By Kebbie Sebastian, founder and CEO of Merge
Stablecoins are processing trillions of dollars of cross-border payments, promising an always-on digital dollar that bypasses geographic and banking barriers. Despite domestic real-time payment rails covering most of the world, cross-border payments remain slow and costly.
A striking disconnect defines today’s payment infrastructure. While domestic transactions clear in seconds across most developed markets, international transfers remain expensive multi-day affairs. This gap has created an opening for stablecoins, which processed $5.6 trillion in adjusted volume in 2024 .
The speed disparity
Local and international payment systems have a clear speed disparity. Near-instant domestic payment systems cover 80+ jurisdictions, ~90% of global GDP, and 78% of the world’s population . India’s UPI processes 19 billion monthly transactions ; the U.S.’ FedNow processes ~2 million quarterly transactions, totaling ~$246 billion. These local payment systems deliver near-instantaneous settlement, operating 24/7/365.
International transfers tell a different story. SWIFT’s infrastructure delivers 89% of messages to beneficiary banks within an hour. Yet only 43% of funds reach end customers in that timeframe due to delays with domestic beneficiary banks . Additionally, traditional payment flows involve multiple intermediary banks and high FX costs, keeping remittance costs high – averaging 6.62% for a $200 transfer, over double the G20 target .
Why international payments remain slow
Three key structural issues are preventing seamless global transfers: currency complexity, regulation, and a lack of economic incentive.
Domestic systems handle single currencies, whilst cross-border transactions require either pre-funded accounts or complex mechanisms like payment-versus-payment models that synchronize the final transfer of one currency with that of another. Only limited bilateral connections like Singapore’s PayNow and Thailand’s PromptPay have achieved near real-time cross-border clearing using domestic payment rails.
Furthermore, regulatory differences – like varying anti-money laundering, data privacy, and consumer protection policies – create compliance barriers. The Bank for International Settlements (BIS) estimates that harmonizing G20 settlement definitions could reduce remittance costs by 1-2% .
Lastly, banks profit from float income by holding customer funds and interchange fees paid by merchants to the banks that issue cards. Domestic rails bypass these fees entirely, challenging traditional business models.
Three forces reshaping payments
Against this backdrop of systemic inefficiency, domestic rails, pressure on legacy networks, and stablecoin momentum are reshaping cross-border payments. Real-time domestic payments typically cost <0.05% per transaction and operate continuously . What’s more, Europe’s Instant Payment Regulation will require all euro payment service providers to send and receive funds within 10 seconds by October 9th 2025 .
On the flip side, legacy networks are under pressure from modernised rails, with correspondent banking relationships declining by 22% since 2011. Coupled with rising compliance costs and de-risking strategies by large correspondent banks due to compliance and reputational risk concerns, these legacy networks have left smaller economies with fewer options for cross-border connectivity .
Enter stablecoins, which now have a market cap exceeding $250 billion. Their transformative potential is clearest in challenging corridors like Africa, where traditional cross-border payments have long suffered from 6-10% fees, multi-day settlements, and systemic dollar shortages. Visa’s USDC settlement pilot demonstrates the solution in action with near-instant settlement that reduces costs by up to 80% . The pilot has already processed $225 million, proving that stablecoins can deliver on their promise of faster, cheaper cross-border payments. To ensure this growth happens safely, regulations are catching up and with Europe’s MiCA framework and the U.S.’ GENIUS Act being adopted, the foundations for further stablecoin growth are being built.
Implementation priorities
For organisations navigating the transition to updated payments models, there are a few main areas to consider.
Firstly, organizations should build multi-rail infrastructure that routes payments by cost, speed, and regulation, instead of defaulting to single channels like SWIFT. This will ensure durability and maximise operability. With these infrastructure systems in place, real-time payments shift liability onto the payer’s bank to verify legitimacy, necessitating additional fraud infrastructure. We are seeing regulators respond to this and require the verification of payee capabilities, which, for example, are becoming mandatory under European rules.
For cross-border payments, sub-hour settlements should be the baseline moving forward. Businesses should be working to meet this demand whilst maintaining acceptable data standardisation. In a BIS report on the use of stablecoins in retail and cross-border payments, ISO 20022 was highlighted as a natural messaging standard that can provide the foundation for interoperability between traditional rails and programmable money like stablecoins. Additionally, we are seeing crypto projects being built to match ISO 20022 requirements, like Ripple’s XRP and Stellar’s XLM, so that they can work with existing systems.
Businesses should also build out stablecoin treasury management systems. By doing so, corporate treasurers can benefit from near-instant 24/7 fund movement, reduced FX risk, and eliminating pre-funding requirements. Ultimately, organisations delaying implementation face increasing technical debt and a competitive disadvantage compared to organisations that adopt stablecoins.
The acceleration ahead
The payments industry is experiencing 40 years of evolution compressed into 3-5 years. Citi projects a $286 billion GDP uplift by 2028 from real-time payment adoption, but global distribution looks like it will be uneven for some time.
Thankfully, the $124 trillion B2B payments market is modernizing . Success will belong to organizations that treat payment settlement as a strategic priority and recognize speed, cost, and programmability as competitive differentiators. In a market where settlement time is measured in seconds and costs in basis points, there’s no room for outdated infrastructure.
