Few bottlenecks across the payments landscape have been more intractable than that of cross-border payments.
But with the news Thursday (Dec. 5) that the U.S. licensed FV Bank is now supporting direct USDT stablecoin deposits to simplify cross-border transactions by reducing reliance on traditional wire transfers and fees, cross-border payments optimization could be arriving — for both financial institutions (FIs) and their end-users — faster than anyone could have anticipated.
“This innovation positions us at the forefront of regulated financial institutions offering comprehensive stablecoin on-ramp and off-ramp services. We have also seamlessly integrated our blockchain analytics tools to pre-screen and detect transactions which may be linked to sanctions or AML activity ensuring our compliance with regulations,” Miles Paschini, CEO of FV Bank, said in a release.
Paschini also noted that by eliminating the dependency on traditional bank wires and exchange fees, FV Bank’s USDT direct deposit feature offers a streamlined option for high-volume and smaller-scale international transfers alike.
Traditional cross-border payments are notorious for high fees, slow processing times and opaque intermediaries. Stablecoins offer a compelling alternative by allowing near-instantaneous transfers, significantly lower costs and enhanced transparency through blockchain technology. However, their utility has been somewhat limited by the difficulty of moving funds between stablecoins and fiat currencies — a gap that on-ramp and off-ramp services aim to fill.
For banks, this functionality highlights the emergence of a potentially stark choice: adapt to a changing payments landscape or risk disintermediation.
Read more: Why Banks Might Want to Have a Blockchain Strategy
The integration of on-ramp and off-ramp services into the mainstream financial ecosystem is both a threat and an opportunity for banks. On one hand, these services encroach on a core banking function — facilitating the transfer and conversion of money. If consumers and businesses find stablecoins easier and cheaper to use for international payments, they may bypass traditional banking systems altogether, reducing banks’ revenue from foreign exchange and remittance fees.
“Blockchain solutions and stablecoins — I don’t like to use the term crypto because this is more about FinTech — they’ve found product-market fit in cross-border payments,” Sheraz Shere, general manager of payments and commerce at Solana Foundation, told PYMNTS earlier this year. “You get the disintermediation, you get the speed, you get the transparency, you get extremely low cost.”
On the other hand, banks have a unique opportunity to integrate these services into their own operations. By partnering with stablecoin issuers or developing proprietary on-ramp solutions, banks can position themselves as the trusted gateway to the digital economy. Such integrations could also help banks tap into new revenue streams, such as fees for stablecoin transactions or value-added services like digital asset custody and compliance solutions.
For example, small- t0 medium-sized businesses (SMBs) stand to potentially benefit immensely. These businesses, often priced out of traditional cross-border payment solutions, can leverage stablecoins to reduce costs and improve cash flow. Similarly, remittances — a lifeline for millions of families worldwide — could become more affordable and accessible.
“When individuals log into their online banking accounts or mobile apps, the processes that we’re taken through to make a cross-border payment are not very transparent,” Andy Elliott, vice president of strategy at EvonSys, told PYMNTS. “It takes too long. It’s relatively expensive and unnecessarily complex.”
Read more: Compliance Divides Stablecoin Market: Why CFOs and Treasury Teams Should Care
PYMNTS Intelligence has found that using cryptocurrencies for cross-border payments could be the winning use case that the sector has been looking for. The research revealed that blockchain-based cross-border solutions, particularly stablecoins, are being increasingly embraced by firms looking to find a better way to transact and expand internationally.
Yet, the transition is not without challenges. Regulatory scrutiny remains a significant hurdle. Governments and central banks are keen to maintain control over monetary policy and prevent financial crimes like money laundering. For on-ramp and off-ramp providers, navigating these complexities is crucial to ensuring trust and adoption.
In its newly released 2024 annual report, the U.S. Financial Stability Oversight Council (FSOC) made special mention of the fact that stablecoins do not have adequate safeguards against risks and failures.
