PayPal Expands into AI Financing Through USD.AI, Offering 4.5% Yield on PYUSD Deposits

PayPal Brings Stablecoin PYUSD To Fund AI Infrastructure

PayPal has moved to integrate its PYUSD stablecoin into the AI sector by partnering with USD.AI, a decentralised protocol that provides on-chain credit for artificial intelligence companies.

Under the partnership, USD.AI will issue loans denominated exclusively in PYUSD to AI startups and infrastructure providers, enabling them to receive funding directly into their PayPal business accounts.

This approach merges blockchain-based lending with traditional enterprise payment systems, aimed at addressing funding friction where rapid AI scaling often outpaces conventional bank credit cycles.

How Will AI Companies Benefit From PYUSD Loans

The loans facilitated by USD.AI are targeted at capital-intensive requirements such as purchasing graphics processing units (GPUs), expanding data centres, and other AI infrastructure investments.

By linking PYUSD to USD.AI’s lending mechanisms, PayPal intends to provide a programmable settlement layer for the most innovative companies in the world, according to a company spokesperson.

The move streamlines large-scale payments, making it faster and more transparent for AI companies to access the capital needed for rapid growth.

Incentives And Institutional Liquidity On The Horizon

To encourage adoption, PayPal and the USD.AI Foundation will launch a one-year incentive programme starting January 2026.

The initiative will offer a 4.5% yield on up to $1 billion in PYUSD deposits used within the USD.AI ecosystem.

The programme is designed to attract institutional liquidity providers who seek regulated, dollar-pegged returns while supporting AI infrastructure financing.

PayPal’s Strategy To Become A Financial Backbone For AI

This initiative forms part of PayPal’s broader push into regulated banking and digital finance.

Earlier this week, the company filed applications for a Utah-chartered industrial bank license, which would eventually allow PayPal to manage deposits and lending directly without third-party intermediaries.

Analysts suggest that by positioning PYUSD as the primary currency for AI infrastructure, PayPal is aiming to become a core financial partner for the rapidly growing AI economy.

Morgan Stanley estimates global AI computing expenditure could reach $6.7 trillion by 2029, highlighting the scale of the opportunity.

Stablecoins Are Expanding Beyond Crypto

The PayPal-USD.AI partnership highlights a growing trend of stablecoins being used to fund capital-heavy sectors beyond traditional crypto applications.

USD.AI already manages over $650 million in assets backed by computing power, showing how digital assets can serve as collateral for large-scale investments.

Stablecoins have also become key drivers in other industries, such as Web3 gaming, where they support self-sustaining, income-generating systems for developers.

Integration With AI Platforms Expands Use Cases

PayPal’s expansion into AI comes alongside its ongoing partnership with OpenAI.

Since October, PayPal’s payment system has been integrated into ChatGPT, allowing users to complete transactions directly within the AI platform.

Under this arrangement, PayPal handles merchant routing and payment verification while leveraging AI tools internally to streamline operations and accelerate the development of new payment products.

Global Stablecoin Adoption Shows Growing Momentum

Other financial institutions are also exploring stablecoin-based solutions.

SoFi Bank has launched SoFiUSD, a dollar-backed stablecoin initially for internal operations but planned for wider customer use, while European banks are developing a Euro-pegged stablecoin to streamline international remittances.

This shows a broader trend of stablecoins being positioned as efficient, regulated alternatives for high-volume capital flows.

Will PYUSD Set A New Standard For AI Financing

By bringing stablecoin liquidity directly to AI firms, PayPal is testing a model that could redefine how capital-intensive technology sectors secure funding.

The integration allows for programmable settlements, transparent capital movement, and faster access to large sums, potentially reducing reliance on traditional credit markets.

How effectively this approach scales alongside the projected AI spending surge will be closely watched by investors and industry participants alike.