The only free and comprehensive online etymological dictionary of the Spanish language
usted (Personal Pronoun) "you"
17th cent. Old Spanish vuasted, vuested, vusted. From vuestra merced (15th cent.). For a counter argument, however, see Menocal (1984), who argues an origin in Arabic ustad "professor."
In Latin America, usted is both formal and informal senses in the plural. In Spain, broadly speaking, usted is strictly formal.