Who Will Share the Profits of Cross-Border Remittances in the Stablecoin Era?

On-chain settlement is just the foundation; no global giant can monopolize it, and profits ultimately flow to regional leaders.

Written by: Prathik Desai

Compiled by: Saoirse, Foresight News

All excellent technologies are powerful equalizers, establishing a universal benchmark for the total value that can be created at the top. Mobile phones and the internet are excellent examples from the 20th century, while blockchain is expected to become a similar technology in the 21st century.

High remittance costs remain a longstanding pain point in the international payment sector. However, the costs of cross-border transfers are not composed of a single fee; the entire process involves multiple layers and participants, each charging fees for their part in the cross-border transaction.

This article will break down this industrial structure and explain how on-chain and off-chain platforms can collaborate to extract value in this iterative remittance system; this new system can reduce remittance fees and accelerate the speed of cross-border capital flow.

The flow of funds itself generates costs, and the expenses of cross-border transfers are even higher. The problem is that users often silently bear these costs without understanding what they are actually paying for.

Suppose you work in the United States and send $100 home; your family in Mexico receives only about 94 dollars when converted to pesos. The apparent loss of 6 dollars seems to be the remittance fee. However, the fee displayed on the screen is only about 2 dollars, less than half of the 6 dollars. So where does the remaining 4 dollars go?

A typical remittance transaction goes through multiple intermediaries, each controlled by specific institutions, and all parties take a cut. The largest portion usually comes from the foreign exchange conversion: dollars need to be converted into pesos to be deposited into a Mexican account, and banks charge a markup on the market exchange rate, which accounts for about 3 dollars, half of the total expenditure.

Cost breakdown of a $100 cross-border remittance from the U.S. to Mexico

With the emergence and gradual popularization of stablecoins, we once thought they would completely rewrite the cross-border remittance model. But where will reality lead? Blockchain is merely the entry threshold, not a competitive moat; it cannot create an industry giant that dominates the market.

The real value lies in off-chain operations: obtaining licenses, building banking partnerships, and achieving end-point payouts. Different countries and regions have vastly different regulatory rules and banking system requirements. The remittance market will see a surge of regional leading enterprises, each deeply cultivating their own remittance channels, establishing advantages that are difficult for others to reach; these advantages can stem from licensing resources, strong distribution channels, or cross-selling capabilities. This article will outline how this industrial structure will evolve.

The above diagram only shows one transfer path: sending $100 from the U.S. to Mexico. If we consider remittance channels like Europe to Asia, or differentiate between person-to-person and business-to-business remittance types, the cost structure will change according to the specific challenges faced. Each remittance channel and each type of remittance scenario has its unique bottlenecks, and as these bottlenecks change, market opportunities and value attribution will also shift.

Hopefully, Remittances Can Be Cheaper

The U.S.-Mexico remittance channel is a relatively mature case; it is the largest bilateral remittance route in the world. Both ends have well-developed payment infrastructures, and market competition has driven the fee for sending dollars to Mexico down to 4.53%. Mexico also has the lowest receiving costs among the G20 countries. At the same time, the liquidity of the Mexican peso is sufficient, and the country's real-time payment system, SPEI, can process transactions instantly around the clock. If all remittance channels reached this level, blockchain would have little room to operate.

According to World Bank data, the average remittance fee worldwide is 6.36%, more than double the target set by the United Nations. The situation is particularly severe in Sub-Saharan Africa, where the average fee reaches 8.46%, and there are 13 remittance channels in Africa with fees exceeding 20%, making it the region with the highest receiving costs globally. In contrast, the Middle East, North Africa, Afghanistan, and Pakistan have the lowest receiving fee rates in the world, averaging 5.11%.

Costs arise from friction. In recipient countries like Mexico, where the banking system is well-established and local payment channels are reliable, most issues have been resolved, and the role of blockchain is limited. However, in regions where banking services are lacking, costs are high, or the public does not trust banks, blockchain becomes a natural choice. Globally, there are about 20 remittance channels that completely lack low-cost services, the vast majority of which are internal transfers within Africa.

The biggest bottleneck for any remittance channel is the foreign exchange spread, which depends on the degree of trade relations between the economies of the two currencies. When trade is frequent, the two countries will hold each other's currencies, ensuring currency liquidity. Trade activity between the U.S. and Mexico is very robust, with ample liquidity for dollars against pesos, leaving banks with little room for markup. However, when trade relations are sparse, both sides have no incentive to hold the other's currency, leading to severe liquidity shortages in the foreign exchange market.

This relationship between trade and the foreign exchange market creates a paradox: the places where remittance demand is most urgent have the highest transfer costs.

Analysis of major cross-border remittance channels

Different Transfer Scenarios Face Different Challenges

Geography is just one influencing factor; the type of transfer business is also crucial.

