Stablecoins for Businesses: A Primer
Traditional Cross Border Payment Systems Are Outdated
International trade relies on the efficiency and reliability of payments. However, traditional methods such as international bank transfers via SWIFT or payments through financial intermediaries have significant limitations that impact the competitiveness of businesses engaged in importing, exporting, or conducting cross-border transactions.
Current Challenges in International Payments
Companies sending money abroad face multiple difficulties with conventional payment methods:
High Operational Costs: Traditional international payments are expensive, with bank fees ranging from $30 to $100 per transfer. On top of that, banks apply unfavorable exchange rates, inflating costs without transparency. Many transactions also pass through intermediary banks, each adding fees and delays, making cross-border payments inefficient and costly.
Slow Settlement Times: International bank transfers can take 2 to 5 business days, slowed down by limited banking hours, weekends, and compliance checks. Payments may also be held or rejected due to regulatory reviews, causing delays that disrupt cash flow and business operations.
Unnecessary Intermediaries: SWIFT transactions rely on multiple correspondent banks, each charging fees and increasing settlement times. These intermediaries add complexity and risk, as every extra step raises the chance of errors, delays, or blocked payments.
Lack of Transparency and Traceability: Businesses have limited real-time visibility when making bank transfers. Payments cannot be tracked instantly, forcing companies to rely on manual confirmations from recipients. This lack of transparency complicates reconciliation and delays financial reporting.
Banking and Capital Restrictions: In markets with foreign exchange controls, businesses often struggle to send international payments. Some countries block transfers or impose strict limits, leading to delays and added costs. Companies in these regions need alternative solutions to move funds efficiently without excessive restrictions.
Introducing Stablecoins
What are Stablecoins?
Stablecoins are digital assets designed to maintain a stable value, they are designed to maintain a stable value, backed 1:1 by a fiat currency (such as the U.S. dollar, euro, or Brazilian real) or a basket of financial assets. Unlike cryptocurrencies like Bitcoin or Ethereum, which are highly volatile, stablecoins offer predictable pricing, making them suitable for international payments.
Pegged 1:1 to fiat currencies, they combine the stability of traditional money with the efficiency and transparency of blockchain technology.
Key advantages of using stablecoins for international payments:
Stablecoins for International Payments
There are different types of stablecoins, but the most relevant for international payments are fiat-backed stablecoins, which are backed by cash or cash equivalents.
When a stablecoin claims to be backed 1:1, it means that for every unit issued (e.g., 1 USDC or 1 USDT), there is one real U.S. dollar or an equivalent asset held in the reserves of the issuing company.
Example: If there are 100 million USDC in circulation, Circle (the issuer) must hold $100 million in U.S. dollars or equivalent low-risk assets in a bank account or short-term investments.
This structure ensures that at any time, users can redeem their stablecoins for fiat money, reducing the risk of the currency losing its 1:1 peg to the U.S. dollar.
Why Are Stablecoins Secure Within the Financial System?
Backed by Liquid and Secure Assets: Unlike many cryptocurrencies that rely purely on market supply and demand, fiat-backed stablecoins are supported by traditional financial assets, ensuring their value remains stable.
Examples of reliable reserves:
U.S. Treasury Bonds → Considered one of the safest financial assets in the world.
Bank deposits in U.S. dollars → Held in regulated banks with insurance protection.
This means that in a financial crisis, issuers can sell these assets to guarantee the redemption of tokens in circulation, ensuring liquidity and stability.
Subject to Audits and Regulatory Oversight (Depending on the Issuer): Not all stablecoins have the same level of transparency. Some, like USDC, are subject to regular third-party audits, ensuring that reserves are real and accessible.
USDC (Circle) → Publishes monthly audits verified by Grant Thornton, one of the world's leading accounting firms.
USDT (Tether) → Has improved its transparency but still faces scrutiny regarding its reserves and auditing processes.
Fast Conversion to Fiat Currency: One of the key advantages of stablecoins is their immediate convertibility to fiat through exchanges or OTC (over-the-counter) platforms.
This means businesses can receive payments in USDT or USDC and convert them into dollars, euros, or Brazilian reais within minutes, without waiting for traditional banking processes.
