Cross-border payments are an indispensable part of the global financial system. Whether it is international trade for enterprises, fund settlement for multinational companies, or personal overseas remittances, funds need to be transferred through financial institutions in different countries and regions. However, traditional cross-border payments have long faced problems such as relatively high fees, uncertain arrival times, numerous intermediary institutions, and the difficulty of direct connection between banking systems in different countries.
With the development of blockchain technology and stablecoins, new options are emerging for cross-border fund transfers. Stablecoins pegged to the US dollar, such as USDT and USDC, can be transferred between different wallets via blockchain networks, providing a technical path for international payments and fund settlement that differs from the traditional banking system.
In 2026, the application of stablecoins in the field of cross-border payments continues to attract attention from financial institutions and regulatory authorities. In July, the U.S. Faster Payments Council (FPC) released a research report on stablecoin cross-border payments, exploring how stablecoins compliant with the U.S. GENIUS Act framework can be used for cross-border settlement. The Bank for International Settlements (BIS) also released a research report on October 19, comparing the costs of traditional banks, fintech remittance services, and stablecoin payment channels.
This shows that stablecoins are no longer merely settlement tools in the cryptocurrency trading market, but are gradually becoming an important subject of study for traditional financial institutions when researching payment infrastructure innovation.
So, how exactly do stablecoin cross-border payments work? Compared with traditional bank transfers, what are their advantages and limitations? Is it possible that they will become an important part of the international payment system in the future?
I. Why Do Traditional Cross-Border Payments Have Efficiency Problems?
Traditional international remittances usually rely on the correspondent banking network. When the payer and the payee use banks in different countries, the two banks may not be able to complete fund settlement directly and may need to transfer funds through one or more intermediary banks.
SWIFT is a very important financial messaging network in this system. It is mainly responsible for transmitting standardized payment instructions and related information between financial institutions, but it does not itself directly hold or transfer the funds of bank customers.
For example, when a U.S. company pays a supplier in Asia in U.S. dollars, the paying bank needs to complete settlement through the corresponding correspondent banking relationship according to the account arrangements of the receiving bank. The specific path depends on whether there is a direct account relationship between the banks, as well as the currency used and the payment arrangements.
This model has a mature bank compliance system and a broad international network, but it also has some practical problems.
First, cross-border payments may involve multiple banks, and each participating institution has its own processing procedures and fee standards. Second, bank business hours, holidays, and clearing systems in different countries are not consistent, which may extend the arrival time.
In addition, cross-border remittances also involve foreign exchange conversion. The exchange rates offered by banks may include a certain spread, and the cost ultimately paid by users is not limited to the visible transfer fee.
Therefore, the total cost of traditional cross-border payments usually consists of remittance fees, correspondent bank fees, foreign exchange conversion spreads, and receiving-end fees.
II. How Do Stablecoins Enable Cross-Border Payments?
A stablecoin is a digital asset that seeks to maintain a relatively stable value through reserve assets, collateral mechanisms, or other design methods. Among them, USDT and USDC are fiat-backed stablecoins pegged to the U.S. dollar.
Unlike traditional bank transfers, stablecoins can be transferred on blockchain networks that support the corresponding assets, without needing to complete on-chain transactions through traditional banks' cross-border correspondent accounts every time.
Its basic payment process usually includes the following steps:
First, the payer obtains stablecoins through compliant trading platforms, payment service providers, or other legal channels.
Second, the payer sends the stablecoins to the blockchain wallet address provided by the payee.
Third, the blockchain network verifies and records the transaction. After the corresponding confirmation requirements are met, the payee can view the received stablecoins in the wallet.
Fourth, if the payee needs local fiat currency, they can convert the stablecoins into local currency through a local compliant trading platform or payment service provider and withdraw them to a bank account.
This model is sometimes referred to as the "fiat—stablecoin—fiat" model of stablecoin payments.
Its characteristic is that part of the fund settlement in the cross-border transfer process is completed on the blockchain, thereby reducing dependence on the traditional correspondent banking network.
However, the completion of a transfer on the blockchain does not mean that the payee has obtained fiat currency in a local bank account. Stablecoin conversion, withdrawal, and bank crediting still require the participation of corresponding service institutions.
III. What Is the Difference Between Stablecoin Payments and Traditional Bank Transfers?
Stablecoins and traditional bank transfers are not a simple substitute relationship. The two have obvious differences in payment architecture, fund settlement, and usage conditions.
