A recent mystery-shopping exercise suggests that stablecoin-based remittances are frequently no cheaper than traditional money transfer services once all real-world costs are factored in. The test found that exchange fees, foreign exchange (FX) spreads, and reliance on legacy banking rails can erode the headline savings often associated with blockchain transfers.
Key takeaway
While stablecoins are marketed as a low-cost, near-instant option for moving value across borders, the experiment indicates that end-to-end costs can match or exceed those of established providers. The primary drivers are fees at on- and off-ramps, FX conversion spreads when moving between currencies, and bank charges or delays when depositing or withdrawing fiat.
Why costs add up
- Exchange fees: Buying and selling stablecoins through centralized platforms or brokers typically incurs percentage-based or flat fees.
- FX spreads: Converting from the sender’s currency to a U.S. dollar-pegged stablecoin and then to the recipient’s local currency adds multiple conversion steps, each with its own spread.
- Banking rails: Funding accounts and cashing out often rely on traditional bank transfers, which can introduce additional charges and settlement times.
Implications for remittance use cases
The findings highlight a gap between theoretical and realized savings in cross-border payments using stablecoins. For users and providers, the most significant efficiencies are likely to emerge where local on- and off-ramp costs are minimized, FX steps are reduced, and banking dependencies are streamlined. Until then, stablecoin remittances may not consistently outperform established transfer methods on price, especially in corridors with high conversion and banking fees.