For businesses as well as individuals, cross-border payments have always been a pain point. Trading money across borders is generally a slow, pricey, and obscure process. At the same time, the parties in the business of global trade face the problems of payment reconciliation and currency conversion fees.
Over the past decade, fintech companies have been rising to solve some of these issues by using technology to increase speed, transparency, and cut costs. But the vast majority of fintechs continue to use the old correspondent banking system for cross-border transfers.
The Shortcomings of Correspondent Banking
Most cross-border payments today rely on a system called correspondent banking. Under this framework, banks maintain accounts with banks in other countries to facilitate payments across borders.
For example, if a bank customer in the U.S. wants to send a payment to Mexico, their bank will send the payment instructions to its correspondent bank in Mexico. That bank will then credit the recipient’s account with the transferred money.
While correspondent banking has enabled cross-border transactions for decades, it comes with several downsides:
It’s slow. By having to pass payments from bank to bank, settlement times stretch to days or weeks. Each additional bank that touches the payment increases clearing time.
There are opacity issues. As payments pass through multiple intermediaries, it becomes difficult for end-users to track the status of transfers. This lack of visibility causes problems in reconciliation.
It’s expensive. Banks charge relatively high fees to facilitate correspondent banking transfers to account for telecommunication, compliance, and currency conversion costs. These fees are usually passed down to end consumers.
There are liquidity issues. Banks must pre-fund accounts held with overseas banks to enable seamless cross-border payments. Tying up money in low-yielding nostro accounts is expensive for banks.
The system was not built for an increasingly global and digital economy where businesses and individuals expect fast, affordable payments with end-to-end tracking.
Fintechs initially tried to improve correspondent banking from the front-end by building better UIs and tracking systems. But most of the underlying issues remained unsolved. It soon became clear that innovation was needed at the foundation layer of cross-border infrastructure.
This is where crypto payment solutions are beginning to play a transformative role. By enabling near-instant, transparent, and low-cost value transfer without the need for a network of correspondent banks, crypto payment solutions offer a fundamentally different approach. These decentralized systems reduce the reliance on intermediaries, improve traceability, and eliminate the need for costly pre-funded accounts, making them especially attractive in a digital-first world demanding speed, efficiency, and global reach.
Crypto’s Potential to Solve Cross-Border Friction
Fintechs have started leveraging cryptocurrency rails to facilitate transfers between currencies and countries.
Cryptocurrencies are digital assets that run on public blockchains like Bitcoin and Ethereum. Using crypto for payments introduces several advantages:
- Speed. Cryptocurrency transactions settle within minutes on public blockchains without having to go through intermediaries. Both Ripple and Stellar have been able to achieve 1-2 second settlement times.
- Transparency. Blockchains provide immutable records of every transaction that can be easily tracked through explorers. Users know where their money is at all times.
- Lower costs. By eliminating manual processing and nostro accounts, fintechs like Circle and Coinbase have reduced fees to 1-2% using crypto-based transfers.
- Liquidity. Fintechs can source liquidity from global crypto capital markets to enable instant settlements without pre-funding accounts.
- Programmability. Smart contracts allow fintechs to code complex transfer logic and payout conditions directly into transactions. This enables advanced treasury and trade finance functions.
While the borderless nature of crypto is ideal for facilitating cross-border transfers, volatility in crypto prices can make it impractical as a payment method.
Stablecoins, which are crypto tokens pegged 1:1 to fiat currencies like the U.S. dollar, solve this. Leading fintechs use stablecoins for transfers and then cash them out to fiat at the receiving end.
Crypto Use Cases Across B2B Payments, Trade Finance, and Remittances
Many top fintechs across various cross-border verticals have integrated crypto in recent years as an efficient rail to move money globally.
Consumer Remittances
International money transfers by foreign workers to support their families back in the home country are called remittances. Remittance alone in 2019 was estimated to have been over $500 billion.
But sending $200 across borders today costs the average person outside of wealthier circles around 7% of the money, essentially pushing people from a disadvantaged background. Remittances using cryptocurrencies come with much lower fees.
