What Is a Stablecoin Sandwich? The Future of Cross-Border Payments

Cross-border payments remain one of the most inefficient aspects of global business. Companies moving money internationally face a familiar set of frustrations—transfers taking three to five days, fees ranging from 3% to 6% per transaction, opaque foreign exchange markups, and failed payments requiring manual intervention. These problems persist despite decades of digital transformation in other areas of finance.

The stablecoin sandwich offers a practical solution already processing billions in monthly transaction volume. This approach uses blockchain-based stablecoins as the transfer mechanism between two fiat currency conversions, delivering settlement in minutes rather than days while dramatically reducing costs. Unlike asking businesses to "go crypto," the stablecoin sandwich keeps traditional currency on both ends while leveraging blockchain infrastructure for the middle layer—the part where traditional banking creates the most friction.

Major financial institutions including Visa, Bank of America, Santander, and Standard Chartered now actively implement stablecoin payment flows. The model has moved beyond experimentation into production systems handling real business transactions. Understanding how this architecture works, why it delivers such significant improvements over traditional methods, and what limitations remain provides insight into where global payment infrastructure is headed.

A stablecoin sandwich wraps a blockchain-based stablecoin transfer between two fiat currency conversions. The name comes from the visual structure—fiat currencies form the bread on both ends while stablecoins provide the filling that actually moves across borders. This architecture enables businesses to capture blockchain benefits without requiring recipients to hold cryptocurrency or manage digital wallets.

The process begins with the fiat on-ramp. A business or individual converts their local currency into a stablecoin, typically USDC or USDT, through a payment service provider, exchange, or integrated gateway. This conversion happens using local liquidity pools, ensuring competitive exchange rates without international banking fees. The sender never needs to understand blockchain mechanics—modern infrastructure handles technical complexity invisibly.

Once converted to stablecoins, the transfer happens on blockchain networks. Settlement occurs in minutes regardless of banking hours, weekends, or time zones. The transaction moves as a digital asset rather than a message passed between correspondent banks. Every step is recorded on-chain, providing transparent audit trails that traditional wire transfers cannot match. This immutability enables real-time tracking and automated reconciliation.

The fiat off-ramp completes the process. At the destination, the stablecoin converts back to local currency through regulated partners connected to domestic banking rails. Recipients receive traditional currency in their bank accounts, often unaware that blockchain technology facilitated the transfer. The entire flow—fiat to stablecoin to fiat—completes in hours or less compared to days for traditional correspondent banking.

Different implementations exist depending on business needs. The "full stablecoin sandwich" automates the entire conversion process, making blockchain rails completely transparent to both sender and receiver. An "open stablecoin sandwich" gives recipients more control, allowing them to hold stablecoins in embedded wallets and choose when to convert to fiat. Each approach offers different trade-offs between simplicity and flexibility.

The correspondent banking system that underlies international transfers was never designed for today's global digital economy. When a company in France sends payment to a supplier in Brazil, the transaction doesn't move directly between banks. Instead, it passes through a network of intermediary banks that maintain relationships and accounts with each other.

SWIFT provides the messaging layer—instructions telling banks to execute transfers. But SWIFT doesn't actually move money. The physical movement of liquidity happens through debits and credits across accounts that correspondent banks maintain. If the sending and receiving banks don't have direct relationships, additional intermediaries enter the chain, each adding fees and processing delays.

According to Bank for International Settlements data, nearly 40% of cross-border transactions rely on just a handful of major correspondent banks, creating concentration risk and liquidity bottlenecks. This centralization proves particularly problematic for emerging markets where major banks may lack correspondent relationships, forcing payments through circuitous routes that multiply costs and extend timelines.

The fee structure compounds these inefficiencies. Transactions incur charges from the originating bank, each intermediary bank, and the receiving bank. Foreign exchange spreads add hidden costs as each institution applies its own markup when converting currencies. Total fees for traditional international wire transfers typically range from 3% to 6%, with some corridors significantly more expensive. For a business processing $10 million annually in cross-border payments, these fees cost $300,000 to $600,000.

