A Simple Guide to Cross-Border Payment Rails: Banks, Fintech, and Stablecoins

Cross-border payments have always been messier than they should be. Slow, expensive, and hard to track. Today, there isn’t one global system, there are three.

First, there’s the traditional banking model, reliable but clunky. Then there’s the fintech workaround, faster, cheaper, and now the norm in many markets. And more recently, there’s a third option creeping in: stablecoins.

Whether stablecoins actually solve anything depends on where you look. In the big currency corridors, some argue they’re more trouble than they’re worth. Airwallex CEO Jack Zhang recently put it bluntly: if you’re moving dollars to euros through regulated fintech rails for less than 0.01 percent, as Airwallex claims to do, then why bolt on a blockchain?

But in other markets, where local currencies are volatile and it’s hard to find liquidity or willing counterparties.

Here’s how the models compare, and why the choice of rail now depends on where you are, what you need, and how fast you need it.

Traditional Model

Let’s start with the traditional model, the way international payments have worked for decades.

When you ask your UK bank to send money to someone in the US, the payment doesn’t move in a single, direct line. It travels through a network of correspondent banks, a chain of relationships where each bank holds accounts with others to help route funds across borders.

Your bank might not hold US dollars, but it has a relationship with a bank that does. That intermediary bank maintains a nostro account, a pool of pre-funded dollars that your bank owns but the intermediary holds on its behalf. The receiving bank, on the other end, might also hold a vostro account, reflecting those funds from its perspective. The actual money doesn’t cross the border in real time, it’s already sitting in these accounts, waiting to be moved between ledgers. In most cases, the payment is settled by adjusting balances between these accounts, not by shipping money around.

Now add SWIFT, the Society for Worldwide Interbank Financial Telecommunication. It doesn’t move money. It moves messages. It’s a secure, global messaging system that tells each bank in the chain what to do: debit this account, credit that one, confirm the transaction. Think of it as a fax machine with a network effect, the protocol that everyone agrees to use, not the value itself.

The process works, but it’s hardly modern. It can take one to three business days, especially if several intermediaries are involved. Each bank in the chain might charge a fee. And because the system relies on legacy infrastructure and siloed databases, there’s a real lack of transparency, for the sender, the recipient, and sometimes even the banks in the middle.

The money “moves,” yes, but only in the sense that balances are adjusted between institutions who already hold funds on one another’s behalf. In practice, it’s less like moving water through a pipe and more like updating a shared spreadsheet across time zones.

So where does the traditional model still fit in? Mostly in large, regulated corridors where trust, security, and compliance matter more than speed. If you’re a multinational moving millions between treasury accounts or a corporate bank settling high-value trade finance, this system offers predictability and scale. But if you’re a freelancer waiting on a $300 payout, or a startup trying to pay global contractors quickly, it can feel like overkill. So lets move on.

Fintech Model

Now compare that with how fintech services like Wise, Airwallex or Revolut handle the same task. They do not actually send your money across borders.

Instead, they hold local bank accounts in the countries where they operate. When you send pounds in the UK, they pay out dollars in the US from their own US-based account. Your money never leaves the country. It is local in, local out.

Because they control both ends of the transaction, they bypass the entire correspondent banking chain. There is no need for nostro accounts, no messaging via SWIFT, and no waiting while multiple intermediaries take their cut or approve the transaction.

It is faster, cheaper, and more transparent. Most payments arrive within seconds or hours, and users get clear pricing with FX rates close to the mid-market. For freelancers, remote teams and global SMEs, this is no longer the future. It is already the default.

Behind the scenes it is not magic. Just smart treasury management presented in a way that feels smooth to the user.

This model works best in well-regulated, well-connected currency corridors where speed, cost-efficiency, and transparency matter. If you’re a remote worker in the Philippines getting paid by a client in the UK, or a SaaS business sending recurring payouts to global contractors, fintech rails like Wise or Airwallex offer a reliable, low-friction path. These providers settle locally at both ends, bypassing traditional correspondent banks, which makes them ideal for smaller, high-frequency payments. They combine fast execution with full regulatory coverage through licensed local partners, offering users the convenience of consumer-grade apps with the confidence of banking-grade oversight.

Stablecoin Option

Then there’s the stablecoin option. This one might feel futuristic, but for many people around the world, it’s already part of daily life.

