The global payments infrastructure is undergoing a significant transformation, driven by modernization and innovation. Stablecoins are increasingly being utilized to build robust crypto payment systems, streamline cross-border transactions, and facilitate remittances. In 2023, the stablecoin market settled over $10.8 trillion in total transaction volume—or $2.3 trillion when adjusted for non-organic activities like bot-driven or automated trades. On an adjusted basis, transaction volume grew by 17% year-over-year, indicating that stablecoins are rapidly catching up with major traditional payment networks.
While existing payment systems benefit from liquidity and network effects, competition has driven down costs. According to the World Bank, the average cost of sending remittances has decreased by more than one-third over the past 15 years. However, the global average cost for sending $200 remains high at 6.35% of the transaction amount, totaling approximately $54 billion in annual fees. In contrast, stablecoin-based remittances cost significantly less—between 0.5% and 3.0%—with potential for further reduction as technology advances.
As technology makes it easier for merchants and users to adopt new payment methods, traditional systems are becoming more vulnerable to disruption by fintech innovators. The integration of stablecoins into existing payment workflows is one example of cryptocurrencies gaining real-world utility. That said, broader adoption requires simplifying blockchain’s technical complexities and establishing clearer regulatory frameworks to ensure consumer protection and financial inclusion.
The Four Pillars of Traditional Payments
The current payment ecosystem consists of diverse entities, which can be broadly categorized into four groups. Many of these players are beginning to explore stablecoin integration:
- Automated Clearing Houses (ACHs): Electronic networks used for bank transfers and other financial transactions, primarily within domestic borders.
- Major Card Networks: Including Visa, Mastercard, American Express, and China’s UnionPay.
- International Banking Networks: Such as SWIFT and China’s Cross-Border Interbank Payment System (CIPS).
- Mobile Payment Systems: Platforms like PayPal/Venmo, Alipay, WeChat Pay, and India’s Unified Payments Interface (UPI) that facilitate digital and peer-to-peer (P2P) transactions.
It is worth noting that large-value systems like the U.S. Fedwire are excluded from this list, as they primarily serve institutional participants and do not focus on retail payments or remittances.
How Stablecoins Compare
Traditional payment systems dominate in volume but suffer from drawbacks such as high transaction fees, slow settlement times, and limited transparency. For example, bank transfers often involve multiple intermediaries, each adding cost and complexity.
Stablecoins, operating on public blockchains, offer a decentralized alternative with transparent processes that help prevent fraud and resolve disputes via consensus. This often results in lower costs, faster settlement, and easier transaction tracking.
However, using stablecoins involves trade-offs. For instance, blockchain-based settlements are near-instant but can be irreversible in cases of fraud. The proliferation of multiple blockchains can also fragment liquidity, forcing users to bridge assets across chains—a process that introduces cost and risk. Additionally, the user experience in crypto remains cumbersome for the average person. Fortunately, innovations like smart contract wallets and payer-based gas fee structures are gradually abstracting away this complexity.
Advantages of Incumbent Systems
Established payment networks still hold significant advantages, including massive user bases and substantial transaction volumes. Network effects matter: it is easier to send and receive money using platforms that everyone else uses. A McKinsey report suggests that banks maintain higher consumer trust compared to fintech companies. For stablecoins to achieve mass adoption, they must not only address regulatory uncertainty but also build user trust.
Competition has already driven down costs in traditional remittances. According to the World Bank, the average cost of sending money across borders has fallen by more than a third over the past 15 years. However, sending $200 internationally still costs an average of 6.35%—roughly $12.70 per transaction.
In comparison, the average cost of a stablecoin-based remittance ranges from 0.5% to 3.0%. This range accounts for potential additional expenses such as currency conversion fees when moving between fiat and stablecoins. As adoption increases and networks scale, these costs are likely to decrease further due to higher transaction volumes and improved efficiency.
Filtering Out the Noise
Stablecoins are often called “crypto’s killer app” due to their potential in mainstream commerce and their advantages over traditional payment rails in speed and cost. This label reflects the promise of stablecoins to attract a broader consumer base to blockchain technology.
