Why Stablecoins Are Becoming the Default for Cross-Border Transactions in 2025

Stablecoins, digital assets pegged to stable currencies such as the US dollar, are increasingly being adopted for cross-border transactions. 

Their ability to facilitate near-instantaneous transfers at low cost addresses the limitations of traditional systems.

Let’s delve into why stablecoins are becoming the default for cross-border transactions in 2025. 

What are Cross-Border Transactions?

Cross-border transactions are any financial transactions involving two or more countries, such as payments, remittances, investments, or trade. 

Individuals, businesses, and governments can all make these transactions, which typically involve multiple currencies, regulations, and financial infrastructures.

Types of Cross-border Transactions

Remittances:

Remittances refer to money sent by migrant workers to their families back home. This is one of the most prevalent forms, especially in developing countries.

B2B Payments:

B2B Payments refer to payments made between companies across international supply chains or service contracts.

Consumer Payments:

Consumer payments include online purchases from international e-commerce platforms, subscriptions to global services like Netflix and Spotify, and cross-border gig work compensation.

Investment Transfers:

Investment transfers refer to funds sent for foreign real estate purchases, stock market investments, or business acquisitions.

Trade Settlements:

Trade settlements involve payments for importing and exporting goods between countries.

Key Components of Cross-Border Transactions

• Currencies: Most cross-border payments require currency conversion, which can result in fees and forex risk.
• Intermediaries: Traditional systems usually involve multiple banks or payment processors that handle and verify transactions.
• Compliance and Regulation: Each country has its own rules (for example, AML/KYC laws), which can lead to delays or rejections.

Why Do Cross-Border Transactions Matter in 2025?

• Globalization of Work: Remote and freelance work across borders has increased, necessitating faster and less expensive ways to pay international talent.
• Digital Commerce Boom: As e-commerce platforms expand globally, they will require seamless payment solutions.
• Diaspora Contributions: Remittances are vital to many economies, and their efficiency impacts millions of households.
• Financial Inclusion: With modern cross-border payment solutions, billions of unbanked people can gain access to global markets.

Entry of Stablecoins

Stablecoins are quickly emerging as a substitute for traditional cross-border transaction systems. They’re digital currencies pegged to stable assets like the US dollar and can be transferred 24/7 across borders with little cost and near-instant settlement. 

This makes them an ideal solution to many of the inefficiencies described above and a major reason why stablecoins are becoming the default for cross-border transactions in 2025.

The Cross-Border Payment Challenges

Despite technological advancements, traditional cross-border payment systems still face significant challenges in 2025. These issues reduce efficiency, increase costs, and limit accessibility for both individuals and businesses.

Here are the major challenges of cross-border payment:

• Slow Settlement Times
• High Fees, Especially for Low-Value Transactions
• Lack of Transparency
• Limited Operating Hours

1. Slow Settlement Times

Traditional cross-border payments, particularly those processed through the SWIFT network, typically take 1 to 5 business days to complete. 

Delays are caused primarily by multiple intermediaries, different time zones, and compliance checks. Because of strict capital controls and regulatory approvals, transfers to countries such as India can take up to three days on average.

2. High Fees, Especially for Low-Value Transactions

Sending small amounts internationally can be prohibitively expensive. The global average fee for remittances is around 6%, with some corridors charging even more. 

Certain regions, such as parts of Africa, can experience a fee rise of nearly 16%. These high costs are often the result of intermediary bank charges and unfavorable exchange rates.

3. Lack of Transparency

The lack of transparency regarding fees and exchange rates is a major issue with traditional cross-border payments. Many consumers are unaware of the specific costs involved, resulting in unexpected deductions. 

Hidden fees, such as intermediary bank charges and exchange rate markups, can account for a significant portion of the overall cost. For example, businesses have reported losses of $120 billion per year as a result of these hidden charges.

4. Limited Operating Hours

Traditional banking systems have limited operating hours that typically coincide with standard business days and hours. This restriction complicates cross-border transactions, especially when dealing with countries in different time zones. 

The lack of real-time processing capabilities causes delays in initiating, clearing, and settling payments.

These persistent challenges highlight the need for more efficient, transparent, and accessible cross-border payment solutions. Emerging technologies, such as stablecoins, are poised to address these issues by enabling faster transactions, lower fees, and greater transparency.

