Stablecoin 'Sandwich' May Not Be the Solution for Cross-Border Payments

The idea that stablecoins are better suited for cross-border payments is widely accepted in the crypto industry, but does it truly solve any problems?

According to Jonah Burian, Investor at Blockchain Capital, people often overlook the fact that fintech companies like Wise have already made cross-border payments fast and cheap without using stablecoins.

The traditional correspondent banking system is both expensive and slow due to multiple layers of intermediaries taking a cut. World Bank data shows the average total cost of consumer cross-border remittances through bank channels is nearly 15%, with transfer times ranging from 1-5 business days.

Fintech companies like Wise have transformed this model by creating networks that rely on partner banks, financial licenses, and local partners. They can net settle transactions in opposite directions, minimizing the need for cross-border fund transfers.

The result is a more efficient system with lower fees. Wise has dropped its cross-border business comprehensive fee rate to about 0.5%, which is already on the lower end of the industry at 3.5% for purely digital remittance service providers.