How are Stablecoins Changing International Money Transfers

Picture this: you need to send $5,000 to a supplier in another country. Your bank charges you a $45 transfer fee, takes a 3% cut on the exchange rate, and tells you the money will arrive in 3-5 business days. By the time your supplier receives it, they’re looking at around $4,800. You just lost $200 and almost a week.

If you have dealt with international payments, you understand this frustration. The fees add up. The delays are annoying. And somewhere between banks and intermediaries, a chunk of your money just disappears.

But there is a shift happening. Stablecoins are starting to change how money moves across borders, and they are doing it in a way that actually makes sense for businesses and individuals who are tired of the old system.

So, before we really understand how cross-border payments are taking a shift, let us understand what stablecoins are.

What Are Stablecoins?

Stablecoins are digital currencies that are linked to a traditional asset such as the US dollar, euro or gold. Stablecoins are designed to maintain a constant price, unlike Bitcoin or Ethereum, whose price shifts wildly.

Here is how they work?

Every stablecoin issued must have an equal amount of assets in reserve. Since USDC is a popular stablecoin that represents a US dollar, there should be one US dollar backing it. Because they are backed by a stable asset such as the US dollar and can be used in daily transactions rather than just derivatives, stablecoins are very popular. 

The technology behind stablecoins is blockchain. The verification can be done by anyone since the record is decentralised. No single bank or institution controls it. When you send stablecoins to someone, it is settled over this network in a matter of minutes and at a fraction of bank fees.

Consider stablecoins like digital cash that can travel at the speed of the internet. Stablecoins are a type of cryptocurrency that aim to peg their market value to an outside reference, such as the US dollar. You get the stability of traditional currency with the efficiency of crypto technology, which usually equals 1 Stablecoin = 1 USD.

How Stablecoins are Reshaping International Money Transfers

The traditional cross-border payment system is a mess. When sending money internationally, it goes through multiple banks, which take a cut, adding time to the process. In journeying to us, your payment could pass through various banks across various countries. Every step adds cost and delay.

Stablecoins cut through all of that. By sending stablecoins across a border, you are transferring digital coins from your wallet to the recipient’s wallet. There is no chain of banks. No correspondent banking fees. No waiting for business hours in different time zones. The transaction will be done on the blockchain and confirmed in minutes, costing a few cents to a couple of dollars, no matter how much you’re sending.

The cost difference is huge. $25-$50, plus a percentage of fees, for a wire transfer.

Sending stablecoins? Usually under $5, sometimes less than a dollar. If you are a company that pays abroad on a regular basis, those savings add up fast. A firm that wires $50,000 every month to a different country can save thousands of dollars over the year, just by switching to stablecoins.

Speed is another game changer. Regular money transfers can take 3 to 5 business days as they depend on banking hours and manual processing. Stablecoins move 24/7. A payment sent at 2 am on Sunday will reach its destination within minutes. For companies relying on payment within specific timeframes or people sending money back home to family, speed is important.

There is also the transparency factor. Using stablecoins allows you to monitor your transactions in real time on the blockchain. You can see the time the order is placed to when it’s delivered. No more calling your bank to ask where your money went. The entire process is visible and verifiable.

Types of Stablecoins

Before you start using stablecoins for international transfers, it helps to understand what types exist. Each has different backing mechanisms and use cases.

Type	How It Works	Examples	Best For
Fiat-Backed	Backed 1:1 by traditional currency held in bank accounts or regulated reserves	USDT (Tether), USDC (USD Coin), BUSD	Most common for cross-border payments. Easiest to understand and widely accepted.
Crypto-Backed	Backed by other cryptocurrencies, usually over-collateralised to manage volatility	DAI	Users who want decentralisation but require more technical understanding.
Algorithmic	Maintains its peg using smart contracts + algorithms, not backed by physical assets	Previously UST (now defunct)	Very risky. Several have collapsed. Not recommended for business use.
Commodity-Backed	Pegged to real-world commodities like gold, silver, or oil	Paxos Gold (PAXG)	Niche category. Good for storing value, not for everyday transactions.

Fiat-backed​‍​‌‍​‍‌​‍​‌‍​‍‌ stablecoins are the main players in cross-border payments. They are also the easiest ones to use and the most trusted because one can verify that they are actually backed by real assets. Namely, USDC and USDT are the two most popular tokens on which transaction volumes of billions of dollars are done on a daily basis.

The advantage of crypto-backed stablecoins such as DAI is that they provide more decentralisation. Nevertheless, they are less straightforward and could be more difficult to supply an explanation to suppliers or partners who do not know about crypto.

Algorithmic stablecoins have experienced issues. On account of several significant failures (e.g., Terra’s UST collapse in 2022), these should be considered as risky choices. So, unless you are very knowledgeable in this area, it is better to go with fiat-backed options when dealing with business transactions.

The stablecoin that you opt for is of utmost importance. If you are operating a business, then it is certain that you would prefer a stablecoin that is reliable, accepted by many, and can be easily converted to dollars when the need arises. Most of the time, that simply translates to fiat-backed stablecoins that are already established and issued by reputable entities.

The movement of cross-border payments to stablecoins is not just a fad. In fact, businesses are already implementing them in their operations to save money and accelerate the transaction process. Eventually, as the adoption of digital wallets and blockchain technology increases among companies and individuals, stablecoins may very well become one of the standard ways for sending money abroad, together with traditional bank transfers and other payment ​‍​‌‍​‍‌​‍​‌‍​‍‌services.

PandaMoney uses stablecoins as a secure, behind-the-scenes payment rail to move money across borders faster and at lower cost than traditional bank transfers. When you send money via a normal bank transfer, PandaMoney converts the funds into USD-backed stablecoins (such as USDC or USDT), transfers them instantly across borders using blockchain infrastructure, and then converts them back into the recipient’s local currency before depositing the money directly into their bank account. This reduces reliance on slow, multi-bank SWIFT routes, avoids unnecessary intermediaries, and enables quicker settlement, lower fees, and greater transparency — all without requiring you or your recipient to use crypto or manage a wallet.