Processing times create operational challenges beyond direct costs. Transfers taking three to five business days tie up working capital that could otherwise be deployed productively. Suppliers waiting for payment may refuse favorable terms or impose penalties for late receipt. Employees receiving international payroll face delayed compensation, creating friction for distributed teams. The inability to send money on weekends or holidays further restricts flexibility.

Transparency issues exacerbate these problems. Once a transfer enters the correspondent banking network, visibility disappears. Businesses cannot track payment status in real-time or identify where delays occur. Failed transactions often provide no clear explanation, requiring manual investigation and resubmission. This opacity makes cash flow forecasting difficult and complicates reconciliation processes.

Stablecoin sandwiches compress the multi-bank correspondent network into a single digital settlement layer. Rather than passing messages and value through intermediary institutions, the transfer moves as a blockchain transaction settling according to network block times—seconds to minutes depending on the chain selected. This architectural change eliminates most sources of traditional payment friction.

Speed improvements prove dramatic. Transfers that traditionally require three to five business days complete within an hour when using stablecoin rails. The blockchain operates continuously, processing transactions on weekends and holidays when banks remain closed. Recipients access funds immediately upon arrival rather than waiting for batch settlement cycles. This acceleration frees working capital previously trapped mid-transfer, improving liquidity management.

Cost reductions reach 80% to 98% compared to traditional methods when full on-chain settlement occurs. Remittance fees that typically exceed 6% through conventional channels drop to a few basis points using stablecoins. The elimination of intermediary banks removes multiple fee layers. Blockchain transaction costs, while variable depending on network congestion, generally prove negligible compared to traditional wire fees.

For businesses processing substantial volumes, these savings become material. A company handling $10 million in annual cross-border payments saves $200,000 to $300,000 by switching to stablecoin rails. Small and medium enterprises benefit proportionally more since fixed fees represent larger percentages of smaller transfer amounts. Even individual remittances, where traditional services charge premium rates, become economically viable through stablecoin infrastructure.

Transparency transforms operational workflows. Every transaction creates an immutable on-chain record with complete audit trails. Finance teams track payments in real-time rather than querying multiple banks for status updates. Automated reconciliation replaces manual processes prone to errors and delays. Smart contracts enable conditional payments triggered by specific events, adding programmability impossible with traditional rails.

Capital efficiency improvements compound these benefits. Traditional cross-border payment providers must pre-fund accounts across multiple countries to enable "instant" transfers—essentially using their own liquidity to bridge settlement delays. Stablecoin settlement happens fast enough that extensive pre-funding becomes unnecessary, reducing capital requirements and operational complexity.

The transparency extends beyond individual transactions to systemic reliability. When traditional payments fail, identifying the point of failure requires contacting multiple banks. Blockchain transactions either succeed or fail atomically—there's no ambiguous middle state. This certainty simplifies exception handling and reduces support costs associated with investigating payment issues.

Remittance companies represent early stablecoin sandwich adopters, driven by high traditional costs and the consumer demand for faster transfers. PayPal's Xoom service, MoneyGram through Stellar integration, and purpose-built platforms like Sling Money now use stablecoin rails. Latin America leads adoption with 71% of financial institutions already using stablecoins for cross-border payments, responding to high traditional costs and currency volatility.

Business-to-business payments increasingly leverage stablecoin infrastructure for supplier payments and vendor settlements. Companies like Siemens incorporate stablecoins into payment workflows, prioritizing speed and cost savings over cryptocurrency speculation. Bitso Business and similar platforms build stablecoin corridors specifically for commercial transactions, handling everything from purchase orders to invoice settlements.

Global payroll represents another growing application. Companies with distributed teams face expensive and slow payment processing when compensating international employees through traditional banking. Stablecoin sandwiches enable same-day settlement regardless of employee location, improving worker satisfaction while reducing payroll processing costs. The model proves particularly valuable for companies hiring remote workers in emerging markets where traditional banking access may be limited.

