4.5 Stablecoins vs Traditional Payment Rails
What you'll learn: The direct cost and speed comparisons between traditional payment systems and stablecoins, why sending $1,000 internationally costs $75-150 via SWIFT but under $7 with stablecoins, and when each system makes practical sense.
When Maria in New York sends $200 to her family in Mexico, she faces a choice that millions confront daily. Through Western Union, she'll pay $15-20 in fees and her family receives the money in 2-3 days. Using stablecoins, that same transfer costs under $1 and arrives in minutes [1]. This comparison repeats across corridors worldwide, revealing why stablecoins processed $27.6 trillion in 2024 [2], surpassing the combined transaction volume of Visa and Mastercard.
Understanding Payment Rails
Payment rails are the infrastructure systems that move money between people and businesses. Think of them as highways for financial transactions, each with different speeds, costs, and accessibility.
Traditional payment rails include:
Bank wires: Direct transfers between bank accounts
Credit cards: Networks like Visa and Mastercard that process retail payments
ACH (Automated Clearing House): The system handling direct deposits and bill payments in the US
SWIFT: The international messaging network banks use for cross-border transfers
Money transfer services: Companies like Western Union and MoneyGram
These systems evolved over decades, creating reliable but often slow and expensive ways to move money, particularly across borders.
The below table compares how different payment systems perform across key characteristics. While traditional rails excel in trust and regulatory clarity, stablecoins offer advantages in programmability, interoperability, and 24/7 availability. Understanding these trade-offs helps explain why different systems serve different needs.
This comparison reveals why businesses and individuals increasingly view stablecoins and traditional systems as complementary rather than competing. The specific cost and speed differences make this concrete:
Domestic Payments
ACH (US)
$0.20-0.50
1-3 business days
Business hours
US only
SEPA (EU)
€0.20-0.50
1 business day
Business hours
EU only
Wire Transfer
$15-30
Same day to 1 day
Business hours
Domestic
International Payments
SWIFT
$25-100 + 3-5% FX
1-5 business days
Business hours
Global
Card Networks
1.5-3% + FX fees
1-3 business days
24/7 processing
Global
Western Union
5-10% total
Minutes to days
Business hours
200+ countries
Stablecoins
Ethereum
$2-6
12 seconds
24/7/365
Global
Polygon
<$0.01
2 seconds
24/7/365
Global
Solana
<$0.01
<1 second
24/7/365
Global
The Speed and Cost Reality
Traditional systems show their age through their limitations. A domestic ACH transfer costs about $0.54 [3] and typically settles the next business day. Credit-card transactions take 1.5-2 % of the transaction value in fees [4], with merchants waiting 1-3 days for funds [9]. International SWIFT transfers present the starkest contrast: $25-65 in fees plus 0.5-3% in foreign exchange spreads, with most arriving within 24 hours but some taking up to 5 business days [5].
Stablecoins dramatically reduce these friction points. Sending USDC on networks like Polygon costs less than a penny with ~2-second settlement [6]. Even on Ethereum, the most expensive network, average fees are $2-6 in normal conditions [7]. The difference becomes most apparent in international transfers: sending $1,000 via SWIFT costs $30-95 total (3-9.5%), while the same stablecoin transfer costs $1-7 (0.1-0.7%), saving 70-95%.
Settlement-speed advantages prove equally compelling. While SWIFT averages 18 hours for completion [5], stablecoin transfers settle in seconds to minutes on most networks. This 24/7 availability serves global commerce without regard to banking hours or holidays.
European and Card Network Comparisons
SEPA transfers within Europe cost €0.20-0.50 and settle next business day, making them efficient for euro-denominated transfers between EU countries. However, they still operate on banking hours and exclude weekends. Card networks like Visa and Mastercard process transactions 24/7 but charge merchants 1.5-3% plus currency conversion fees for international transactions. While cards offer consumer protections and dispute resolution, these benefits come at a premium that merchants ultimately pass to consumers.
Why Stablecoins Cost Less and Move Faster
The efficiency gains stem from fundamental architectural differences. Traditional payments move through multiple intermediaries: your bank, correspondent banks, clearing houses, and the recipient's bank. Each adds processing time and fees. A $1,000 SWIFT transfer might touch 4-5 institutions, each taking their cut and adding their processing time.
