Stablecoins for Cross-Border Payments: An Effective Alternative to Traditional Banking

Businesses have long been burdened by the complex nature of moving money across international borders. Traditionally, cross-border payments through bank transfers that rely on numerous intermediaries. The result of this are high processing fees, lots of friction (multiple business days to settle transactions), and the dependency of businesses on banks limited operating hours. In recent years, stablecoins have emerged as an attractive alternative to a simple problem: how send and receive money across borders in a cost-effective, time-sensitive manner. 

At Levl, we’re developing stablecoin first technology solutions to address this issue, seeking to drive the future of democratizing international payments, levelling the playing field for all our clients. This blog post explores the use of stablecoins as an alternative to the traditional banking system with regards to cross-border payments, and why they are an effective solution for international businesses 

The Worldwide Payments Ecosystem 

International businesses have faced a constant challenge with arduous and expensive cross-border payments. International bank transfers have historically relied on networks like SWIFT, a system that enables banks to communicate with each other, but rely on transactions to move through multiple intermediary banks before they settle. This results in long transaction times, and a reliance on traditional operating hours for each of the intermediary parties. In transactions where at least one party is an emerging economy, these transactions can be particularly painstaking with higher FX fees, and longer transaction times. Many of these countries also have central banks that limit the use of foreign reserves, making international payments inaccessible for many businesses in such countries. 

Stablecoins as a Solution 

Stablecoins are digital currencies designed to maintain stable values by being pegged to fiat currencies, typically the U.S. dollar. Stablecoins maintain their peg through a variety of mechanisms, most commonly backing each token with reserve assets like US dollars, Treasury bills, or other stable assets held by a regulated entity. The digital component of stablecoins however, allow them to bypass many of the challenges associated with international transfers. Stablecoins can settle in minutes or seconds on blockchain networks and operate 24/7 without banking hour restrictions.  

The technology also eliminates many of the intermediaries in the process. Instead of routing through multiple intermediaries, payments can flow directly between parties using stablecoin rails, reducing both the cost and complexity associated with cross-border payments. 

Key Advantages for International Business 

Cost Efficiency: Traditional cross-border payments often involve fees from multiple banks and currency conversion charges that can total 3-7% of the transaction value. Stablecoin transactions typically cost under 1% of the total transaction amount. 

Speed and Availability: While traditional bank transfers can take 3-5 business days to clear, stablecoin transactions settle within minutes regardless of time zones or holidays, enabling businesses to manage cash flow more effectively. 

Enhanced Transparency: Blockchain technology provides complete transaction visibility, allowing businesses to track payments in real-time compared to traditional banking systems where transaction status can be unclear. 

Real-World Applications 

Stablecoins are transforming how businesses handle international payments across several key areas. Companies use them for supplier payments, enabling faster settlement with overseas vendors. International payroll processing has become more efficient, particularly for businesses with remote workers who can receive payments instantly rather than waiting for traditional wire transfers. 

Trade finance is seeing significant adoption, where stablecoins enable faster invoice settlement and reduce working capital requirements. Businesses in emerging markets find stablecoins particularly valuable for accessing global markets without traditional banking restrictions.  

The Future of Cross-Border Payments  

The adoption of stablecoins in international payments represents a fundamental shift toward more efficient, accessible, and transparent financial systems. As regulatory frameworks mature and technology continues to improve, stablecoins are positioned to become a standard tool for businesses managing international transactions. 

Companies that embrace stablecoin technology today can gain competitive advantages through reduced costs, faster settlement times, and improved cash flow management. The technology is particularly beneficial for businesses operating in multiple time zones, those with frequent international transactions, or companies seeking to expand into emerging markets where traditional banking infrastructure may be limited. 

Key Takeaways 

Stablecoins offer a compelling alternative to traditional cross-border payment methods, addressing many of the longstanding challenges that have hindered international business operations. By providing faster, cheaper, and more transparent payment solutions, stablecoins enable businesses to operate more efficiently in the global economy. 

At Levl, we're committed to helping businesses harness the power of stablecoin technology for their international payment needs. Our stablecoin-first solutions are designed to provide the infrastructure necessary for businesses to seamlessly integrate these advantages into their operations. 

The future of cross-border payments is digital, efficient, and accessible. Stablecoins are leading this transformation, and businesses that adopt them today will be better positioned to thrive in tomorrow's interconnected economy.