Stablecoins, digital tokens that are tied to a stable fiat currency, are increasingly being seen as a potential game-changer for cross-border remittances. However, contrary to the popular belief that these cryptocurrencies will disrupt the existing remittance infrastructure, they are more likely to integrate and strengthen it. The current system of international remittances, despite advancements in digital finance, continues to be slow, expensive, and unreliable for a vast majority of users. The transformation offered by stablecoins is not just desirable but urgently needed.
It’s no secret that migrant workers, who regularly send money back home, are burdened by high transaction fees. With the possibility of an additional 1% remittance tax in the US, these costs could potentially increase. The unpredictability of delivery times, largely dictated by traditional banking hours, further complicates matters. Transactions often come to a standstill on weekends, bank holidays, or beyond the 9–5 weekday window. This can delay the receipt of funds that families may desperately need.
Smaller transactions and cash remittances are particularly affected by these inefficiencies. Every fraction of a fee can significantly impact the receiving household’s budget. Cash is still widely trusted because of its universality, instantaneity, and simplicity. However, it is constrained by geographical and infrastructural limitations, as well as costs. Formal banking provides little respite, with its limited branch networks and barriers such as credit history requirements.
Despite the rapid evolution of user-facing payment apps, the underlying infrastructure for cross-border transactions remains outdated. This system, with its batch settlements, cut-off times, and numerous intermediaries, is not in alignment with a world that demands instant messaging, on-demand content, and 24/7 commerce. For migrant families who rely on remittances to pay rent, buy groceries, or cover school fees, the current system is simply too slow.
Stablecoins offer a promising solution to these challenges. Unlike other volatile cryptocurrencies, stablecoins are pegged to stable national currencies. They blend the value stability of traditional money with the speed, programmability, and reach of blockchain networks.
Cross-border payments – the benefits are clear
Stablecoins can facilitate transactions that settle within seconds, regardless of the time of day, without being hindered by banking hours. They can significantly reduce costs, particularly for smaller transfers. The programmability of this infrastructure enables improved liquidity management and better routing. It is also interoperable, capable of seamlessly working with cash pick-up systems, bank deposits, and mobile money providers. However, the delivery of these benefits does not hinge solely on the technology. Stablecoins can create a tangible impact only when they are deeply integrated into the systems that people already trust.
Making global payment networks more resilient, flexible, and cost-efficient
From the perspective of the digital remittance industry, stablecoins represent a long-term infrastructure investment. They have the potential to make global payment networks more resilient, flexible, and cost-efficient. The real opportunity lies in incorporating them into the core systems that already facilitate reliable money transfers, rather than introducing them as an add-on or expecting users to change their behaviour.
The goal should be to strengthen what already works: enhance liquidity, increase speed, expand access, and create more avenues for people to hold and build value over time, without requiring them to download new apps or manage private keys.
Adoption will be driven not by novelty or enthusiasm for cryptocurrency, but by the delivery of faster transfers, lower fees, and secure funds. Accordingly, regulators and policymakers need to ensure strong compliance, transparency, and integration with licensed, trusted entities. For the industry, this means achieving interoperability and settlement efficiency across multiple regions and currencies.
Smarter liquidity management, reduced friction
When stablecoins are integrated into trusted networks, the technology operates quietly in the background, enhancing speed and flexibility while maintaining reliability. Over time, this could enable greater control over when and how value is accessed, more seamless two-way flows between senders and recipients, and smarter liquidity management that reduces friction across the entire system.
This transformation will not happen overnight. It depends on the steady development of regulatory clarity, the maturation of settlement infrastructure, and partnerships between traditional finance and emerging technology. Stablecoins are not a quick fix, but they represent a meaningful step towards a more inclusive, efficient, and transparent global remittance system. The end goal is not to replace cash, mobile money, or bank transfers, but to make them all work better together.
By integrating stablecoins into the remittance industry’s infrastructure, we can build a system that finally aligns with the pace and needs of the people it serves. Source
Article by George Goodyer, CPTO, Zepz