In this model, you hold or send digital tokens, typically USDC or USDT, on a public blockchain. These tokens are designed to stay stable in value, usually pegged to the US dollar. You send them to your recipient, who receives them almost instantly. From there, they can hold the tokens, spend them, or convert them into local currency.

The on-chain transfer is fast, global and low-cost. There are no correspondent banks, no pre-funded nostro accounts, and no long waits for settlement. But the friction often appears at the edges, in the off-ramp. Converting from stablecoins back into fiat can be expensive, inconsistent, or compliance-heavy, especially in regulated corridors.

That’s exactly the point Airwallex CEO Jack Zhang raised recently in a thread that sparked debate. He argued that in major currency corridors stablecoins add very little value. The off-ramp is often more costly than using interbank FX. For well-regulated businesses making high-volume payments between dollars, pounds, and euros, the fintech rails already make the cost of money movement negligible, in some cases under 0.01 percent. If that’s the case, he asked, why add a layer of complexity?

Today, stablecoins tend to add the most value where traditional finance falls short. In countries with unreliable banking infrastructure, skewed official exchange rates, or strict capital controls, they offer a practical workaround. Freelancers in Argentina trying to preserve earnings against inflation, or merchants in Nigeria settling weekend cross-border invoices, use stablecoins like USDC or USDT to store and send value in a dollar-like form, instantly, across borders, and often outside banking hours. The trust shifts from banks to token issuers, and the legal clarity varies by jurisdiction. But for many users, that’s still a trade worth making.

In countries like the Philippines, the drivers are different. The peso has been relatively stable, but remittances remain a pain point. Millions of overseas workers send money home each month through legacy systems that can be slow and expensive. Stablecoins are starting to change that. A worker in Dubai might buy USDC, send it via blockchain, and have it cashed out locally via a crypto wallet or fintech-linked pawnshop. The process isn’t seamless yet, off-ramps remain patchy, and the central bank is watchful, but the demand is clear where urgency trumps friction.

So is stablecoins just an edge case?

In short, no. That’s only one layer of the story. While today their use is often concentrated in high-friction markets or specific pain points, the real opportunity is much broader. Over time, stablecoins could evolve well beyond these edge cases and expand along three major lines:

First and foremost, programmability: Stablecoins don’t just send money, they can also follow instructions. Because they run on blockchains, stablecoins can be programmed to do things automatically. For example, they can release a payment only when certain conditions are met, or split a payment between multiple people without needing a bank in the middle. This makes them useful for things like automating payroll, speeding up insurance payouts, or handling payments in supply chains. Over time, this ability to carry built-in rules could make stablecoins useful even in countries with strong banking systems.

Second, availability and time sensitivity: Traditional and even fintech rails are still bound by banking hours, local holidays, and regulatory bottlenecks. Stablecoins settle 24/7, globally, and instantly, making them incredibly useful for weekend settlement, cross-time-zone coordination, or businesses operating in “always-on” digital economies.

Third, financial access and platform integration: As and more digital wallets, apps, and platforms start to support stablecoins, especially in places like Southeast Asia, Africa, and Latin America, it becomes easier for people and businesses to use stablecoins in everyday life. They’re no longer just a backup option when banks fail, they’re becoming part of the core financial system. This means businesses can use stablecoins for things like paying suppliers, settling online sales, or sending money to gig workers directly through the apps they already use.

Multi-rail network

The bigger picture is this: cross-border payments are no longer one-size-fits-all. For decades, the system operated as a single rail, one dominant model, built on correspondent banking, slow clearing, and a complex patchwork of intermediaries. It worked, more or less, because there was no serious alternative.

That’s no longer the case.

Today, value moves across multiple rails, each designed for a different job. Some optimise for scale and regulatory coverage. Others are built for speed, price, or simplicity. Some rails, like traditional SWIFT-linked banking, remain essential for large institutions moving high-value funds with compliance certainty. Others, like fintech platforms, serve smaller businesses and individuals who prioritise speed, cost, and user experience. And now, stablecoin rails might offer an entirely different set of benefits: global access, 24/7 settlement, and programmability baked in.

And that changes everything. It means it’s no longer just about using the oldest or biggest system. It’s about picking the right tool for the job. Being quick and flexible can matter more than being big and established. The future of payments won’t run on just one system, but on how well we orchestrate, meaning connect and combine, all the different options now available.