Fintech providers outperform banks and stablecoins in cross-border payment costs

Research from the Bank for International Settlements (BIS) indicates that fintech money transfer operators (MTOs) are significantly reducing the costs of cross-border payments compared to traditional retail bank wire transfers. In the studied bank transactions, foreign exchange markups ranged from approximately 2% to 4.7%, even for highly liquid currency pairs, before accounting for explicit wire transfer fees.

Fintech transfer costs were found to be considerably lower, with costs declining as a proportion of the total amount sent as transfer sizes increased. For $10,000 transfers originating in the United States, median costs across developed-market currency groups were approximately $40 to $60.

While stablecoins are gaining interest as an alternative for international transfers, the BIS research suggests their cost advantages are not guaranteed. Their effectiveness depends on market liquidity, access to traditional currencies, regulatory compliance, and the reliability of intermediaries. Traditional banking structures often struggle to meet the demand for real-time liquidity required by global freelancing and cross-border e-commerce, frequently resulting in high exchange rate markups and slow settlement cycles due to intermediary banking networks.