How Blockchain Revolutionises Cross-Border Payments

Global cross-border payments totalled over $40 trillion in 2024 and will increase 5% per year until 2027.

As more businesses make cross-border payments, it’s clear that traditional payment systems and banking rails are no longer suited to the digital-first global economy.

One technology that’s paving the way for innovation is blockchain payments. Driven by the demand for faster, 24/7 availability, mitigation of currency fluctuations (emerging markets) and security, blockchain technology is increasing the speed and transparency of payments while reducing the costs and complexities involved.

In this post, we’ll explore blockchain in cross-border payments, how it works, and its benefits and challenges.

What is a blockchain?

At the heart of this payment innovation is a technology known as blockchain. To understand it, let’s explain a few key terms related to the blockchain conversation.

• Blockchain: A distributed ledger or database that is shared among the nodes of a computer network.

• Nodes: This refers to a device, like a computer, that’s connected to a network.

• Validator nodes: Also called ‘miners,’ these nodes approve transactions that reach an agreement using a dedicated consensus or set of rules.

• Blocks: A block contains the approved transactions. A series of blocks (a blockchain) holds an immutable record of these transactions.

• Keys: A block’s content is cryptographically protected by a code and is only visible to users with the appropriate ‘key’.

Cryptocurrencies, stablecoins and CBDCs – what’s the difference?

• Cryptocurrencies Decentralised digital assets like Bitcoin (BTC) and Ethereum (ETH), not backed by any central authority. Their value is driven by market supply and demand. Peer-to-peer transfers, cross-border payments without intermediaries, store of value in regions with currency instability.

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• Stablecoins Digital assets pegged to fiat currencies such as the US dollar or euro. Examples include USDC and USDT. They combine crypto’s speed with fiat’s price stability. Real-time cross-border payments, low-volatility international transfers, and digital remittances in emerging markets.

  
  

• Central Bank Digital Currencies (CBDCs) Government-issued digital currencies built on private or permissioned blockchains. Designed to modernise monetary systems while maintaining regulatory oversight. Domestic and international settlements between banks, retail payments in pilot programmes (e.g., China’s digital yuan), financial inclusion through centralised infrastructure.

As blockchain becomes more embedded in global payment infrastructure, it’s important to distinguish between the types of digital assets powering these networks. Each serves a different purpose and plays a unique role in cross-border payments and financial inclusion.

Cryptocurrencies

Cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH) are decentralised digital assets not backed by any government or central authority. They were designed as alternatives to fiat currencies, with value driven by market supply and demand.

Use cases: Peer-to-peer transfers, cross-border payments without intermediaries, and store of value in regions with currency instability.

Stablecoins

Stablecoins are digital assets that are pegged to the value of a fiat currency, such as the US dollar or the euro. Examples include USDC and USDT. They combine the programmability and speed of crypto with the price stability of traditional currency.

Use cases: Real-time cross-border payments, low-volatility international transfers, digital remittances in emerging markets. Explore how stablecoins are gaining traction as a mainstream payment rail.

Central Bank Digital Currencies (CBDCs)

CBDCs are digital versions of national currencies issued and regulated by central banks. They are typically built on private or permissioned blockchains and aim to modernise monetary systems while maintaining government oversight.

Use cases: Domestic and international settlements between banks, retail payments in pilot programmes (e.g., China’s digital yuan), and financial inclusion via state-backed infrastructure.

How is blockchain used in cross-border payments?

Blockchain technology can be used in two main ways in payments:

1. Blockchain-based payments

These are payments that happen on the blockchain itself. Some examples include:

• Cryptocurrency transactions: Payments are made using blockchain-native assets like Bitcoin, Ethereum, USDC, etc.

• Stablecoin payments: Stablecoins like USDC and USDT are used for cross-border transactions or remittances.

• Central Bank Digital Currencies: CBDCs like China’s digital yuan run on blockchain-based infrastructure.

  
  

2. Blockchain for payment infrastructure

Blockchain technology is also used to improve existing payment systems. Some examples include:

• Tokenisation of assets: Using digital representations of fiat money or securities to settle transactions faster.

• Cross-border settlements: Ripple’s XRP Ledger or JPM Coin for interbank settlements.

• Smart contracts for automated payments: Programmable payments that execute based on predefined rules.

  
  

How do blockchain cross-border payments work?

Before explaining how blockchain cross-border payments function, it’s important to outline some of the core architecture behind this technology.

