The future of international transfers: Stablecoins for cross-border payments

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The use of cryptocurrencies is growing rapidly, as shown by the growth of more than 100% per year, and was adopted faster than the Internet in the early 2000’s. Even if the growth rate slows down to 80%, crypto will reach one billion users by 2024.

One of the main goals of cryptocurrency is to redefine global payments. Although global payments have grown significantly over the years, much of the systemic efficiency complements widely used currencies such as the US dollar or euro. As a result, emerging and ending international transport in developed countries has become more cost effective and faster. But relocations ending or emerging in emerging economies have not been as cost-effective, nor has the time for reconciliation been so quick.

As cross-border payments from emerging markets slow, costly and take many days to complete, even in 2022, the question still remains: how do we take international transfers to the next level?

This is where the rapid adoption of cryptocurrencies supports financial inclusion and accelerates the efficiency gains of the financial system in emerging markets.

The answer lies in a specific type of cryptocurrency: Stablecoin – the least volatile of them all. Stablecoins are designed to ensure that the price does not fluctuate when offering users the benefits of crypto. Their value is linked to government-issued currencies such as the US dollar, precious metals – gold, for example, and other assets such as algorithmic functions.

Emerging markets need better remittance solutions

International transfers or remittances are mainly seen through the lens of people living abroad in developed countries who send financial aid to their friends and family in developing countries. In fact, in 2021, according to the World Bank, the transaction volume reached $ 589 billion.

While remittances arising from emerging economies to developing economies are low in volume, they are certainly not as trivial as they are in the range of hundreds of billions of dollars. This type of international transfer still needs better solutions.

The consumer of the emerging country has disadvantages due to the financial system which includes serious challenges for international money transfer, starting with huge exchange fee markup of about 10%, high transfer fee and extended settlement time up to 5 days. In fact, according to the World Bank, $ 200 remittances can cost anywhere from 5% to 9.3%, depending on the destination country and the type of service used.

On the other hand, stablecoins such as USD Coins (USDC) are already a part of global payment networks such as Visa Inc. Integrated with, which allows transaction settlement using USD coins. In addition, McKinsey & Co. According to, two popular stablecoins, USDC and Tether, completed $ 3 trillion in transactions in the first six months of 2021.

What’s more, recently, Facebook and Coinbase decided to develop and incorporate stablecoin-based international transfers into their services. However, they still operate in mainstream payment corridors – from developed to developing countries. For example, Novi – a Facebook-based digital wallet, allows transactions from the US to Guatemala, but not otherwise. And that needs to change.

Since stablecoins are resilient to the price volatility experienced by traditional cryptocurrencies such as Bitcoin, they can act as a bridge between crypto and fiat, especially in the case of payment usage.

Restricting third parties to crypto for foreign transfers

International money transfers, when traditionally done, often involve four intermediaries. This traditional settlement process involves high transfer costs, as each of the providers involved adds their service fees and this multilateral settlement results in a delayed transfer process.

For example, when sending remittances abroad, the customer of the country of origin has to pay a transfer fee to the money transfer operator (MTO). These MTOs are financial institutions, not necessarily banks, that facilitate funds transfer abroad through their internal settlement network or using a third-party international banking network such as SWIFT or a major remittance service provider. In addition, MTOs may be required to pay on a regular basis for payment network setup, usage-based subscriptions, and system maintenance.

As a result of this settlement process, the recipient collects less funds in the destination country’s currency after deducting transfer fees and expensive currency conversions.

Simplifying this settlement process through cryptocurrency will reduce the number of intermediaries as it enables direct fund transfer between sender and recipient, thereby reducing transfer costs and settlement time.

Stablecoin settlement as an alternative to SWIFT

Crypto worldwide usage jumped more than 880% during 2021, with P2P platforms leading to the adoption of cryptocurrencies in emerging markets. Not surprisingly, Vietnam and India are at the top of the global markets in terms of adoption of cryptocurrencies by individual consumers.

This widespread adoption of crypto in emerging markets presents an opportunity to facilitate international money transfers through stablecoins settlement. However, at first glance, this may seem like an expensive solution because of the associated costs associated with both on-ramp collection and off-ramp payout. But, with the current crypto adoption rate, both on-ramp and off-ramp costs are already competitive compared to the global average in some payment corridors.

As cryptocurrency continues to be adopted, the facility of international money transfer from many other emerging markets will become faster and cheaper than traditional payment rails. In particular, with the enhanced role of stablecoins in global payment networks for settlement, this set of cryptocurrencies will empower the next generation of international money transfers.

A good use case for this stablecoin settlement process from emerging markets could be the international education market. With over 6 million international students originating from emerging countries, the cost-effective and fast way of saving billions of dollars of cross-border payments is undoubtedly a matter of time.

Abhinov is the CEO and founder of Balago’s Pax Credit.


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