Business-to-business Payments
Cross-border B2B payments facilitate import/export transactions between companies. This is a $120 trillion market plagued by issues like currency volatility and invoice reconciliation during settlement.
Trade Finance
Banks underwrite guarantees on behalf of importers/exporters to minimize risk for international trades. But paper-based documentation makes this inefficient.
Fintechs like We.Trade are creating blockchain platforms for automating letters of credit and payment/shipping obligations between parties. Crypto is used to instantly settle payments.
Major Fintechs Driving Crypto Adoption
The fintech companies leading the disruption in global payments, remittances, and trade finance using crypto include:
Inqud
B2B crypto infrastructure for the payments, wallets, and tokenization, the digital asset platform Inqud is something that covers the whole gamut there. What it offers is plug-and-play APIs and white label solutions specifically for fintechs, exchanges, and institutional clients.
Crypto on or off-ramping, wallet management, and providing processing in instant payments across multiple blockchain networks are some of the offerings that Inqud provides. Both digital and fiat currencies are supported here, and conversions as well as liquidity provisioning across the globe are seamlessly provided by it. It also actually focuses on the regulatory compliance and the customizable security layer for the enterprises’ deployment.
Ripple
The payments-focused fintech created the XRP cryptocurrency ledger for instant settlement of cross-border transactions. XRP acts as a bridge between fiat currencies during a transfer.
Ripple products enable banks and fintechs to message and settle payments with end-to-end tracking. It uses XRP to source liquidity for trades, allowing nostro account balances to be reduced by 60%. Over 300 financial institutions use RippleNet.
Stellar
Stellar is an open network that connects banks, payment systems, and users to facilitate fast and cheap cross-border transfers. Through Stellar Enterprise, fintechs can conduct FX transactions and offer mobile money transfer services.
It has partnered with IBM for several CBDC projects in Asia. The Stellar Development Fund also backs startups using blockchain to promote financial inclusion.
Circle
Circle issues USD Coin (USDC), the second-largest stablecoin pegged 1:1 to the U.S. dollar. Over $50 billion in USDC runs on public blockchains.
Circle Business Account uses USDC rails to conduct cross-border B2B payments and treasury services for enterprises. It allows businesses to send and receive funds instantly across borders.
BitPay
BitPay is a crypto payments processor that enables merchants to accept payments from customers in digital currencies. Through partnerships with banks, these crypto payments can be converted to fiat.
Beyond payments, BitPay also enables cheap cross-border B2B transfers using stablecoins. Businesses can pay overseas vendors in USDC or other tokenized fiat currencies.
We.Trade
We.Trade is a consortium of major banks backed by IBM, building an enterprise-grade blockchain trading platform for managing trade finance transactions in B2B trade.
It digitizes commercial documents like purchase orders and invoices and leverages smart contracts to automate workflows and release payments/shipments. Crypto helps cheaply settle these digital obligations.
Conclusion: Fintech-Crypto Collaboration Will Define the Future of Finance
Cross-border payments have seen little innovation over the last 50 years compared to other industries. But fintech adoption of cryptocurrency as a new global settlement layer promises to drastically solve latency, cost, and transparency issues.
Leading fintechs across payments, banking, and capital markets are collaborating with crypto companies in various ways to improve existing products:
- Asset management apps are adding crypto trading alongside traditional securities.
- Neobanks allow customers to buy/sell crypto from their accounts.
- Payment fintechs leverage stablecoins for global transfers.
- Decentralized finance apps use crypto for lending outside of banks.
Incumbent financial institutions are also launching crypto services to keep up with fintech innovation:
- Visa is piloting settlement in USDC stablecoin to expand its reach.
- JPMorgan issued its own JPM Coin for interbank settlements.
- PayPal allows users to buy, sell, and hold crypto assets.
The unique properties of crypto combined with the intuitive interfaces of fintech create a powerful formula to achieve the ideal of real-time and affordable money movement globally.
This collaborative approach, where fintechs handle fiat-to-crypto on-and-off ramps while blockchains facilitate settlement between currency pairs, is likely to define the future of finance.
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This page was last updated on April 23, 2025.
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