• Distributed Ledger Technology (DLT): Transactions are recorded on a distributed ledger maintained by a peer-to-peer network of nodes.

• Consensus-Based Validation: Transactions are verified through consensus mechanisms (think of these as predefined rules), including Proof of Stake and Practical Byzantine Fault Tolerance.

• Smart Contract Automation: Self-executing smart contracts automate payment triggers, such as releasing funds upon delivery confirmation. These contracts also enforce rules like currency conversion rates or compliance checks.

  
  

The above architecture allows blockchain payments to be quick and secure, even across borders. Here’s a simplified overview of how a financial transaction on the blockchain would work:

• Initiation: A business or platform submits a payment request via a web/mobile app or payment network integrated with a blockchain network.

• Validation: The network validates the transaction using its established consensus rules.

• Settlement: Funds transfer directly between parties’ digital wallets, typically in seconds.

• Recordkeeping: Transactions are timestamped and added to an immutable ledger visible to all authorised participants.

Why traditional cross-border payments need innovation?

Cross-border payments are typically processed through traditional payment methods like transfers between bank accounts or card payments.

Yet, these payment options present many hurdles to businesses and platforms.

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Slow payments

Depending on the countries involved, local regulations, and the various banks through which the payment has to be processed, a single transaction can take anywhere from 1 to 5 days to settle.

High transaction fees

Cross-border payments pass through multiple correspondent banks, financial institutions and third-party payment providers, each of which can add extra fees to the payment cost. Fluctuating currency conversions can also add unexpected costs to every transaction.

Lack of transparency.

With standard payment systems, there’s little transparency. The different intermediaries in each transaction chain may operate differently, which can affect cost, speed, and arrival confirmations.

Risk of fraud.

Due to their complexity, multiple touchpoints and lack of a global standard, cross-border payments are vulnerable to fraud. Common risks include identity theft, cyberattacks, and money laundering.

The benefits and opportunities of using blockchain in cross-border payments

Blockchain is one answer to the challenges of cross-border payments. The technology offers businesses, platforms and marketplaces the ability to make near-instant payments that are lower in cost and more secure.

Let’s explore how using blockchain in cross-border payments can overcome the limitations of current payment processes.

Faster settlement times

Traditional cross-border payments can take days to settle. Blockchain technology allows for near-instant international transfers and transactions 24/7/365. Two components of the blockchain enable real-time payments:

• It eliminates intermediaries

• It’s built on a decentralised, peer-to-peer network to validate and record transactions.

Eliminating third parties and financial institutions means instant international transactions can be made, verified, and settled in minutes or even seconds.

Cost efficiency

Blockchain innovations are helping to remove the layers of complexity involved in traditional international money transfers. Blockchains allow for straight-through processing of payments between a payer and a payee through third parties like wallet providers or FinTech products, reducing costs.

Research shows that the deployment of blockchain for cross-border settlement could grow cost savings by 3,300% by 2030.

Secure transactions

The foundation of blockchain is its decentralised and immutable nature. Each transaction is recorded in a ‘block’, which is linked to the previous block, creating a chain of records. This process makes it inherently secure.

Recorded transactions can’t be amended or deleted without altering the previous blocks. Doing this is almost impossible due to the sheer size and complexity of a blockchain network.

Improved transparency and traceability

Traditional payment systems make it difficult for senders and recipients of a payment to track its progress.

A blockchain acts as a public ledger, making all transactions transparent and traceable. It provides a clear, immutable record of every transaction that any participant in the network can verify. This increases accountability and allows for real-time monitoring, improving fraud detection.

Meeting an emerging market

This growing appetite for digital assets is particularly strong in emerging markets, where stablecoins are helping to unlock new payment rails and bridge financial inclusion gaps.

• Turkey has one of the highest rates of stablecoin purchases as a share of GDP, at 3.7%, which reflects strong demand for stable assets in an economy grappling with currency instability.

• Nigeria has a penetration rate of 11.9%, making the country the second-largest adopter of digital assets worldwide.

• In Argentina, where annual inflation reached 143% in late 2024, stablecoins are being viewed as a hedge. Its stablecoin market is one of the largest in the world in terms of share of stablecoin transactions, beating the global average by 17%.

These emerging markets are quickly becoming the proving ground for the stablecoin revolution.

Financial inclusion

As of early 2025, over 5.56 billion people have access to the Internet – that’s 67.9% of the world’s total population.

Blockchain opens up finance options to anyone with an Internet connection, driving financial inclusion in regions and demographics that are unbanked or underbanked.