The previous example of $100 represents a person-to-person (C2C) transfer. In 2025, person-to-person remittances accounted for less than 5% of retail remittance transaction volume but contributed 14% of industry revenue, with an average fee rate of 3.1%, the highest among all business types. In contrast, business-to-business (B2B) remittances have the largest transaction volume but the lowest fee rates.

Cross-border payment flow and revenue by business type in 2025

The roots of the obstacles to the scaling of these two types of businesses are different. Person-to-person transfers involve small amounts and are often one-time transactions, where identity verification, compliance checks, end-point payouts, and marketing promotions all increase customer acquisition costs. Therefore, the core of competition in personal remittances lies not in foreign exchange conversion but in channel distribution. The underlying payment channels have become increasingly homogenized; the key is to acquire and retain remittance users at low cost to capture value.

In contrast, business-to-business transactions involve large amounts and high transaction frequencies, with minimal fees, and the upper limit of business scale is constrained by working capital. To ensure that the recipient in Manila receives funds on the same day, the service provider must pre-deposit pesos into an account in Manila, known as pre-funding. If the service provider wants to serve multiple countries, the amount of pre-funding required will balloon, making it difficult for a single company to bear.

Thus, it is clear that different transfer scenarios require different solutions: personal remittances need lower customer acquisition and distribution costs, while business remittances need to reduce capital occupation to achieve timely payouts across various remittance channels and minimize pre-funding. Many blockchain projects are reconstructing the industrial structure around these two types of scenarios.

Who Is Taking My Profits?

Now that the infrastructure is gradually becoming complete, blockchain is ironically the easiest part to build. Blockchain can reduce settlement and foreign exchange conversion costs, but since anyone can use blockchain, this cost reduction does not provide a unique competitive advantage. All participants using blockchain start from the same starting line, and the value that can be contested flows entirely off-chain. Only local companies holding exclusive licenses, banking partnerships, and mature deposit and withdrawal networks have the opportunity to capture the largest share of value.

In the new generation of remittance architecture, the core functions at each level have not fundamentally changed; they have merely been completed using new assets, reshuffling the value distribution pattern.

Every remittance begins at the customer interaction layer. Applications with massive traffic that build transfer entry points can solve the pain points of person-to-person remittances.

Felix Pago, for example, conducts remittance business through WhatsApp, allowing immigrant communities to avoid downloading a brand new app. By sending $200 through Felix Pago, users can receive 3680 Mexican pesos, while Wise can only provide 3604 pesos. Felix Pago uses stablecoins for on-chain settlement, but users see only the messaging software they have been using for many years.

The distribution channel is its competitive moat, and it is precisely based on this that Felix Pago completed a $75 million Series B financing, achieving an annual transaction volume of several billion dollars.

Felix vs. Wise platforms: how many pesos can be exchanged for $200 sent to Mexico?

The deposit and withdrawal layer is the most challenging part of the entire system. The cost of stablecoin transfers is almost negligible, but the conversion between cash and stablecoins is precisely the dilemma faced by most crypto payment solutions. Each country has its own banking system, regulatory license requirements, and cash usage habits, so deposit and withdrawal facilities must be built for each market; only companies deeply rooted in a single region can spread the investment costs and achieve a commercial closed loop. This also determines that the winners in this track are regional professional service providers, not a single globally applicable deposit and withdrawal solution.

Yellow Card has obtained currency transmission licenses and virtual asset service provider licenses in over 20 African countries, connecting banks and mobile money networks to achieve two-way conversion between fiat currencies like naira, cedi, and rand and stablecoins. Acquiring a full set of licenses takes time and is costly, so Yellow Card chooses to export this infrastructure, profiting from deposit and withdrawal service fees and business transaction volumes rather than charging ordinary consumers.

Kotani Pay connects stablecoins to mobile money through USSD functionality, allowing even feature phones without internet access to complete fund payouts; this challenging but necessary integration is rarely undertaken by companies.

Coins.ph is a licensed deposit and withdrawal service provider in the Philippines, connecting to the country's real-time payment system and cash agent network, profiting from licensing resources and payout reach capabilities.

Looking at the bigger picture, the deposit and withdrawal layer is filled with numerous localization challenges. This is why regional players can harvest value here; Yellow Card and Coins.ph each focus on their respective remittance channels without competing for market share.

ZyntaFinance addresses similar pain points for businesses. Most African currencies do not have direct trading pairs, so when transferring funds from Accra to Lagos, the money must go through intermediary banks in New York or London, first converting cedi to dollars and then to naira. ZyntaFinance uses stablecoins for settlement, with a single fee of 0.5%-1%, and will choose the optimal public chain among Solana, Ethereum, and Stellar based on real-time costs.

The orchestration layer primarily serves business-to-business operations. Orchestration layer service providers uniformly manage payment channels, stablecoin types, and remittance routes, packaging deposit and withdrawal and settlement capabilities into a set of API interfaces. This layer did not exist in the old industrial structure, and existing industry giants are actively acquiring to enter this space.

