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Competing rails for crossborder payments: banks, fintechs, and stablecoins

Author

Listed:
  • Wenxin Du
  • Catherine Huang
  • David Scharfstein

Abstract

Cross-border payments remain slow and expensive despite significant improvements in digital financial infrastructure over the past several decades. This paper compares the cost of sending cross-border payments across three payment rails: traditional banks operating through the correspondent banking system and SWIFT, fintech money trans fer operators (MTOs) such as Wise, Remitly, and the digital arm of Western Union, and stablecoin-based transfers. We construct harmonized all-in costs measures across these three rails for different corridors and payment values. We find that fintech MTOs have significantly compressed the costs of cross-border payments, and demonstrate that stablecoins are not a panacea for frictions in cross-border payments.

Suggested Citation

  • Wenxin Du & Catherine Huang & David Scharfstein, 2026. "Competing rails for crossborder payments: banks, fintechs, and stablecoins," BIS Working Papers 1385, Bank for International Settlements.
    • Handle: RePEc:bis:biswps:1385
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    Keywords

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    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Systems; Standards; Regimes; Government and the Monetary System
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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