Stablecoins are the biggest infrastructure upgrade to payments in decades

Why? Because they're programmable, global, and instant, making them a better choice for many types of transactions. 

But when we think about payments products, there's generally four key criteria we use to judge effectiveness: speed, cost, reliability, and convenience. Stablecoins have some clear advantages, but also several trade offs as compared to traditional payment rails: 

• Speed: stablecoins are faster than ACH and wire transfers, and can compete with card payments. 
• Cost: they're cheaper than cards, but can be less predictable due to gas fees.
• Reliability: generally strong, but dependent on the blockchain stability on which they run.
• Convenience: they require crypto wallets, making them less intuitive for mainstream users as compared to cards and bank transfers
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For cross border B2B payments, stablecoins can be a game changer. But for everyday consumer transactions, cards still dominate, due to their convenience and acceptance, particularly in markets like the US. 

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Right now, it feels like it's early cloud computing. Stablecoins are powerful, but not yet seamless for all use cases. Businesses are still figuring out how to plug in and the setup can be complex.

But just as cloud eliminated the need for businesses to run their own servers, stablecoins will abstract away the fragmented payment rails. Money will move like data, instant, programmable, and borderless. We're headed into a world where payments are on chain, just like content is now on demand, where businesses won't need to think about the rails, just the outcomes.

Over time, middlemen will disappear, costs will compress, and stablecoins will be the invisible engine behind global payments. 

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Now that we’ve covered utility, let's look at adoption

Stablecoins are scaling faster than any other global payment rail today. Total supply has gone from $5 billion to north of $220 billion in just over 5 years.

This market cap is turning over, with $32 trillion of transaction volume in stablecoins in 2024 alone. If we double click on just the payments use cases, that's around $6 trillion or 3 percent of global cross border payments volume today. And they’re still gathering steam. In January this year, payments volume was 2x that of January last year.

In the next five years, we expect this 3 percent of global cross-border payments volume to grow to 20 percent, making stablecoin payments a $60 trillion payments opportunity.

On top of this, we're seeing increasing regulatory clarity, which is a huge unlock. In the US, the Trump administration is pro crypto, and we're likely to see stablecoin regulation in the next 6 to 12 months, while in the EU the MICA framework is now in full force. This is not speculation. Stablecoins are already reshaping global payments infrastructure.

Within five years, every major fintech will integrate stablecoins

Now that we've established that it's not a small shift, but actually the foundation of the next $60 trillion payments market, to remain competitive, all fintechs will need to integrate stablecoins. The big players are already moving, with many, many more testing stablecoin payments or refining their strategy.

Common use cases that we see today for stablecoin payments include:

Business use cases:

• Supplier invoices
• Merchant settlement
• PSP settlement
• Cross-border payments
• Treasury management
   

Consumers:

• Ecommerce payments
• Stablecoin deposits/withdrawals
• Wage payouts
• Marketplace seller payouts
• P2P transfers/remittance
• Store of value

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But there's a fundamental problem with many stablecoin payment solutions out there. And that's that moving money between fiat and stablecoins is complex – and the UX sucks! Payments run on separate systems. Banks rely on Swift, SEPA, ACH. While stablecoins move on blockchains like Ethereum and Tron. Businesses are forced to stitch together multiple providers, third party exchanges for on and off ramps, and navigate complex compliance hurdles just to move money globally.

Most banks won't touch stablecoins, and stablecoins alone can't replace fiat. The result? Slow, fragmented, and expensive payments. 

So we set out to fix it. BVNK has built the first embedded wallet that bridges fiat and crypto in a single solution. Our embedded wallet unifies fiat and stablecoins in one platform, with direct access to Swift, SEPA, ACH and Faster Payments so businesses can receive, send and convert between currencies, without the friction of legacy banking. 

With our embedded wallets we aim to give fintechs flexibility across banking and blockchain rails. And this brings me to my third takeaway.

Stablecoins will only go mainstream when they’re truly interoperable with fiat 

Stablecoins are better infrastructure for global payments because they remove the intermediaries. Which is actually what makes payment slow and expensive in the first place.

Consider a typical correspondent banking model used for cross border payments. Imagine I'm a business owner in the US, trying to pay a supplier in Mexico.

It takes me three to five days, there are at least four banks involved and I'm charged transaction and processing fees multiple steps along the way. While each bank has to do their own compliance checks. Now, let's compare that same flow to stablecoins (bottom half of this diagram).

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Stablecoins replace the messaging layer (Swift) and the money movement layer (the correspondent banking system). So if you're a BVNK customer, we make this payment for you in a matter of minutes – using a stablecoin to accelerate the middle part of the payment journey. Commonly called the stablecoin sandwich. Sounds great, right?

So then why hasn't this gone mainstream? For a few reasons:

• Practicality. While US dollar stablecoins can be used to protect savings from local currency inflation, expenses like groceries and utilities still need to be settled in local currencies.
• ‍Network effects. The global economy still runs on fiat. And stablecoins have just not reached critical mass yet. ‍
• Complexity. Right now, the stablecoin sandwich is just too manual. Businesses need to coordinate across liquidity providers to swap fiat and stablecoins, as well as local partners for off ramp and payouts in fiat, and multiple banks, PSPs, exchanges. This just doesn't scale well. 

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At BVNK, we’re solving this with Layer1, our payments orchestrator 

You might say, payments orchestration isn’t new! We've seen this in traditional payments: where platforms optimize routing, reduce costs, and eliminate complexity. But this is not just about fiat and stablecoins. It's about orchestrating seamless money movement across old and new rails. 

Layer1 is BVNK's tech stack, unbundled from our fully managed custody and payments offerings. Instead of using BVNK's banking partners, liquidity partners, licensing, with Layer1, you plug in your own.

While other wallet solutions were built to hold assets, Layer1 is built to move them across chains and rails, making fiat and stablecoins interchangeable.

• Custody? Bring your own custodian, 1 vault.
• Liquidity? Integrate 60 plus liquidity venues and execute multi leg trades. Payments? Orchestrate Fiat and stablecoin transactions across banks and payment partners.
• Compliance? On-chain and off chain compliance built in. BVNK is enabling any business to launch stablecoin products, whether they want to manage the infrastructure themselves or have a fully managed solution.

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So, to recap on the three takeaways:

• Stablecoins are the biggest infrastructure upgrade to payments in decades. 
• Over the next five years, every large fintech will have a stablecoin solution. 
• Stablecoins will go mainstream when they're truly interoperable with fiat.
   

Will you lead the shift or get left behind? The good news is if you're ready to lead, BVNK is here to help.