Stripe spent about $1.1 billion to acquire Bridge, allowing developers to complete cross-border transfers without worrying about wallet, public chain, or license details, simply by calling the interface; Stripe relies on its massive merchant base to extract service fees from each transfer, rapidly expanding its business scale.

Mastercard spent $1.8 billion to acquire BVNK, enabling large enterprises to achieve multi-channel settlement of fiat currencies and stablecoins, along with compliance licenses in various regions.

The orchestration layer is one of the few levels that could potentially give rise to a global leader. Companies like Stripe and Mastercard can connect all remittance channels through a single API. However, even so, global orchestration service providers cannot control the naira withdrawal channel, Philippine payout licenses, or local bank accounts in Manila; they must connect with regional leaders. Global giants thus become clients of local service providers, and value flows down to the regional leading enterprises that control scarce resources in each remittance channel: whether it is a trusted user interaction entry point, compliance license conditions, or massive reserves that can generate passive income.

Stablecoins reconstruct the seven-layer industrial chain of remittances, reducing the cost of a $100 cross-border remittance from $5.99 to $1.10, with stablecoins replacing SWIFT in the settlement layer.

Floating Capital Returns

The settlement asset layer replaces the traditional cross-border messaging system. Stablecoins replace SWIFT messages and pre-funded nostro accounts, enabling 24/7 settlement.

The value of this layer comes from reserve assets. Circle holds tens of billions of dollars in U.S. Treasury bonds as reserves for USDC, earning interest on these reserves, which ordinary holders cannot access. In 2025, Tether profited over $10 billion from this model, with its advantageous position being in emerging markets where remittance issues are most pronounced. This is also why traditional giants like Western Union, Visa, and PayPal are rushing to issue their own stablecoins rather than simply using third-party stablecoins.

The foreign exchange layer was once the most profitable segment of the old structure. Under the new system, banks' original markups of 50-150 basis points have been compressed to single-digit costs.

OpenFX quotes only 3-12 basis points, using stablecoins as the settlement channel for foreign exchange transactions, attempting to hedge foreign exchange exposure through reverse orders; when hedging is not possible, it takes on positions itself to provide real-time determined exchange rates.

If market liquidity is poor and currency volatility is high, holding positions directly carries significant risk; OpenFX will transfer this risk to local banks or over-the-counter trading desks in exchange for lower profits. Internal order matching can reduce capital occupation, further amplifying the contribution of fee income to profits. dLocal employs this model in Africa, Latin America, and Asia, maintaining a fee rate around 0.7%, surviving on transaction volume rather than high profits.

The clearing and netting layer optimizes capital efficiency. Netting offsets transactions flowing in both directions, only transferring funds for the remaining net amount after mutual offsets. The clearing layer is responsible for processing net settlements of multi-party transactions.

As mentioned earlier, service providers need to pre-fund in various countries; companies like OpenFX and dLocal rely on clearing and netting to reduce the scale of idle funds dispersed across different countries.

Institutions like Ubyx, t-0 Network, and Cycles achieve bilateral trading hedging, where neither party needs to pre-fund. If someone sends dollars to Manila while someone else sends pesos back, the two transactions offset each other without actual fund transfers. The clearing institution consolidates a pile of bilateral debts into a net amount for settlement, charging fees for the netting service.

Although the current business volume is still small, this model can release hundreds of billions of occupied capital. The t-0 Network is set to launch in early 2026 and has already supported cross-border payments for 1200 currency pairs. From January to August 2026, the scale of business-to-business stablecoin settlements reached $150 billion, a 40% year-on-year increase.

By comparing the new and old industrial structures, we can see what has changed and what remains the same.

Traditional remittance structure vs. stablecoin remittance structure

In the past, most profits were taken by the foreign exchange conversion segment; now profits are redistributed to three major sectors: the interaction layer with scarce traffic, the orchestration layer that major giants are competing to acquire, and the settlement asset issuers earning reserve interest.

Value flows to the entities that control scarce resources within each remittance channel: whether it is a user-trusted interaction entry point, compliance license conditions, or massive reserves that can generate passive income. The on-chain segment finds it difficult to capture high value; stablecoins can only accelerate the cross-border flow of dollars, but ultimately someone has to hold pesos in Manila to complete the dollar conversion.

The case of cross-border remittances has universal implications. Blockchain reduces transfer costs but does not allow any single company to build a competitive moat based on this efficiency. In the Web 2.5 era, protocols handle the underlying work while applications control users; cross-border remittances add a regional attribute on top of this: infrastructure is becoming globalized, but differentiated competitive barriers are firmly rooted locally.

Remitters in the U.S. still send out $100, and their families in Mexico can receive a few more dollars on the same day. However, most of the profits generated in between end up in the pockets of companies in cities neither party has heard of or visited.