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

Wenxin Du, Catherine Huang and David Scharfstein

No 1385, BIS Working Papers from Bank for International Settlements

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.

Keywords: cross-border payments; fintechs; stablecoins; SWIFT (search for similar items in EconPapers)
JEL-codes: E42 F31 G21 O33 (search for similar items in EconPapers)
Date: 2026-10
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Persistent link: https://EconPapers.repec.org/RePEc:bis:biswps:1385

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