Fund Transfer Time
Traditional cross-border bank transfers may be affected by bank business hours, correspondent bank processing procedures, and clearing arrangements in different countries.
Stablecoins, however, can be transferred around the clock on blockchain networks that support the asset, without being completely dependent on traditional bank business hours.
But it should be noted that around-the-clock on-chain transfers do not equal around-the-clock fiat currency withdrawals. The payee's ultimate receipt of bank deposits may still be limited by local bank business hours and compliance reviews.
Payment Cost
Traditional bank transfers may involve remittance fees, intermediary bank fees, and foreign exchange conversion spreads.
Stablecoin payments usually involve blockchain network fees, platform transaction fees, fiat currency conversion spreads, and withdrawal fees.
Therefore, it cannot simply be assumed that stablecoin payments are necessarily cheaper than bank transfers. The actual cost needs to be calculated comprehensively based on the remittance amount, target country, currency, and conversion channel.
Payment Transparency
Traditional cross-border payments usually require querying transaction status through banks or payment service providers, and information may be scattered among different institutions.
Stablecoin transactions, however, can be viewed through blockchain browsers for transaction records and confirmation status, providing a certain degree of public verifiability.
But blockchain transaction records do not mean that the payer's true identity and commercial background are fully public, nor do they mean that the transaction has completed all legal and compliance reviews.
How Funds Are Used
Traditional bank transfers usually directly transfer fiat currency from the payer's account to the payee's account.
Stablecoins, however, require users to hold or receive digital assets. If the payee wishes to use local fiat currency, conversion still needs to be completed through exchange and withdrawal channels.
Therefore, the business scenarios suitable for the two methods are not exactly the same.
IV. What Are the Practical Application Scenarios of Stablecoin Cross-Border Payments?
The value of stablecoins is not only reflected in cryptocurrency trading; they also have application potential in some international payment and commercial settlement scenarios.
International Corporate Fund Settlement
Multinational companies may need to allocate funds among multiple countries to pay suppliers, manage operating expenses, and handle business payments in different regions.
Stablecoins can provide some enterprises with another digital settlement method, especially in regions where traditional bank cross-border payment costs are high or fund arrival efficiency is unsatisfactory.
However, before using stablecoins, enterprises need to consider accounting treatment, tax declaration, source-of-funds review, and local regulatory requirements.
Overseas Remittances
Cross-border remittances are one of the application areas that have attracted relatively more attention for stablecoins.
For example, when overseas workers remit money to their families, traditional channels may involve remittance fees and currency conversion costs. Stablecoins can provide new fund transfer options in some payment corridors.
But whether the recipient can conveniently convert into local currency is an important factor determining the actual user experience.
Cryptocurrency Market Fund Settlement
In the digital asset trading market, stablecoins have become an important trading medium.
Traders can use USDT or USDC to participate in transactions between different digital assets, and can also temporarily move funds into stablecoins when adjusting their investment portfolios.
This use is different from commodity payments in the real economy, but it has already formed an important demand for stablecoins to flow across platforms and markets.
Cross-Border Commercial Payments
Some enterprises are exploring the use of stablecoins to handle international supply chain payments, service fees, and digital business settlement.
Compared with relying solely on bank transfers, blockchain settlement can provide the possibility of programmable payments and automated transactions.
For example, after predetermined conditions are met, smart contracts can trigger payment operations. However, such applications still require reliable identity verification, legal contracts, and fund custody arrangements.
V. What Are the Risks and Limitations of Stablecoin Cross-Border Payments?
Although stablecoins can provide new payment options, their application still faces limitations in multiple aspects.
1.Stablecoin Depegging Risk
Stablecoins usually aim to maintain a 1:1 peg to the U.S. dollar, but this does not mean that the price will never deviate from 1 U.S. dollar.
When market liquidity is tight, reserve assets are questioned, or the issuing institution encounters operational problems, stablecoins may temporarily or even continuously deviate from the pegged price.
Therefore, users need to pay attention to the quality of the issuer's reserve assets, redemption arrangements, and information disclosure.
2.Insufficient Fiat Currency Conversion Channels
An important issue in stablecoin cross-border payments is the on-ramp and off-ramp channels.
Even if the payee has received USDT or USDC, if the local area lacks compliant exchange platforms, bank cooperation channels, or sufficient market liquidity, it may still be unable to smoothly convert the funds into local currency.
This means that blockchain transfer efficiency cannot fully represent the efficiency of the entire payment process.