Stablecoins: Why They Are Built for Global Payments

What are Stablecoins?

Stablecoins are digital assets that maintain a stable value by being pegged to reserve assets such as fiat currencies (e.g., USD, EUR), commodities (e.g., gold), or other cryptocurrencies. 

Because of their stability, they are ideal for everyday transactions, cross-border payments, and remittances, serving as a bridge between traditional finance and the digital economy.

Types of Stablecoins

Fiat-Collateralized Stablecoins 

Backed 1:1 by fiat currency reserves in regulated financial institutions.

• Examples: USD Coin (USDC), PayPal USD (PYUSD), and Tether (USDT).
• Use Case: Because of their stability and liquidity, these payment methods are ideal for remittances and cross-border payments.

Crypto-Collateralized Stablecoins

Secured by other cryptocurrencies, and frequently over-collateralized to account for volatility.

• Example: DAI (backed by Ethereum and other assets).
• Use Case: Preferred in decentralized finance (DeFi) applications.

Algorithmic Stablecoins: 

Algorithmic stablecoins maintain their peg through algorithms that control supply and demand.

• Example: USDe.
• Use Case: Offer decentralization but have struggled to maintain stability.

Key Features of Stablecoins for Global Payments

• Borderless: Operate on blockchain networks to provide global accessibility without the need for traditional banking intermediaries.
• Instant Settlement: Transactions are processed in real-time, 24/7, reducing the delays associated with traditional banking systems.
• Low fees: Transaction costs are significantly lower when compared to traditional cross-border payment methods.
• Programmable: Smart contracts can be programmed to perform automated and conditional transactions, increasing efficiency.

Stablecoin Growth Statistics 

• Market Capitalization: As of early 2025, stablecoins have surpassed $230 billion, a 30-fold increase in five years.
• Transaction Volume: Monthly stablecoin transaction volumes increased by 36% over the last year, from $521 billion to $710 billion.
• User Adoption: The number of unique stablecoin addresses has risen to 35 million, up 50% from the previous year, reflecting rising global adoption.
• Remittances and Trade Flows: About 35% of stablecoin usage is related to remittances and trade flows, emphasizing their importance in cross-border transactions.

Stablecoins have emerged as a game changer in the world of global payments, providing speed, cost efficiency, and accessibility. Their rapid adoption and integration into financial systems highlight their potential as the default medium for cross-border transactions in 2025.

Drivers of Adoption in 2025: Why Stablecoins Are Taking Over

Speed and 24/7 Availability

Traditional cross-border payments can take several days to settle due to intermediary banks and limited operating hours. Stablecoins, on the other hand, allow for near-instantaneous transactions on blockchain networks and operate 24/7. 

This immediacy is critical in sectors such as e-commerce, freelance services, and humanitarian aid, where timely payments are required.

Cost Efficiency

Stablecoin transactions on efficient blockchain networks such as Solana and Polygon have low fees. For example, Solana’s transaction fees are around $0.02275, making it an affordable option for frequent transactions. 

This represents a significant savings over traditional remittance services, which can charge fees ranging from 5% to 7% per transaction.

User Growth and Infrastructure

The adoption of stablecoins is increasing in areas with volatile local currencies and limited access to traditional banking. In Latin America, Southeast Asia, and Sub-Saharan Africa, stablecoins are becoming more popular as a store of value and medium of exchange. 

This expansion is aided by integrations with neobanks, digital wallets, and even social media platforms, which integrate stablecoins into daily financial transactions.

Improved Regulatory Clarity

Regulatory frameworks are evolving to provide clearer guidelines for stablecoin usage. In the European Union, the Markets in Crypto-Assets Regulation (MiCA) established comprehensive rules for crypto-assets, including stablecoins. 

MiCA mandates issuers and service providers to be transparent, disclose information, and obtain authorization in order to improve market integrity and protect consumers.

Enterprise Integration

Businesses are increasingly integrating stablecoins into their financial operations. PayPal, for example, intends to expand the use of its stablecoin, PYUSD, throughout its platform, allowing merchants to settle transactions and pay vendors seamlessly. 

This integration enables faster and more efficient cross-border payments and payroll processing, especially for freelancers and contractors.