Treasury management applications take advantage of stablecoin liquidity and programmability. Visa uses stablecoins for both internal and external treasury operations, while Yellow Card leverages stablecoin rails to remove obstacles corporate treasurers face accessing African markets. The ability to move value instantly enables more efficient capital allocation across global operations.

E-commerce platforms integrate stablecoin payment acceptance to reduce transaction costs and eliminate chargebacks. Credit card processors charge 2% to 4% plus fixed fees, significantly impacting margins for high-volume merchants. Stablecoin payments incur negligible transaction costs while providing instant settlement that improves cash flow. Compass Coffee accepts USDC payments with minimal processing costs, while Shopify announced full USDC integration enabling millions of merchants to accept stablecoin payments.

Digital service providers including SaaS companies, gaming platforms, and digital content creators benefit from frictionless international payments. An indie game studio in England receiving royalties from the UAE can accept payment in local currency, move it as USDC through blockchain rails, and settle in pounds—all within their UK business account. The stablecoin layer provides speed and efficiency while keeping traditional currency on both ends.

For businesses looking to implement cross-chain stablecoin infrastructure, modern solutions abstract technical complexity while providing the performance benefits of blockchain settlement. These platforms handle custody, compliance, and currency conversion automatically, enabling companies to capture stablecoin advantages without building blockchain expertise internally.

Regulatory clarity has accelerated institutional adoption after years of uncertainty. The GENIUS Act signed in July 2025 established clear federal rules in the United States requiring 1:1 reserve backing, regular audits, and AML compliance for stablecoin issuers. This framework provides the legal foundation for mainstream financial institutions to integrate stablecoins into payment operations without regulatory ambiguity.

Europe's Markets in Crypto-Assets (MiCA) regulation came into full effect in late 2024, providing comprehensive licensing requirements for stablecoin issuers. MiCA defines Asset-Referenced Tokens and E-Money Tokens, mandating full reserve backing and introducing formal authorization processes. Banking Circle's issuance of EURI, the first MiCA-compliant stablecoin, demonstrates how European institutions move quickly under clearer regulatory frameworks.

The United Kingdom aligns closely with MiCA standards. The Financial Conduct Authority finalizes a regulatory regime for stablecoin issuers and custodians with stricter capital and operational requirements. Additional rules expected throughout 2025 will form part of a broader cryptoasset framework enabling UK financial institutions to operate with regulatory certainty.

Asia presents diverse regulatory approaches. Japan restricts issuance to licensed banks and trusts, with institutions like SMBC launching regulated offerings. Singapore permits issuance under robust requirements covering reserve quality and third-party audits. Hong Kong implements licensing for virtual asset platforms while maintaining openness to innovation. The UAE, particularly Dubai's VARA, advances a flexible and innovation-forward model attracting international issuers.

Regulatory frameworks address concerns that previously prevented institutional adoption. Requirements for reserve attestations ensure stablecoins maintain their pegs through verifiable backing. Audit mandates provide transparency around issuer solvency and operational controls. AML and KYC requirements integrate stablecoins into existing financial crime prevention frameworks, addressing concerns about illicit use.

These developments enable banks and traditional financial institutions to participate without regulatory risk. Santander and Standard Chartered use USDC in live payment flows, while numerous other institutions conduct pilots or planning exercises. The shift from "whether" to "how" around stablecoin integration indicates regulatory tailwinds rather than headwinds.

Challenges remain in jurisdictions without clear frameworks. India restricts cryptocurrency use for payments, creating legal uncertainty for stablecoin sandwich implementations targeting Indian corridors. China bans private stablecoins in favor of central bank digital currencies. These regulatory gaps limit stablecoin sandwich viability in specific markets, though evolution continues as frameworks develop globally.

For businesses implementing stablecoin payment flows, regulatory-compliant infrastructure ensures operations align with jurisdictional requirements. Platforms handling licensing, compliance, and regulatory reporting enable companies to capture stablecoin benefits while maintaining adherence to applicable frameworks.

