Stablecoin Settlement Compared With SWIFT in Cross-Border Trade
Global cross-border transactions in 2025 generated over $2.5 trillion in revenue from $2.0 quadrillion in value flows across 3.6 trillion transactions, according to the 2025 McKinsey Global Payments Report. Cross-border transactions play an important role in international trade, and businesses often explore more efficient payment systems.
Currently, SWIFT (Society for Worldwide Interbank Financial Telecommunication) is widely used for cross-border transactions. Traditional cross-border payment systems have dominated for decades until the arrival of blockchain technology. Innovations in cryptocurrency have prompted organizations and small businesses to evaluate alternative payment methods. This raises the question of how different payment systems may influence the future of international trade.
Overview of Stablecoin Settlement and SWIFT Systems
Stablecoin settlement is the process of completing a transaction using a stablecoin, a cryptocurrency derivative representing fiat currencies. Currently, stablecoin adoption is mostly prominent for the US dollar, with the most popular including USD Tether (USDT), USD Circle (USDC), and Euro Circle (EURC). Businesses and individuals that rely on stablecoins for cross-border trade use a recognized crypto trading platform with clear compliance with regulatory laws. Prior to 2024, regulatory frameworks for stablecoins in the United States were still developing.
The enactment of the GENIUS Act for stablecoins has filled this gap. Stablecoin adoption is increasing, and some market analyses suggest it may play a larger role alongside traditional banking systems. As of the end of 2025, USDT transaction volume rivaled those of VISA and MasterCard combined. Stablecoin settlements are often faster than traditional systems and may involve lower transaction fees, a combination which contributes to their growing use in cross-border transactions.
While stablecoins are gaining adoption alongside card-based fintech solutions, SWIFT continues to retain the largest demand. SWIFT’s network connection to over 11,000 banks in over 200 countries has, over time, created payment dependencies that may be hard to crack. SWIFT’s network includes extensive banking and corporate connections, which promote accessibility. In addition, SWIFT is widely trusted.
How Each Payment System Works
Stablecoins are cryptocurrencies with their value pegged to the blockchain. As a result, USDT is designed to maintain a value close to one USD. Stablecoin settlements are typically processed within seconds to minutes, depending on the network. SWIFT, on the other hand, processes international payments within five business days. Faster settlement times are related to blockchain-based transaction processing. Stablecoin transactions are processed on the blockchain. Blockchain networks function as distributed ledgers that validate transactions, in real time, and display the “receipts,” allowing for transparency.
Stablecoin Transaction Process
- The sender converts their local fiat currency into a stablecoin like USDC using a crypto exchange.
- Once the conversion is complete, the sender transfers the token to its destination (the receiver’s crypto address).
- Once the receiver gets the stablecoin deposit, they can convert back into fiat currency using internal conversion systems or peer-to-peer marketplaces.
The process works similarly for card-based stablecoin payments, but with a minor variation. Some crypto trading platforms feature crypto VISA cards. Users can fund the crypto card with stablecoin and view the balance in crypto and fiat. The balance remains in stablecoin and can be used for retail payments. At the exact point of payment, the system converts the stablecoin to fiat and settles the transaction in fiat.
SWIFT Payment Process
The SWIFT system does not hold currency; it only works to facilitate capital flow. At the ground level, banks do not have direct accounts with all foreign banking institutions. As a result, financial institutions rely on a chain of intermediary banks that have a standing order to facilitate capital flow from one bank to another for transactions to be completed. The SWIFT network is what facilitates the communication of messages and payment instructions among the banks.
Due to the numerous intermediaries, cross-border foreign exchange costs may range between 200 and 400 basis points. Additionally, banks are obligated to run anti-money laundering screening and other administrative activities that add to costs. Banks pass on these costs to users, leading to high transaction fees, some as high as 8%. In addition to high transaction fees, the layers of middleman operations and administrative processes delay payment processing. For less common high-value transactions between major financial centers, this is manageable. However, small and medium enterprises processing rapid transactions across emerging markets will feel the pinch as fees weigh in on profit margins.
Advantages and Limitations of Each System
SWIFT is the unifying system that allows bank transfers to be processed. Traditional SWIFT payments are still the gold standard for cross-border trade but are subject to chargebacks, delays, and even transaction reversals. In addition, it’s limited and only available to financial institutions connected to the network. While that number is above 11,000 in more than 200 countries, it doesn’t capture many financial institutions. In addition, the BRICS countries are pushing for another unifying financial messaging system with the goal of de-dollarizing trade activities. These factors may influence the adoption of SWIFT in certain contexts for cross-border trade.
Conversely, stablecoin adoption is rising, due to characteristics such as accessibility and processing speed. Stablecoins rely on the blockchain network, which is accessible anywhere in the world. The blockchain is its own messaging system, and onboarding processes may be completed relatively quickly depending on the platform. As a result, businesses and individuals can adopt crypto-based payment solutions, which may offer lower costs and faster processing times. Some limitations associated with traditional SWIFT payments are mostly non-existent in stablecoin settlements. There are no chargebacks, no transaction reversals, and even though delays can sometimes occur on a few blockchain networks, they are often processed faster than traditional banking systems.
Summary
Stablecoin settlements are increasingly used in cross-border payments for cross-border payments. Regulatory acts like the GENIUS Act are one step forward in fueling confidence in stablecoin use. However, the main growth will occur when traditional banking systems integrate with blockchain to process stablecoin payments. In the meantime, efforts to build quantum computing intelligence strong enough to crack the cryptography on which blockchain is built remain an area of ongoing monitoring for organizations.
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