Stablecoins could save companies money on cross-border payments and simplify international transactions, but the digital currencies must be better accepted and understood by consumers before achieving widespread use, payments and fintech executives say.
Consumers and small businesses sending money across borders prefer so-called fiat currencies like the dollar, the euro, or the British pound, they said during a panel at the annual Money 20/20 conference in Las Vegas on Oct. 28.
“At the moment, there is simply not the demand for beneficiaries to receive funds in stablecoins,” John McNaught, head of payouts at the Cincinnati-based payment processor Worldpay, told panelists.
Stablecoins were used to settle roughly $10.8 trillion in transactions in 2023, including cross-border payments, for a 17% rise from the year before, according to the cryptocurrency platform Coinbase. That’s still miniscule though given the consulting firm McKinsey estimates global payments industry processed $1.8 quadrillion worth of transactions in 2023.
Cross-border payments are complicated and expensive.
Sending stablecoins — digital currencies pegged to the value of a traditional currency like the dollar, making their value more stable than the volatile digital currencies like Bitcoin — could simplify that process, McNaught said.
When transactions include fiat and digital currencies, “what we're doing is stitching together different ecosystems that don't really talk to each other,” he said.
Sending a stablecoin and simply converting it to the recipient’s currency removes some of the complexity, McNaught said.
The fintech executive described stablecoins as “cross-border middlemen.”
Stablecoins have existed for about a decade. In recent years, companies like the San Antonio, Texas-based stablecoin platform Bridge made them easier to use, said Cuy Sheffield, global head of crypto at Visa, who also sat on the Oct. 28 panel.
Bridge’s plan to be acquired by payments software company Stripe, disclosed earlier last month, demonstrates the growing intersection of payments and digital currencies.
“What Bridge has done represents a trend we're seeing with many companies,” Sheffield said. Bridge is “starting to pair traditional fiat [currency] infrastructure with stablecoin infrastructure, so both sides can speak the same language.”
However, stablecoins are not something the businesses his company works with are asking for, Philipp Reichardt, head of platform sales for the cross-border payments company Airwallex, said in an interview on Oct. 29. (Reichardt was not on the Oct. 28 panel.)
“We certainly can see that there is a potential application” for stablecoins, he said. But “we're not currently seeing a lot of demand from our customers.”
The major obstacle to widespread acceptance is stablecoins’ complicated nature, and existence of many different types of stablecoins, McNaught said. The plethora of options just confuses potential users, and it’s going to turn away some consumers, he said.
“Why are there so many stablecoins, and which one is safer?” he said. It is difficult for consumers and business owners to tell, he explained.
Few stablecoins are direct-to-consumer brands, Sheffield noted. He contended USD Coin is one of the few that some consumers recognize. USD Coin is a stablecoin pegged to the value of the dollar and managed by the Boston-based Circle Internet Group, a money transfer business seeking to advance cross-border digital money movement.
Visa said last year that it is working with Circle to use USD Coin to expand cross-border settlement capabilities.