Despite advantages, stablecoin sandwiches face practical limitations slowing universal adoption. The "last mile" problem persists—while stablecoins excel at cross-border transfer, most daily expenses require settlement in local fiat currency. Groceries, utilities, and rent don't accept USDC. Recipients must convert stablecoins to usable currency, adding friction even when transfers themselves prove efficient.

Infrastructure fragmentation complicates implementation. Over 200 stablecoins circulate across multiple blockchains with varying liquidity conditions and technical standards. Businesses operating globally must support multiple stablecoins and navigate different chains, increasing operational complexity. Converting between stablecoins or moving across chains adds steps that partially offset the simplification stablecoin sandwiches promise.

The operational setup remains more complex than traditional banking. Companies must coordinate across liquidity providers for on-ramps and off-ramps, integrate with local partners for fiat conversion, establish custody solutions for blockchain assets, and maintain relationships with multiple service providers. This complexity doesn't scale easily without sophisticated orchestration platforms that many businesses lack.

Network effects favor established systems. Traditional banking infrastructure, despite inefficiencies, benefits from universal acceptance and decades of relationship-building. Convincing counterparties to accept stablecoin-enabled payments requires education and sometimes technical integration. The transition period where both traditional and stablecoin rails coexist creates operational overhead.

Regulatory uncertainty persists in many jurisdictions despite progress in major markets. Businesses serving customers in multiple countries must navigate patchwork regulatory frameworks, some of which explicitly prohibit cryptocurrency use for payments. This fragmentation increases compliance costs and limits accessible markets, particularly in regions that would benefit most from improved payment infrastructure.

Stablecoin liquidity varies significantly across corridors and currencies. Major pairs like USD to EUR or USD to Asian currencies enjoy deep liquidity enabling efficient conversion. Less common corridors suffer from wider spreads and higher slippage, partially offsetting cost advantages. Building sufficient liquidity across all possible currency pairs remains an ongoing challenge for the ecosystem.

Trust and education barriers affect adoption rates. Despite regulatory progress, many businesses remain cautious about cryptocurrency-adjacent technologies. Overcoming perception issues requires demonstrating track records, providing clear documentation, and building confidence through gradual adoption. The learning curve for finance teams unfamiliar with blockchain concepts adds implementation friction.

Gas fees on certain blockchain networks introduce cost unpredictability. Ethereum transaction costs can spike during network congestion, potentially making small transactions economically unviable. While Layer 2 networks like Arbitrum and Optimism address this through lower fees, the proliferation of solutions adds complexity around network selection and interoperability.

Current stablecoin sandwich architecture represents a transitional stage rather than the final destination. The model succeeds by making minimal changes to endpoints—keeping fiat on both sides—while revolutionizing the transfer mechanism. This pragmatism enables adoption but also constrains potential benefits by maintaining dependence on legacy infrastructure for currency conversion.

The next evolution moves toward end-to-end on-chain flows where value stays digital throughout. Local-currency stablecoins launching in Mexico, Brazil, Turkey, Philippines, Japan, Singapore, Nigeria, Hong Kong, and elsewhere eliminate the need for one leg of fiat conversion. A payment from euros to Mexican pesos could soon happen as EUR-stablecoin to MXN-stablecoin, touching traditional banking only when recipients need physical cash.

On-chain foreign exchange markets are emerging where currency conversions happen atomically on blockchain networks rather than through traditional dealers. These venues provide instant settlement with no counterparty risk, operating continuously across weekends and time zones. As liquidity deepens, conversion spreads narrow toward levels competitive with or better than traditional forex markets.

Programmable money unlocks capabilities impossible with traditional currency. Smart contracts enable conditional payments triggered by delivery confirmation, automated recurring payments without merchant account setup, escrow arrangements requiring no trusted third party, and instant micro-payments economically unviable through traditional rails. These capabilities enable entirely new business models built on reliable, instant settlement.