These factors all contribute to stablecoins’ growing adoption in 2025, positioning them as a viable alternative to traditional cross-border payment methods.

Spotlight: Real-World Use Cases Driving the Shift

Stablecoins are transforming cross-border transactions in 2025, providing faster, more affordable, and accessible financial solutions. The following are the major real-world applications driving this transformation:

Remittances: Empowering Migrant Workers

Stablecoins like USDC streamline remittances in countries like the Philippines and Nigeria. Migrant workers use mobile wallets to transfer funds instantly and affordably, evading traditional banking delays and fees. 

Nigeria notably ranks second globally in mobile crypto wallet adoption, with approximately $59 billion in crypto between July 2023 and June 2024.

Gig Economy: Easy Payments for Freelancers

Freelancers worldwide are increasingly paid in stablecoins such as PYUSD and USDT. PYUSD has been integrated into platforms such as PayPal, allowing US companies to pay international contractors more efficiently, reducing currency conversion fees, and ensuring timely payments.

E-Commerce: Improving Checkout Experiences

E-commerce platforms are adopting stablecoin payments to provide customers with faster and more cost-effective transactions. Shopify, for example, has integrated crypto payment solutions, allowing merchants to accept stablecoins while expanding their customer base.

Aid and Disaster Relief: Rapid Response with Stablecoins

Non-governmental organizations (NGOs) are using stablecoins such as USDC to quickly deliver aid in crisis situations. 

For instance, during the COVID-19 pandemic, NGOs used USDC to provide immediate financial assistance to healthcare workers in Venezuela, ensuring that funds arrived without the delays associated with traditional banking systems.

These practical applications highlight why stablecoins are becoming the preferred choice for cross-border transactions in 2025, providing speed, efficiency, and financial inclusion.

Challenges and Criticisms: Not Always Smooth Sailing

While stablecoins are transforming cross-border transactions in 2025, several challenges and criticisms remain, which could impede their mainstream adoption.

Volatility Risks for Non-USD Pegged Users

Although stablecoins aim to maintain a 1:1 peg to fiat currencies, users in countries with volatile local currencies face exchange rate risks. 

For example, a recipient in a country experiencing rapid currency devaluation may discover that the value of received stablecoins fluctuates significantly when converted to local currency, eroding the stability that stablecoins are intended to provide.

On/Off-Ramp Limitations

Converting stablecoins to local currencies (off-ramping) remains difficult in many regions. Limited infrastructure and regulatory barriers can make it difficult for users to obtain fiat equivalents of their digital assets. 

This limitation reduces the utility of stablecoins for everyday use, particularly in areas where traditional banking services are scarce.

Technical Literacy and Wallet Risks

Stablecoins require a certain level of technical expertise. Users must understand how to securely manage digital wallets, safeguard private keys, and detect phishing attempts. A lack of technical literacy can result in financial losses due to scams or accidental mishandling. 

Furthermore, the decentralized nature of many stablecoin platforms means that customer support is limited, making users vulnerable when problems arise.

Regulatory Gray Zones

The regulatory landscape for stablecoins is still evolving. Banks and financial institutions in some jurisdictions are hesitant to carry out stablecoin transactions due to unclear or restrictive regulations. 

This uncertainty can cause banks to block or delay crypto-linked inflows, posing challenges for users attempting to use stablecoins for cross-border payments.

Addressing these challenges is essential for stablecoins’ continued growth and integration into the global financial system. 

Efforts to enhance regulatory clarity, improve user understanding, and develop a robust ecosystem are crucial steps toward realizing the full potential of stablecoins in facilitating seamless cross-border transactions.

The Competitive Landscape: Stablecoins Vs CBDCs and Banks

As digital currencies gain momentum in 2025, stablecoins, central bank digital currencies (CBDCs), and traditional banking innovations compete for dominance in the cross-border payments space. Each has unique advantages and faces different challenges.

CBDCs: Controlled Progress with Limitations

Central banks around the world are exploring CBDCs to modernize payment systems. China’s digital yuan (e-CNY) remains the most extensive pilot, with transactions totaling about $987 billion across 17 regions by mid-2024. 