Stablecoins eliminate these intermediaries. When you send USDC, the blockchain directly updates two balances: decreasing yours and increasing the recipient's. No banks negotiate in between. No clearing houses batch process overnight. The network operates like a global spreadsheet that updates instantly and automatically, available to anyone with internet access.
This direct transfer model explains both the speed (no queues or batch processing) and low cost (no intermediary fees). You only pay for the computational resources to record your transaction on the blockchain.
Real-World Payment Corridors
The US-to-Latin America remittance corridor, worth $161 billion annually [10], demonstrates these advantages clearly. Felix Pago, a WhatsApp-based stablecoin service, processed over $1 billion in 2024 [11] across Colombia, Ecuador, and Peru, charging < 1 % compared to traditional services’ 5-10 %. MoneyGram partnered with Stellar to offer stablecoin conversion at 380 000+ cash-out locations worldwide [12], bringing digital efficiency to cash-dependent communities.
Consider specific examples:
A $100 remittance from the US to Mexico costs $5-10 via Western Union but < $1 using stablecoins.
A Filipino worker in Singapore sending wages home saves ≈ 85 % on fees while family receives funds instantly.
A small business paying a $10 000 invoice to an overseas supplier saves $400-900 per transaction.
These savings explain why 71 % of Latin-American businesses now use stablecoins for cross-border payments [13], with similar adoption patterns emerging across Southeast Asia and Africa.
Regional Adoption Patterns
Different regions adopt stablecoins for different reasons, reflecting local economic realities. Sub-Saharan Africa leads global adoption, driven by currency instability and limited banking access. In Nigeria, where the Naira lost 55 % of its value in 2023 [17], stablecoins provide a form of digital dollarization for savings and payments.
Latin America shows similar patterns. Argentina leads with 61.8 % of crypto transactions being stablecoins, while Brazil follows at 59.8 % [14]. The correlation is clear: countries with currency instability see higher stablecoin adoption as citizens seek stable stores of value.
Developed markets adopt stablecoins differently. North-American businesses focus on efficiency gains for international payments. Europe benefits from clear regulatory frameworks that encourage institutional adoption. Asia-Pacific markets vary from Singapore’s wholesale financial applications to India’s retail-driven usage.
Who's Making the Switch
Nearly 20 million people actively use stablecoins monthly, and adoption is accelerating among both consumers and businesses. For individuals, primary uses include:
Savings protection in high-inflation countries
Remittances that cost 80-90 % less than traditional services
Freelancer payments that arrive instantly regardless of banking relationships
Online purchases from international merchants without credit cards
Business adoption has moved beyond experimentation. Over 25 000 merchants worldwide accept stablecoins [15], with major platforms like Shopify enabling millions more. SpaceX uses stablecoins for Starlink payments in emerging markets [16]. Telecom companies process billions in carrier settlements, achieving 3-4× cost savings on international transfers.
Financial institutions, initially skeptical, now embrace the technology. JPMorgan expanded its JPM Coin to euro payments. Visa settled $225 million in stablecoin transactions [18]. PayPal launched PYUSD for both consumer and business use. These aren’t experiments but operational systems processing real value.
When Each System Makes Sense
Traditional payment rails maintain advantages in specific scenarios:
Domestic payments where ACH or local systems work efficiently
Consumer protections for credit-card disputes and fraudulent charges
Established relationships where businesses have negotiated rates
Regulatory requirements in highly regulated industries
Stablecoins excel for:
International transfers with 80 %+ cost savings
24/7 operations across time zones and holidays
Unbanked access where traditional accounts aren't available
Speed requirements when minutes matter more than days
High-frequency transfers where percentage fees compound
Important Limitations to Consider
Despite their advantages, stablecoins present real constraints:
Irreversibility: Once sent, transactions cannot be reversed. No chargebacks or dispute resolution exist.
Technical barriers: Users must manage wallet addresses and private keys. One wrong character in an address means permanent loss of funds.
Limited acceptance: While growing, merchant adoption remains far below credit cards.
Regulatory uncertainty: Rules vary by jurisdiction and continue evolving.
No deposit insurance: Unlike bank accounts, stablecoin holdings lack government protection.
These limitations make stablecoins unsuitable for situations requiring payment reversibility, serving non-technical users without support, or where regulatory compliance demands traditional rails.