Most Used Stablecoins for International Payments: USDC and USDT
In international trade, the two most commonly used stablecoins for B2B payments are USDC (USD Coin) and USDT (Tether USD). Both are backed by U.S. dollars and enable fast, low-cost transfers without the need for banking intermediaries.
Comparison: USDC vs. USDT for Business Payments:
In practice, many businesses use both stablecoins, depending on the type of transaction and the provider’s preference.
Comparison Between Stablecoins and Traditional Payment Methods
Companies that handle international payments typically rely on traditional methods such as SWIFT bank transfers or ACH payments. However, these systems come with high costs, long settlement times, and operational restrictions, which can impact a company's cash flow.
In contrast, using stablecoins for international payments has significantly reduced processing times, eliminated intermediaries, and provided a more agile and cost-effective solution.
Stablecoins vs. Traditional Bank Transfers
Use Cases for Stablecoins in Businesses Sending International Payments
Accounts Payable: Businesses that make recurring payments to international suppliers can reduce costs and settlement times by using stablecoins instead of bank transfers. With USDT or USDC, payments are executed in minutes and without intermediaries, ensuring full traceability while eliminating high banking fees.
Global Cash Flow Optimization: Stablecoins enable companies to move capital between countries without relying on banking restrictions or incurring intermediary costs. This improves liquidity availability in key markets and facilitates efficient fund distribution across subsidiaries operating in multiple jurisdictions.
International Payroll Payments: Companies with employees or contractors in different countries can use stablecoins for salary payments, removing banking barriers and reducing the high costs associated with international transfers.
For example, a developer in Eastern Europe or a freelancer in Argentina can receive payment in USDC and convert it to their local currency without losing value through unnecessary conversions.
Hedging Against Currency Devaluation: Businesses operating in economies with high inflation can protect their capital by converting local revenue into stablecoins, preventing depreciation of their national currency.
Access to International Markets Without Local Bank Accounts: Companies looking to expand into new markets can use stablecoins for payments and collections without the need to open local bank accounts abroad.
How to Make International Payments with Stablecoins
Businesses looking to make payments with stablecoins have two main options: sending funds directly through blockchain networks like Ethereum or Tron or using specialized fintech platforms that optimize the process.
The appropriate method depends on factors such as transaction volume, the recipient’s preference, and the need for fiat conversion.
Direct Payments Through Blockchain Networks
Stablecoins like USDT and USDC operate on multiple blockchain networks, allowing businesses to send international payments decentralized, without banking intermediaries. This method requires both parties to have compatible wallets and a basic understanding of how blockchain networks function:
1. Choosing the Right Blockchain Network
Each blockchain has different costs and processing speeds, impacting the payment experience:
Ethereum (ERC-20): High security and global adoption but higher transaction fees.
Tron (TRC-20): Low-cost and fast confirmations, ideal for frequent commercial payments.
Solana (SPL): Near-instant and cost-efficient transactions, though with lower adoption.
Example: A Mexican importer can pay a Chinese supplier by sending USDT-TRC20 directly from their MetaMask or Trust Wallet, ensuring the recipient has a compatible wallet on the same network.
2. Buying and Depositing Stablecoins
If the company does not yet have stablecoins in its wallet, they can be purchased on platforms like Kraken. Once acquired, the funds must be transferred to the wallet that will be used for the payment.
3. Sending the Payment and Verifying the Transaction
From the wallet, the recipient’s address is entered, the amount is selected, and the network fee is paid. The transaction is confirmed within minutes and can be verified on blockchain explorers such as Etherscan (Ethereum) or Tronscan (Tron).
Stablecoin Payments Through Fintech Platforms
For businesses that require a more seamless way to manage international payments with stablecoins, specialized fintech platforms offer a solution that eliminates the technical complexity of directly operating on blockchain networks.
These platforms integrate stablecoins into a corporate payment system, allowing companies to process transactions without manually interacting with blockchain networks.
Key advantages of using a fintech for stablecoin payments include:
How to Make International Payments and Settlements with Stablecoins Through Conduit
Conduit enables businesses to use stablecoins to streamline supplier payments, manage treasury in USD, and efficiently convert funds between local currencies and stablecoins.
