Stablecoins in Remittance: Key Benefits, Potential Risks, and Real-World Implementation

As one of the largest economic sectors, the remittance industry is evolving rapidly. Indeed, we have come a long way from sending international payments through banks and waiting for days to carry out online cross-border payments. Yet, individuals and businesses face struggles with speed, security, and high cost.

As per the industry experts, stablecoins in remittance payments have the caliber to deal with these issues. Blockchain is transforming every single sector for good reasons, but how could the application of stablecoin actually work in remittance?

Let’s explore how stablecoin-based payments can actually make such an enormous difference in the remittance sector. We will also discuss the expected industry changes and examine real-world implementations already taking shape.

What Are Stablecoins?

As the term implies, stablecoins are a type of cryptocurrency that maintains a stable value by being tied to a certain underlying asset. They are presented as a better alternative to highly volatile crypto coins but still hold most of the beneficial characteristics of blockchain technology.

They are further categorized into two types:

• Fully reserved stablecoins: These stablecoins are pegged to high-grade assets such as fiat currency or short-term government securities.
• Algorithmic stablecoins: These stablecoins are linked to digital contracts (smart contracts) that operate as per the demand and supply imbalances.

Understanding Stablecoins In Remittance

Stablecoin remittance is the transfer of stablecoins by the sender to a recipient in another country. These coins are typically pegged to a stable asset, most commonly a fiat currency like the US Dollar (USD). Some stablecoins may also be backed by commodities such as gold, but fiat-backed stablecoins are the primary type used in remittance today.

Remitters use stablecoins to send money to recipients in other countries because they are price-stable (unlike cryptocurrency) and can be transferred quickly over a blockchain network.

How do Stablecoins In Remittance Work?

Stablecoin remittances are peer-to-peer (P2P) transactions between the sender and recipient. Since the platforms allow value to move directly from sender to receiver using the blockchain network, these payments remove multiple intermediaries, such as correspondent bank participants, and streamline international money movement. Here’s the basic flow of how a stablecoin remittance payment works:
Convert Fiat To Stablecoins

Sender initiates the payment by first converting its funds in local currency to a stablecoin. They add the desired amount on a crypto exchange platform that converts it into a stablecoin and stores it in the digital wallet.

Process Stablecoin Remittance Payment

The receiver located across the border can receive the stablecoins in their digital wallets. The sender can transfer stablecoins from their digital wallet to the recipient’s wallet either through the wallet’s alphanumeric address or by scanning a QR code.
The process records on the blockchain’s distributed ledger and takes no more than a couple of minutes and even seconds in some cases.

Convert Stablecoins To Fiat or Directly Use Them

As the stablecoin payment is made to the overseas recipient, they can use it for their desired purpose. They can either hold the coins in the wallet, cash out to local currency using the crypto exchange platform, or directly use them for payments to other digital wallets.

Key Benefits of Stablecoins for Remittance Payments

The biggest advantage of stablecoin-based remittance is their stability, as they are pegged to real-world assets. But there is more to It! Stablecoin payments offer several advantages, as detailed below:

Low Transaction Costs

Traditional Remittance payments involve multiple intermediaries that not only make the remittance chain way too complex but also lead to increased transaction costs as each participant adds their own fee. Hence, it leads to a reduced amount of money that actually reaches the recipient, especially in the case of low-value transfers.

Stablecoin payments actually process between just the sender and the recipient’s wallet and eliminate many of these middle steps. Blockchain settles the payment by moving funds directly between digital wallets and helps remitters save on multiple fees and pay low network charges.

Quick Settlement Across Borders

International money transfers take days or weeks for the money to actually reach the recipient. It is, of course, due to the lengthy payment rails, but also due to the multiple compliance checks, the time zone differences, and unavailability during weekends and holidays. But stablecoin remittances are immune to this! These payments can be made at any time of day or week, and they settle in a matter of minutes or even seconds.

Access for the Unbanked and Underbanked

There are many areas in some countries that don’t have access to banking services. Due to this, remitters struggle to send money to these countries. Stablecoin payments can be sent to any area of the world that has internet access and a mobile device to transfer funds.

Transparent and Secure Transfers

Stablecoin transfers are recorded on the immutable distributed ledger, which provides complete visibility to each transaction. This allows remitters and recipients to track the status and confirmation of transfers in real time.

Reputable wallets and service providers implement strong security measures—such as encryption, private key protection, and multi-factor authentication—to protect users’ funds. This ensures that transfers remain secure and reduces the risk of fraud when proper security practices are followed.

Potential Risks and Challenges of Stablecoin Payments

Every technology leaves some gaps for future innovation, and stablecoin payments are no exception. There are some potential risks and challenges of stablecoin payments that are essentially obstacles to smooth implementation:

Reserve Quality and De?Pegging Risk

Not all stablecoins are the same. Some are pegged to fiat reserves, some to crypto collateral, and some are operated by a set algorithmic mechanism. If their reserves aren’t transparent and well-managed, a stablecoin may lose its peg, leading to instability and potential losses for users. This is quite common in the case of algorithmic stablecoins that actually operate using smart contracts that adjust supply and demand automatically.

Regulatory Uncertainty

Stablecoins sit at the crossroads of payments, banking, and digital currency. Some countries still have not established regulatory frameworks for stablecoin payments. As a result, there is confusion about the rules that govern stablecoin issuance, custody, and use. It makes it difficult to ensure compliance, meet various licensing requirements, handle tax implications, and so on.

Cybersecurity and Private Key Management

Although blockchain works perfectly to protect its network from any kind of tampering, the responsibility for protecting access to funds lies with the end user. Stablecoin transactions are controlled through private keys. If these keys are lost, exposed, or stolen, attackers can gain full access to the user’s wallet. Consequently, poor private key management can lead to unauthorized access and potential loss of funds.

Real-World Implementation Of Stablecoin Cross-border Payments

Although it is still in early stages, several corridors and industries have begun stablecoin remittances at scale. Here are some of the real-world implementations of stablecoin remittances:

• Countries like Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, and many more in Southeast Asia are home to major remittance markets. Several licensed money remittance platforms in these regions allow currency conversions to the local currencies for stablecoin payments sent from the United States and European countries.
• Mexico, Colombia, and Argentina support stablecoin remittances. Senders in the U.S. can transfer stablecoins to family members in these countries. The receivers can either convert them through local exchanges or use them directly on digital platforms for payments.
• Visa, the world’s second-largest card payment organization, has been piloting stablecoin settlement since 2023. It settles payments in USDC on the Ethereum and Solana blockchain networks.
• Payroll providers are also employing stablecoin cross-border payments to pay for freelancers, cross-border contractors, and gig workers located overseas.

Wrapping Up

Stablecoins have a lot to offer to the remittance software industry ! Where it can help remitters with affordable and swift payments, stablecoin remittances can actually contribute to improving the global economy. At Tech Remit, as a fintech development company, we continually explore innovative solutions and emerging technologies that improve the remittance experience for both individuals and businesses. Our tech experts have found stablecoins to be one of the most promising tools for helping streamline international payments, reduce transaction costs, and carry near-instant payment settlements. Get in touch with us to explore how Tech Remit is powering stablecoin remittance payments.

Also Read : Role of Blockchain in Cross-Border Payments in 2025