In reality, the primary use case for stablecoins today is enabling crypto traders to move digital assets between centralized and decentralized exchanges. This is why stablecoin market capitalization is often used as a proxy for digital asset market liquidity.
To better understand organic adoption, we filtered stablecoin transaction data to exclude non-organic activity—such as duplicate smart contract transactions and automated bot-driven trades—using methodology similar to that outlined by Visa in a recent blog post. After applying these filters, we found that stablecoins still settled over $2.3 trillion in organic transactions in 2023, focused largely on payments, P2P transfers, and remittances.
This adjusted volume grew by 18% in 2022 and 17% in 2023—a faster growth rate than any major traditional payment network. In absolute terms, stablecoin transaction volume after filtering is approximately one-fifth of Visa’s payment volume and more than one-quarter of Mastercard’s.
The Regulatory Landscape
Wider stablecoin adoption faces one major hurdle: regulation. In 2020, the Financial Stability Board (FSB) published a set of high-level recommendations for the regulation, supervision, and oversight of global stablecoin arrangements, which were finalized in July 2023. These recommendations are shaping stablecoin regulation across jurisdictions.
In Europe, the Markets in Crypto-Assets (MiCA) regulation has legalized stablecoin issuance under strict rules and operational guidelines. In Asia, jurisdictions like Singapore and Japan have implemented frameworks, while Hong Kong plans to introduce regulations soon.
In the U.S., two bills are under discussion: the Clarity for Payment Stablecoins Act of 2023 (CPSA) and the Lummis-Gillibrand Payment Stablecoin Act (LGPSA). Both propose reserve requirements for issuers and include consumer protection provisions, but they differ in regulatory approach. The CPSA advocates for state or federal oversight, while the LGPSA proposes a comprehensive federal regime.
Frequently Asked Questions
What are stablecoins?
Stablecoins are cryptocurrencies designed to maintain a stable value by being pegged to a reserve asset like the U.S. dollar. They combine the benefits of digital assets—such as fast settlement and global accessibility—with the price stability of traditional currency.
How do stablecoins reduce remittance costs?
By using blockchain technology, stablecoins eliminate intermediaries typically involved in cross-border transfers. This reduces fees, accelerates settlement times, and increases transparency compared to traditional banking channels.
Are stablecoins regulated?
Regulation varies by jurisdiction. In the European Union, MiCA provides a comprehensive framework, while in the U.S., stablecoins exist in a regulatory gray area. However, multiple legislative proposals are under consideration that could bring clarity.
What risks are associated with stablecoins?
Key risks include regulatory uncertainty, potential fraud or irreversible transactions, and liquidity fragmentation across different blockchains. Users should also be aware of exchange fees when converting between fiat and stablecoins.
Can stablecoins be used for everyday purchases?
Yes, but adoption is still growing. Major companies like Visa, Mastercard, and PayPal are integrating stablecoins, and payment processors such as Stripe support crypto transactions. However, user experience and regulatory frameworks need to improve for broader use.
What is the future of stablecoins?
Analysts project significant growth, with the stablecoin market potentially reaching $3 trillion within five years. This will depend on regulatory developments, technological improvements, and increased merchant adoption.
Conclusion
The payments landscape is evolving rapidly, and traditional systems—including banking networks, credit cards, and mobile payments—face growing pressure to adapt. Stablecoins bridge the volatile world of cryptocurrencies with traditional finance by offering price stability and efficiency. Although stablecoins have been technically available since 2015, they have only gained traction for low-cost transfers in the last 2–3 years.
While stablecoins offer compelling advantages in speed and cost, they must integrate with existing financial systems to achieve everyday utility. Recent partnerships between companies like Coinbase and Stripe, as well as initiatives from Visa, Mastercard, and PayPal, signal growing acceptance. For stablecoins to fully deliver on their potential, they need clearer regulations and smoother user experiences. 👉 Explore advanced payment strategies
We believe stablecoins represent the next major leap in payments and capital movement—especially as merchants and other entities find it increasingly easy to integrate this technology into their workflows. The future of global payments is being rewritten, and stablecoins are at the heart of this transformation.