“As the council has stated over the last several years, stablecoins continue to represent a potential risk to financial stability because they are acutely vulnerable to runs absent appropriate risk management standards… The Council recommends that Congress pass legislation creating a comprehensive federal prudential framework for stablecoin issuers to address run risk, payment system risks, market integrity, and investor and consumer protections, including for entities that perform services critical to the functioning of the stablecoin arrangement,” the annual report stated.
In the end, the success of stablecoin on-ramps likely hinges on striking a balance between innovation and trust, between efficiency and compliance. For banks, this may be a challenge worth rising to. For the payments industry, it could prove to be a sign of the future arriving faster than anyone might have anticipated.
Agentic artificial intelligence (AI) promises to improve operational efficiencies and the customer experience offered by enterprises.
The advanced technology is finding applications in loan underwriting and fraud detection, and now it’s moving across borders.
TerraPay Co-Founder and Chief Operating Officer Ram Sundaram told PYMNTS as part of the “What’s Next in Payments” series focused on exploring AI’s use in banking and by FinTechs that automated decision making and streamlined processes will continue to transform global money movement, especially as faster payments gain ground in cross-border transactions. That’s the inexorable trend, but as Sundaram put it, there’s still room, and a necessity, to have some human interaction in the mix.
In terms of global fund flows, TerraPay’s single connection ties more than 3.7 billion mobile wallets together across 200 sending and 144 receiving countries, touching 7.5 billion bank accounts. As one might imagine, coordinating and enabling the transactions is complex.
“Obviously, in the best-case scenario, everything goes smoothly, but when things are not going smoothly, that’s when the customer queries come in,” Sundaram said.
It’s no easy task to find out straight away where a transaction is, as analysts and representatives at the company have to look at logs and query partner systems.
“A lot of that work is done manually,” said Sundaram, who added that the agents “know the corridors and the markets that they are working in, but it still takes some time.”
TerraPay is using AI models with machine learning to bolster customer support and automate tasks as financial institutions (TerraPay’s client base) send payments in real time, and those payments are processed into local markets’ beneficiary banks.
“We still don’t trust [AI models] to let them respond to the customer straight away, but we can do the analysis, and then that gets reviewed by an agent who decides if [information] is accurate or not and then sends it off,” Sundaram said.
The same principles are guiding AI models and company practices to improve technical and security operations, analyzing and categorizing anomalous transactions and automating integrations with partner firms.
“Compliance is an issue where there is a lot of review needed of the alerts, and we are using [AI models] to speed up those processes,” Sundaram said.
Asked by PYMNTS about how agentic AI can be harnessed, he said: “In financial services, you can’t take chances on technology like this, which has the freedom to go wrong. You have to be careful about making sure that it’s 100% reliable before we can let things run entirely by automation.”
Agentic AI also remains pricey. For example, OpenAI is charging $20,000 a month for its specialized agents. However, Sundaram said the industry will become commoditized quickly, which will lower prices, and some open-source offerings are capable.
“There’s a fire hose of news about breakthroughs and new ideas and new ways of doing things that are coming out on a daily basis,” he said.
Data underpins it all, and Sundaram told PYMNTS that no matter what the application, the information fed into the models must be clean. Most organizations have a range of data sitting in different intra-company silos, and those silos need to come down.
In addition, the data must be structured so that it is accessible and can be synthesized by the models. Many firms may have more than 1,000 software-as-a-service (SaaS) resources to which they are subscribed but are not accurately tracked or monitored.
“Every database is separated, each one sitting somewhere else,” he said.
The days of stitching together those separate SaaS offerings to run an enterprise are ending, he said, and we’re headed to a future when data is collected in one place.
AI models and agentic AI “are extensions of what we’ve always valued at TerraPay, which means building the most efficient infrastructure possible in order to make sure that transactions are processed safely, quickly and affordably,” Sundaram told PYMNTS. “We see AI and [AI models] as powerful tools that help us scale all this very quickly while making sure we build more and more efficiency into the system.”