The Practical Reality
The data reveal that stablecoins have crossed from experimental technology to essential financial infrastructure. For specific use cases like international transfers, remittances, and emerging-market payments, they already represent the superior choice. Traditional systems won't disappear but will increasingly compete on their remaining strengths: regulatory compliance, dispute resolution, and domestic efficiency.
As integration simplifies and costs continue falling, the question shifts from whether to use stablecoins to which situations benefit most from their advantages. For anyone sending money internationally, operating across time zones, or serving customers in currency-unstable regions, understanding stablecoins has become as important as understanding credit cards or bank transfers.
The transformation parallels previous payment innovations. Just as credit cards didn't eliminate cash but created new possibilities, stablecoins won't replace all traditional rails but will serve the use cases where speed, cost, and accessibility matter most.
Key Takeaways:
SWIFT transfers cost $25-100 plus 3-5% FX fees with 1-5 day settlement; stablecoins cost under $1 with instant settlement
US-Mexico corridor: $100 remittance costs $5-10 via Western Union, under $1 using stablecoins
71% of Latin American businesses use stablecoins for cross-border payments, saving 80-90% on fees
Traditional systems maintain advantages for domestic payments, consumer protections, and regulatory compliance
Stablecoins excel for international transfers, 24/7 operations, and serving the unbanked, but face limitations in reversibility and technical complexity
References
[1] SWIFT Transfer Fees and Charges Explained - https://payglocal.in/blog/swift-charges-explained
[2] Stablecoin surge: Here’s why reserve-backed cryptocurrencies are on the rise - https://www.weforum.org/stories/2025/03/stablecoins-cryptocurrency-on-rise-financial-systems/
[3] The FinTech Revolution: Is the ACH Network a Part of It? - https://www.forbes.com/sites/forbestechcouncil/2022/10/11/the-fintech-revolution-is-the-ach-network-a-part-of-it/
[4] Credit Card Processing Fees: A 2025 Guide for Businesses - https://www.nerdwallet.com/article/small-business/credit-card-processing-fees
[5] How Long Do SWIFT Transfers Take? - https://tools.statrys.com/blog/how-long-does-a-swift-transfer-take
[6] Upgrading Every EVM Chain to ZK: Introducing the Type 1 Prover - https://polygon.technology/blog/upgrade-every-evm-chain-to-zk-introducing-the-type-1-prover
[7] Average Transaction Fee on Ethereum Chart - https://www.theblock.co/post/195391/from-cryptopunks-to-redditors-and-a-trump-card-the-year-in-nft-charts
[8] Merchant Services: Settlement Time 24-48 Hours - https://www.investopedia.com/merchant-service-8624263
[9] U.S. Remittances to Latin America Hit $160.9 B - https://www.barrons.com/articles/tax-immigrant-remittance-trump-8cb31e49
[10] Félix Raises $75 M; Processed $1 B+ in 2024 - https://www.finextra.com/newsarticle/45791/flix-raises-75-million-for-whatsapp-based-stablecoin-remittance-platform
[11] MoneyGram Has 380 000+ Agent Locations - https://www.lightspark.com/knowledge/moneygram-vs-paypal
[12] State of Stablecoins Report - Fireblocks - https://www.fireblocks.com/report/state-of-stablecoins/
[13] The 2024 Geography of Crypto Report (PDF) - https://admin.lexikon.com.mx/archivos/The_2024_geography_of_crypto_report_1729164229.pdf
[14] Stablecoin Statistics 2025 - https://coinlaw.io/stablecoin-statistics/
[15] Crypto for Advisors: The Growth of Stablecoins - https://www.coindesk.com/coindesk-indices/2025/01/22/crypto-for-advisors-the-growth-of-stablecoins
[16] Naira Plunged 55 % in 2023 - https://www.bloomberg.com/news/articles/2023-12-29/ngn-usd-nigeria-s-naira-set-for-worst-year-since-1999-with-no-rebound-in-sight
[17] JPMorgan to Offer Instant USD-EUR Settlement via Blockchain - https://www.bloomberg.com/news/articles/2024-11-06/jpmorgan-jpm-coin-to-offer-instant-dollar-euro-blockchain-trades
[18] Visa’s Role in Stablecoins - https://corporate.visa.com/en/sites/visa-perspectives/innovation/visas-role-in-stablecoins.html
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