BIS Working Paper: Stablecoin Cross-Border Payment Costs Still Constrained by Intermediary Fees and Liquidity

The Bank for International Settlements published Working Paper 1385 in October 2026, authored by Wenxin Du, Catherine Huang and David Scharfstein. The paper compares all-in costs across three cross-border payment channels: traditional bank wires, fintech money transfer operators (MTOs), and stablecoin-based transfers. Its central finding is that fintech MTOs have already substantially compressed cross-border payment costs, while stablecoins have not become the panacea for payment frictions that market narratives implied.

The paper constructs a comparable cost measurement methodology that separates foreign exchange markups from explicit fees. For bank wires, the authors find that even on highly liquid currency pairs, FX markups range from approximately 2% to 4.7%, before accounting for explicit wire fees. By contrast, fintech transfer costs are considerably lower and decline substantially as a share of the amount sent as transfer size increases. For $10,000 transfers from the United States, median costs across developed market currency groups are around $40–$60.

The problem with stablecoins is that cross-border transfers still require bidirectional conversions between fiat currencies and stablecoins. These conversions rely on crypto exchanges and other intermediaries, whose trading, conversion and withdrawal fees can substantially increase the total cost. Recipients may also have to wait for stablecoin conversion and bank processing before they can actually access funds in their bank accounts. More critically, liquidity between US dollar stablecoins and non-US currencies is generally very thin, which limits the feasibility of large transfers.