To get started, businesses need to open an account with Conduit, which allows them to manage payments in both fiat and stablecoins. Once registered, initiating a payment is straightforward. The company selects the origin and destination currency, choosing between fiat options like BRL, COP, or USD, and stablecoins such as USDC (ETH), USDT (ETH), or USDT (TRX). The web app provides real-time quotes, ensuring full transparency in conversion rates.
Why Businesses Choose Conduit
This payment flow allows businesses to benefit from the speed and efficiency of stablecoin transactionswithout additional risks or operational complexities. Conduit simplifies currency conversion and integrates stablecoins into global payments securely and efficiently.
Common Misconceptions and Challenges of Using Stablecoins
While fiat-backed stablecoins like USDC and USDT have clear advantages for e-commerce businesses, there are misconceptions and challenges that need clarification. Understanding these can help businesses adopt stablecoins with confidence and navigate potential hurdles effectively.
Common Misconceptions
Are Stablecoins Risky Like Other Cryptocurrencies?
Many people associate stablecoins with the volatility of cryptocurrencies like Bitcoin or Ethereum. However, fiat-backed stablecoins are different. Stablecoins are designed to maintain a consistent value because they are pegged to fiat currencies such as the US Dollar. For example, 1 USDC is always intended to be worth $1.
Example: If you receive $500 in USDC today, its value remains stable, unlike Bitcoin, which could fluctuate by 10% or more in a single day.
While the blockchain technology behind stablecoins is shared with other cryptocurrencies, their stability and backing by real assets make them more reliable for e-commerce payments.
Do Stablecoins Require Technical Expertise to Use?
Some businesses hesitate to adopt stablecoins, fearing they need advanced technical skills or blockchain knowledge. Using stablecoins is straightforward, thanks to user-friendly wallets and payment platforms. Many solutions are as easy to use as traditional banking apps.
Example: Platforms like Trust Wallet or Coinbase allow users to send and receive USDC or USDT with just a few clicks, similar to sending a bank transfer.
Additionally, many payment processors now integrate stablecoins, enabling businesses to accept payments seamlessly without needing to understand blockchain technology in-depth.
Key Challenges
Regulatory Uncertainty in Some Countries
Stablecoins exist in a regulatory gray area in many regions, with laws still evolving. Some governments are cautious about digital assets and may impose restrictions on their use for business transactions. This uncertainty affects businesses, especially those in e-commerce, which must stay informed about the legal status of stablecoins in their country to ensure compliance.To manage this, businesses should work with reliable payment providers that follow local regulations. Keeping up with legal updates and consulting experts when needed can also help them avoid potential issues.
Limited Adoption by Traditional Financial Institutions
Despite growing adoption, many banks and financial institutions have yet to fully integrate stablecoins into their systems. This can make it harder for businesses to convert stablecoins into fiat or integrate them with traditional banking services. To work around this, companies can partner with payment processors that support stablecoin-to-fiat transactions. Using multi-currency accounts that accept stablecoins can also simplify financial operations and improve cash flow management.
The Future of Stablecoin Payments
Stablecoins have evolved from a niche crypto asset into a key solution for international business payments. With the expansion of digital commerce and the demand for faster, more efficient payment methods, adoption will continue to grow, particularly among importers, exporters, fintechs, and globally operating businesses.
A key driver of this evolution is regulatory momentum in major financial markets. Stablecoins are gaining broader acceptance within the traditional financial system, and clearer regulations will facilitate their integration with banks and fintechs, strengthening their use for B2B payments and international transactions.
Additionally, large financial institutions are exploring the issuance of their own stablecoins and integrating these assets into their payment infrastructure. As more fintechs and banks begin offering stablecoins within regulated frameworks, their use in international payments will become even more widespread, enabling businesses to transfer funds instantly, with lower costs, and without unnecessary intermediaries.
Access stablecoin-backed money movement on the Conduit payments platform
Discover how Conduit can help your business overcome significant pain points of making and receiving cross-border payments using stablecoins.
With Conduit you can:
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