The challenges of cross-border blockchain payments

Blockchain technology offers an exciting future for cross-border payments. But it does pose several challenges.

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Volatility and price stability

Any business or platform holding digital assets on a balance sheet faces price volatility risk. Some currencies and tokens can fluctuate daily, cutting into profits or adding extra costs when making cross-border payments.

Stablecoins – assets pegged to fiat currency like the US dollar – have helped mitigate some of this risk. With a market capitalisation of around $230 billion and over $60 billion in daily trading volume, they make an attractive payment option. The growing adoption among businesses and platforms highlights a shift toward more stable and scalable crypto-based solutions.

Explore how stablecoins are gaining traction as a viable payment rail.

Technical knowledge

Using digital wallets, cryptocurrencies, tokens, and cryptographic keys requires technical knowledge and familiarity. This can lead to a steep learning curve that some users may find overwhelming, becoming a barrier to widespread adoption. More importantly, it can require a heavy shift of technology, which can be extremely complex for larger organisations to cope with.

Regulatory compliance

Governments and financial institutions are still developing regulatory frameworks for blockchain payments. This means anti-money laundering (AML), know-your-customer (KYC) and rules on digital assets may vary from country to country.

It’s important to state that not every government or financial institution is pro-blockchain and cryptocurrency. Businesses must take the time to understand the rules for each market and ensure compliance.

Energy consumption

Blockchain networks come with environmental concerns that the industry has yet to address. When a blockchain uses proof-of-work consensus mechanisms like Bitcoin, it consumes large amounts of energy. Data show that the amount of energy used in a single Bitcoin transaction is equal to the use of an average US household over 57.25 days.

Many businesses and platforms have launched initiatives or climate-impact benchmarks to try to make their operations more sustainable. As part of this, the environmental cost of energy-intensive blockchain payments must be a consideration.

Interoperability issues

There are various blockchain systems and different tokens and currencies, which make cross-chain communication difficult. For example, each blockchain network has distinct protocols, consensus mechanisms, and smart contract languages.

Bridging blockchain networks with legacy banking systems is not straightforward. It’s challenging to make these different networks compatible with banks, financial products, and digital wallets.

Real-world use cases of stablecoins in cross-border payments

While blockchain infrastructure is still evolving, stablecoins are already being used at scale for cross-border transactions.

Here are three of the most common real-world applications today:

1. Remittances

Stablecoins are emerging as a faster, lower-cost alternative to traditional remittance services. Instead of relying on bank transfers or high-fee intermediaries, users can send digital dollars, such as USDC or USDT, directly to recipients’ wallets, often within minutes.

In emerging markets, where local currencies are volatile and banking access is limited, stablecoins are unlocking new pathways for affordable and reliable money transfers.

Example: In regions like Latin America and Sub-Saharan Africa, where remittance inflows are high and local currencies are volatile, stablecoins offer a digital on-ramp to dollar-based savings and everyday payments.

2. Contractor and gig economy payments

Freelancers and gig workers are increasingly operating across borders, but traditional payment systems aren’t built for flexible, low-cost, and real-time compensation. Stablecoins enable companies to pay global talent faster, in a stable currency, and without banking delays.

This is particularly helpful in high-inflation markets, where immediate access to digital dollars protects earnings from currency depreciation.

Example: A tech startup in the UK can instantly pay a freelance developer in Argentina using USDC, bypassing traditional banking rails, reducing conversion fees, and ensuring on-time payments, even on weekends.

3. B2B cross-border payments

Businesses are also turning to stablecoins to settle international invoices with partners, suppliers, or service providers. Transactions can be processed 24/7 without Swift fees, offering faster settlement, improved cash flow, and less exposure to FX volatility.

In high-volume, high-frequency corridors, especially across emerging markets, this model offers clear operational and cost advantages.

Example: A business importing raw materials from Turkey can use stablecoins to pay suppliers directly, mitigating local currency volatility and speeding up the settlement cycle from days to minutes.

Using blockchain in a cross-border payments strategy

Thunes can help digital asset businesses and cross-border platforms improve their customer experience across a range of solutions.

With a payments partner, businesses can mitigate risks and offload the complexity of blockchain payments to experts. They can also reduce operational overheads and avoid in-house development costs and resources.

If you are looking to add blockchain payments, such as USDC pre-funding, pay-to-stablecoin wallets or last-mile payouts, reach out to our team.

By Thunes