3.Regulatory and Compliance Requirements
Stablecoins have the characteristic of cross-border circulation, and regulatory policies on digital assets may differ significantly among different countries and regions.
Requirements such as anti-money laundering, customer identity identification, sanctions screening, source-of-funds review, and transaction reporting may all affect the availability of stablecoin payment services.
Enterprises cannot ignore applicable financial regulation and cross-border fund management regulations simply because funds are transferred via blockchain.
4.Blockchain Network Risks
The operation of stablecoins depends on blockchain infrastructure, and different networks differ in transaction fees, processing capacity, and security mechanisms.
If users choose the wrong network or transfer address, assets may be irrecoverable. In addition, smart contract vulnerabilities, wallet security issues, and network congestion may also affect transactions.
Therefore, stablecoin payments require supporting technical security management and risk control mechanisms.
VI. How Will Traditional Banks and Stablecoins Compete in the Future?
Stablecoins will not necessarily completely replace the traditional bank cross-border payment system. A more likely scenario is that the two types of infrastructure will complement each other in different scenarios.
Traditional banks have mature customer identity verification, deposit management, credit services, foreign exchange trading, and regulatory systems, and still have important advantages in large enterprise settlement and complex financial businesses.
Stablecoins, meanwhile, have different technical characteristics in around-the-clock transfers, blockchain programmability, and connection to the digital asset ecosystem.
The BIS working paper "Competing rails for crossborder payments: banks, fintechs, and stablecoins," released on October 19, 2026, compared traditional banks, fintech remittance institutions, and stablecoin payment channels.
The study pointed out that fintech remittance services have significantly reduced some cross-border payment costs, while stablecoins cannot automatically eliminate fees generated by foreign exchange conversion, on-ramp and off-ramp, and intermediary service institutions. The actual competitiveness of stablecoins still depends on market liquidity, fiat currency conversion channels, regulatory compliance, and service provider reliability.
This shows that competition in cross-border payments is not only a technical competition between banks and blockchain, but also an efficiency competition across the entire fund transfer and conversion system.
In the future, banks, payment companies, and stablecoin issuers may cooperate to integrate blockchain settlement into existing financial services. Traditional financial institutions may also adopt tokenized deposits or other digital settlement tools to further promote the upgrading of payment infrastructure.
Conclusion: Stablecoins Are Expanding the Options for Cross-Border Payments
Stablecoins provide a new technical path for international fund transfers. They can use blockchain networks to achieve around-the-clock digital asset transfers, reduce dependence on the traditional correspondent banking system in some scenarios, and provide new options for international remittances, corporate settlement, and digital asset transactions.
But stablecoins are not a solution to all problems in cross-border payments. Exchange rate costs, fiat currency conversion, regulatory requirements, reserve asset quality, and blockchain security still determine whether they can truly be applied to everyday financial activities.
For traditional financial markets, what will be worth watching in the future is not whether stablecoins will replace banks, but how banks, payment service providers, and blockchain networks will redistribute the links of fund transfer, settlement, and conversion.
As financial infrastructure gradually becomes digitalized, the boundary between traditional finance and cryptocurrency may further blur, and cross-border payments will also face competition from more technologies and business models.
Frequently Asked Questions (FAQ)
Q1. Can stablecoins be used for international cross-border payments?
A: Yes. Where the relevant stablecoins and blockchain networks are supported, users can transfer assets such as USDT and USDC to payees in other countries or regions through digital wallets. However, actual use still requires consideration of local regulation, compliant trading platforms, and fiat currency conversion channels.
Q2. Are stablecoin cross-border payments cheaper than bank transfers?
A: Not necessarily. Stablecoins may reduce some intermediate settlement links, but blockchain fees, trading platform fees, exchange rate spreads, and withdrawal fees still exist. The final cost needs to be calculated based on the specific country, payment amount, and service channel.
Q3. Can USDT and USDC be directly converted into local currency?
A: They can be converted through compliant trading platforms or payment service providers that support the relevant assets, but specific availability depends on local laws, trading pairs supported by the platform, liquidity, and bank on-ramp and off-ramp conditions.
Q4. Will stablecoins replace SWIFT?
A: At present, there is insufficient basis to believe that stablecoins will completely replace SWIFT. The functions of the two are not the same: SWIFT mainly provides financial messaging services, while stablecoins can serve as digital value transfer tools on the blockchain. In the future, a situation in which traditional financial networks and blockchain payment infrastructure complement each other is more likely to emerge.