Integration with real-time payment systems accelerates adoption. As domestic instant payment networks like FedNow, PIX in Brazil, and UPI in India gain traction, connecting these systems to stablecoin rails creates seamless cross-border extensions. A person could send money from their US bank account to a recipient's Brazilian bank through stablecoin intermediation without either party interacting with cryptocurrency directly.

Identity and compliance infrastructure maturing on-chain enables previously impossible combinations. Permissionless markets where anyone can participate coexist with KYC-gated environments where institutions trade with verified counterparties. Regulatory-compliant stablecoins carrying identity attestations move through public blockchains while maintaining privacy and meeting reporting requirements.

The shift mirrors earlier technology transitions. Cloud computing initially seemed complex and risky, requiring businesses to manage their own servers. Today's cloud providers abstract that complexity, making infrastructure management invisible. Stablecoin payment infrastructure follows similar evolution—early adopters navigate technical details while next-generation platforms make blockchain rails as simple as traditional banking from a user perspective.

Platforms providing unified stablecoin experiences across multiple chains demonstrate this progression. Users see simple interfaces for sending money internationally while sophisticated routing, liquidity management, and blockchain interactions happen invisibly. This abstraction drives adoption by eliminating the learning curve that currently limits mainstream use.

What is a stablecoin sandwich and how does it work?

A stablecoin sandwich is a cross-border payment method that starts with fiat currency, converts it to stablecoins for blockchain transfer, then converts back to fiat at the destination. This structure uses blockchain rails for the actual value movement while keeping traditional currency on both ends. The sender converts local currency to stablecoins through a payment provider, the stablecoins transfer across blockchain networks in minutes, and the recipient receives converted local currency—often without knowing blockchain technology facilitated the payment.

How much cheaper are stablecoin sandwiches versus traditional wire transfers?

Stablecoin sandwiches reduce costs by 80% to 98% compared to traditional correspondent banking. Traditional international wire transfers typically cost 3% to 6% per transaction through fees and foreign exchange spreads. Stablecoin transfers often cost just a few basis points when settlement happens on-chain. For a business processing $10 million annually in cross-border payments, switching to stablecoin infrastructure saves $200,000 to $300,000 in fees.

Are stablecoin sandwiches legal and regulated?

Yes, stablecoin sandwiches operate under increasingly clear regulatory frameworks. The GENIUS Act in the United States and MiCA regulation in Europe established comprehensive rules for stablecoin issuers including reserve backing requirements, audit mandates, and AML compliance. Major financial institutions including Visa, Santander, and Standard Chartered use stablecoins in regulated payment flows. However, regulatory clarity varies by jurisdiction, with some countries like India maintaining restrictions on cryptocurrency use for payments.

What stablecoins are used in stablecoin sandwich payments?

USDC and USDT dominate stablecoin sandwich implementations due to their stability, liquidity, and regulatory clarity. USDC receives preference from 63% of businesses for its regulatory compliance and institutional backing through Circle. USDT offers the highest liquidity and broadest exchange support globally. Local currency stablecoins like EURI, MXN-pegged options, and others are emerging to eliminate one conversion leg, though USD-based stablecoins currently command the largest market share.

How fast do stablecoin sandwich payments settle?

Stablecoin transfers settle in under 60 seconds on most blockchain networks compared to 3-5 business days for traditional international wire transfers. Solana network transactions finalize in approximately 400 milliseconds, while Ethereum typically settles within 1-5 minutes. The complete process including fiat on-ramp and off-ramp typically finishes within one hour, enabling same-day international payments regardless of banking hours, weekends, or time zones.

What are the main risks or limitations of stablecoin sandwiches?

Primary limitations include infrastructure complexity requiring coordination across multiple providers, regulatory uncertainty in some jurisdictions restricting use, variable stablecoin liquidity across different currency corridors affecting conversion costs, the "last mile" problem where recipients still need fiat currency for daily expenses, and gas fees on certain blockchain networks introducing cost unpredictability. Additionally, the technology requires education and trust-building since many businesses remain cautious about cryptocurrency-adjacent solutions despite growing institutional adoption and regulatory clarity.