Why Tether buys distribution while PayPal already owns it

In the last two weeks, Tether and PayPal have crystallised their interest in being the stablecoin and cross-border payment platform of choice for Africa.

On May 18, Tether, the issuer of USD₮, announced its investment in LemFi, one of the fastest-growing digital remittance startups from Africa.

“At Tether, our goal is to promote financial inclusion, and we are committed to working with platforms building scalable financial solutions that address the real needs of our 585 million users globally,” said Paolo Ardoino, CEO of Tether. “Our investment in LemFi reflects our shared vision on how money moves across borders, prioritizing speed, cost, and transparency.”

Two days later, PayPal said it is expanding access to PYUSD, its stablecoin, to Africa. “Bringing PYUSD to Africa is about delivering tangible value to the people and businesses driving growth in these dynamic markets,” said Otto Williams, Senior Vice President and General Manager of the Middle East and Africa, PayPal.

Both companies are vying for attention in Africa, but with different profiles.

PayPal gets paid to move money across borders via its closed network, while Tether earns from issuing USD tokens by investing the cash it collects in US treasury bills.

Tether generated $33 million net profit per employee, while PayPal generated only $185,000 per employee in 2025.

Clearly, the business of issuing tokens is more lucrative. So, in 2023, PayPal launched its own token, PayPal USD (PYUSD). However, the company is a decade late to the USD-backed token issuing business pioneered by Tether in 2014, with a fast follow from Circle (USDC) in 2018.

PayPal’s lateness is by design, given the company’s entrenchment in the traditional financial system, with regulatory licenses to uphold, and a reputation to protect as a publicly-traded company. So, while PYUSD made a debut in 2023, it could not scale until after the GENIUS Act passed, which was just last year.

The demand for USD-backed stablecoin is prevalent in emerging markets where inflation is high, and USD liquidity is scarce, stymying international payments.

Tether has engaged extensively in these markets over the past few years, and its recent capital deployment spree (see LemFi and Sorted Wallet investment) is a ploy to guarantee the distribution and usage of its USDT amidst the flurry of established alternatives like USDC and adjacent alternatives like PYUSD.

The competition surface area differs for PayPal and Tether

The benefit PayPal has over Tether and Circle is the direct-to-consumer brand. Since PYUSD is available on popular blockchains like Solana (SPL), Ethereum (ERC-20) and Arbitrum, it can be transacted using any crypto wallet that supports those chains. However, being a wallet itself, it can afford to be exclusionary, which it has done by processing only the PayPal USD stablecoin on its platform.

Issuers like Tether and Circle have to depend on distribution channels for their stablecoin usage. PayPal will look to tap into its 400 million-plus consumer and 30-million-plus merchant network to dial in usage, dangling perks like zero or cheaper fees.

For context, sending USD between a PayPal UK and a PayPal US customer incurs fees, as the company treats it as an “international” transaction. PYUSD could eliminate some fees for PayPal customers, which include family and friends gifting each other and merchants receiving payments.

“Consumers and businesses around the world are looking for faster, more seamless ways to transact globally, and the current system still charges too much, takes too long, and settles on timelines that were designed for a different era,” said May Zabaneh, Senior Vice President and General Manager of Crypto, PayPal. “We are working to change that. Enabling PYUSD in users’ accounts across 70 markets gives people faster access to their funds, lower-cost ways to send money across borders, and a more direct path to participating in the global economy, and that is what drives commerce forward for everyone.”

Otherwise, the utility of PYUSD outside of the PayPal network is limited, as large financial institutions are less likely to use PYUSD for settlement. In addition, Tether now has more holders and users of its USD₮, 585 million, than PayPal, albeit across apps that Tether does not control or directly influence. This explains why Tether is investing in these DTC brands.

“Tether’s investment aims to support LemFi’s integration of USD₮ as a settlement layer across its key corridors, replacing multi-day SWIFT chains with near-instant, low-cost settlement across Africa and Asia,” Tether said in an official statement. “Tether will also accelerate LemFi’s stablecoin infrastructure, which will progressively extend across its broader product suite, delivering more stable, transparent, and accessible financial services to customers on both sides of the corridor [emphasis mine]”

Tether desires that one day, a LemFi user in London, UK, will onramp USDT and send that same USDT to a beneficiary in Lagos, Nigeria. By so doing, the beneficiary will become a new customer of Tether; that way, the network effects compound, and Tether will monetise that token from its rolling USD reserves. The scenario described above is how it works with Sendwave Wallet, but powered by Tether’s competitor, Circle’s USDC.

For PayPal, it continues to tap into the remittance and cross-border payments market in Africa via the leadership of Otto Williams. Earlier in the year, it resumed operations in Nigeria via a partnership with Paga, an IMTO licensed by the Central Bank.

Last updated: May 26, 2026