Paypal Holdings is launching a new rewards program for its stablecoin PYUSD to boost adoption of the digital token within a fiercely competitive market. The initiative, announced on April 23 and slated to roll out this summer, will allow Paypal and Venmo users in the United States to earn a 3.7% annual reward on their PYUSD holdings.

According to a Bloomberg report, the rewards, which are paid monthly in PYUSD, can be exchanged for traditional fiat currency, sent to other users, or utilized for international transfers.

Jose Fernandez da Ponte, Paypal’s senior vice president and general manager of blockchain, crypto and digital currencies, said the goal is to incentivize the use of PYUSD as a payment method across PayPal’s network. The move to reward PYUSD holders is the fintech giant’s attempt to grow its footprint in the approximately $240 billion stablecoin market.

With a total market value of approximately $873 million, PYUSD remains a distant player compared with industry giants like Tether’s USDT, which boasts a market capitalization of around $145 billion. The next-ranked stablecoin, USDC, commands a market capitalization of just over $61 billion. As shown by Coingecko data, out of the 296 stablecoins tracked, only six currently hold a market value exceeding $1 billion.

Meanwhile, Da Ponte acknowledged that, similar to its competitors, PYUSD’s primary use has been within cryptocurrency-related transactions.

“We see stablecoins as building the next generation of payment rails, but we are aware that is something that takes time. We are halfway in a 10-year journey,” Da Ponte stated.

Paypal has outlined ambitions to further integrate PYUSD into its diverse product offerings throughout the year, with the goal of reducing payment costs and accelerating transaction speeds for its vast network of merchants and consumers.

“We are thinking a lot about how we can change the expense profile of the payments landscape by using stablecoins,” commented Paypal Chief Executive Officer Alex Chriss.

Since PYUSD’s introduction, the stablecoin landscape has become increasingly crowded. Several other major financial players have made moves into the sector, intensifying competition for Paypal. Fintech heavyweights Robinhood Markets Inc. and Revolut Ltd. are reportedly considering launching their own stablecoins. In addition, some U.S. banks and one are contemplating issuing their own stablecoins.

Paypal’s move to offer rewards mirrors strategies employed by other players in the stablecoin ecosystem. Cryptocurrency exchange Coinbase, for instance, already allows users to earn rewards on their holdings of Circle’s USDC.

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