost payment revenue in the next year. 
  

PayPal has developed a new person-to-person payment feature that it will also apply to digital currencies, a key move as it tries to build scale for its PYUSD stablecoin. 

Called PayPal links, the service enables consumers to request or make a payment to another person by using a link that is inserted into a digital conversation. Links has launched in the U.S. and will add other markets in the coming weeks. It will also soon add support for Bitcoin, Ethereum, PayPal's PYUSD stablecoin and other digital wallets.  

Links is part of a series of PayPal releases that are using new forms of artificial intelligence and cryptocurrency to broaden its merchant and consumer menus as competition and geopolitical risks mount. 

In the current uncertain environment, PayPal CEO Alex Chriss has told investors and analysts that the company is focusing on "what it can control" by investing in digital payments technology. 

What are PayPal links?

Users open the PayPal app and enter the details of the payment or request to generate a one-time link, which is private and cannot be used for other transactions. These links, which serve as a payment button, are embedded in texts, e-mails or other online conversations that involve payments or other financial topics. The links expire after 10 days.

PayPal links expands on PayPal Me, an earlier product that enables consumers to get paid but do not support a "send" capability. By adding cryptocurrency, PayPal can pair links with other initiatives designed to boost cryptocurrency, such as buying, selling and holding cryptocurrency in PayPal or Venmo accounts.

PayPal has also made several partnerships to expand PYUSD, including a deal with Fiserv to make PYUSD interoperable with Fiserv's pending stablecoin and collaborations  with crypto-focused companies to create a network for PYUSD, which has lagged stablecoins such as Tether and Circle's USDC in market capitalization. 

In an email, PayPal's public relations office said "Earlier this year, we shared that we were going to integrate crypto deeper into our broader payments platform. Bringing crypto into the P2P flow follows the pay with crypto announcement, rewards for PYUSD and use of PYUSD as a payment method for Hyperwallet payouts."

AI and crypto

Creating a payments market for stablecoins will be a challenge. 

In a research note on stablecoins, Jefferies mentioned most executives at large payment companies and banks do not see a near-term market for stablecoin payments. Jefferies noted recent investor day and earnings commentary from Mastercard, saying, "We kind of feel that the consumer value proposition for regular P2M [person-to-merchant] payments is lacking and stablecoins doesn't actually do anything in this equation," American Express saying, "what we have today is not broken," and PNC saying, "There isn't really a cost advantage or a driving need to use stablecoin at least in domestic commerce."

Conversely, Visa and Mastercard have expressed optimism that stablecoins could boost cross-border payments, according to Jefferies. Expanding P2P and stablecoin payments could also help PayPal's broader growth strategy, which relies on artificial intelligence-powered shopping and digital assets. 

PayPal is boosting its crypto and P2P payments as it navigates industrywide economic headwinds from tariffs and other factors that impact merchant services. PayPal's U.S. branded checkout growth was less than 2% in the second quarter, according to analysts Jefferies. 

To augment its revenue and relationships, PayPal is enhancing its AI tools to improve value-added services such as subscription management, and recently made Venmo and PayPal interoperable for the first time via a product called PayPal World. 

PayPal World is expected to launch in the fall and add more digital wallets over time. The company estimates the initial addressable for PayPal World is 2 billion users, who could access all of PayPal's products, including links and cryptocurrency. The Venmo integration will enable users to make transfers across PayPal and Venmo to any location, in effect making the U.S.-only Venmo international. In 2026, the Venmo integration will expand to include the ability for Venmo users to shop at merchants outside of the U.S.

PayPal's other recent moves include offering early access to Perplexity's AI-powered Comet Browser before it becomes widely available. Comet will give PayPal's customers a generative-AI tool to manage subscriptions, shopping, payments and other parts of their lives, coming at the same time that Visa, Mastercard, Stripe  and other payment companies push agentic and generative AI to sell value-added services beyond payment processing. In a research note on PayPal, KBW said improvements in PayPal's fundamental performance "could take some time to play out" despite management's optimism about traction from new initiatives.

Jefferies was more bullish, saying the impact of tariffs on PayPal's volume was easing and the company has made progress in migrating its merchant network to new AI-powered checkout technology."Peer-to-peer platforms have been around for years, but they've been fragmented—think Venmo, Cash App, Zelle—each with different rails and limits," Scarlett Sieber, chief strategy and growth officer for Money20/20, told American Banker.

"PayPal is creating a more universal layer that could bring crypto into everyday transactions in a way that feels natural for consumers. If PayPal normalizes crypto payments at scale, banks and fintechs can't afford to wait on the sidelines. It accelerates the convergence we're already seeing between traditional finance and digital assets."