The European Central Bank is currently preparing for the digital euro, focusing on developing a comprehensive rulebook and infrastructure, with a decision on issuance expected by the end of 2025.

Despite these advancements, CBDCs frequently operate on private, permissioned ledgers, which limit interoperability and programmability when compared to public blockchain-based systems. 

Concerns about privacy, data control, and the potential impact on commercial banks all pose barriers to broad adoption.

Traditional Banks: Upgrades Amidst Challenges

Traditional banks are improving their payment systems with initiatives such as ISO 20022 and Real-Time Payments (RTP). 

ISO 20022 aims to standardize financial messaging, thereby increasing efficiency and interoperability across borders. RTP systems enable instant settlement, reducing transaction times.

However, these systems are often limited to national boundaries, and their adoption varies across the globe. Banks also face challenges in achieving the flexibility and cost-effectiveness provided by newer digital payment solutions.

Stablecoins: Agile and Inclusive Solutions

Stablecoins, like USDC, USDT, and DAI, have emerged as flexible options for cross-border transactions. They operate on public blockchains and provide 24/7 availability, low transaction fees, and fast settlement times. 

Their programmability enables integration with decentralized applications, which improves financial inclusion.

Major financial institutions are recognizing the potential of stablecoins. PayPal, for example, has introduced PYUSD, a stablecoin backed by the US dollar, to enable seamless digital payments. 

Furthermore, discussions among US banks about issuing a joint stablecoin point to growing institutional interest in this space.

While CBDCs and traditional banking systems are making progress in modernizing cross-border payments, stablecoins currently provide a more agile, cost-effective, and inclusive solution. 

Their ability to operate seamlessly across borders and integrate with emerging financial technologies distinguishes them as a formidable force in the rapidly evolving digital payment landscape.

What’s Next for Stablecoin-powered Global Payments?

Stablecoins are poised to transform global payments in 2025, thanks to advances in blockchain technology, artificial intelligence, decentralized finance (DeFi), and strategic collaboration. Here’s how these developments are influencing the future:

Layer 2 and Zero-Gas Stablecoin Rails

Layer-2 (L2) scaling solutions such as Arbitrum, Optimism, and zkSync Era improve transaction efficiency by lowering fees and increasing throughput. 

These platforms enable near-instant settlements at low cost, making stablecoins more practical for everyday use and cross-border payments.

AI-Powered Cross-Border Payment Optimization

AI is being integrated into payment systems to improve cross-border transactions. AI algorithms analyze transaction patterns to recommend the most cost-effective and timely payment methods, ensuring optimized currency exchange rates and lower fees.

Stablecoin-Backed DeFi Remittance Apps Gaining Mainstream Traction

DeFi applications are transforming remittance services by using stablecoins to provide low-cost, instant transfers. These apps are especially useful in areas with limited banking infrastructure, as they provide financial inclusion to unbanked populations.

Partnerships with Telcos, Fintechs, and Central Banks

Collaborations among stablecoin issuers, telecommunications companies, fintech firms, and central banks are broadening stablecoins’ reach and utility. 

For instance, Standard Chartered has collaborated with HKT and Animoca Brands to create a Hong Kong dollar-backed stablecoin that aims to improve both domestic and international payment systems.

The future of stablecoin-powered global payments looks promising, with technological advancements and strategic collaborations driving their evolution. 

As these developments continue, stablecoins will become an important part of the global financial landscape, providing efficient, inclusive, and secure payment solutions.

Conclusion 

The global financial landscape is transforming drastically in 2025, and stablecoins are at the center of it. Stablecoins have transitioned from crypto-native tools to mainstream financial infrastructure, providing instant settlement, ultra-low fees, borderless access, and programmable utility.

They outperform traditional payment rails in terms of speed, efficiency, and inclusivity, as well as flexibility and usability, surpassing many CBDC initiatives. 

As a result, stablecoins are becoming the default for cross-border transactions in 2025, not due to hype, but because they work.

Real-world adoption of stablecoins is growing, with migrant workers in Nigeria sending remittances in USDC, global freelancers receiving PYUSD from US clients, and merchants offering stablecoin checkout options on Shopify.

For businesses, freelancers, and migrant families, the stablecoin era has already begun. It’s time to explore, integrate, and leverage the potential of programmable, borderless money.