Banks Make Their Move in Cross-Border Payments

Cost-effective, streamlined and data-rich cross-border payments have long been the holy grail of global commerce.

Stablecoins, after all, have been able to basically make their name on just their promise alone to innovate and disrupt the cross-border settlement space. As recently as Tuesday (March 17), PayPal expanded the availability of its dollar-backed stablecoin PayPal USD (PYUSD) and now offers it in 70 markets worldwide.

But stablecoin flows represent an infinitesimally small portion of cross-border payment volume. Payments originating from Latin America and Africa, two supposed digital asset hot spots, each account for less than $1 billion. Stablecoin payment activity today is driven almost entirely by payments sent from Singapore, Hong Kong and Japan, per McKinsey.

Beneath the headline crypto noise, however, a more powerful, real-world transformation has been unfolding. Traditional payment rails, long criticized for being slow, opaque and expensive, are undergoing a structural upgrade.

Three main advances are driving change: real-time rails are expanding globally, FX costs are shrinking and APIs are turning payments into software and streamlining local and multicurrency collections.

And unlike many crypto-native experiments, these changes are already delivering measurable impact at scale. The news Wednesday (March 18) that J.P. Morgan Payments and Mastercard have launched a new virtual card in Europe, for example, is likely to drive far greater actual cross-border volume than any stablecoin expansion could.

Read more: Trade Disruptions Tie Up Cash and Test CFO Playbooks

Why Stablecoins Aren’t the Main Story

The broader story is that many of the benefits associated with stablecoins, such as speed, lower costs and flexibility, are now being delivered within the existing financial system. They are being delivered in a way that is integrated with regulatory frameworks, banking relationships and enterprise workflows.

In other words, the transformation of cross-border payments is not waiting for a new system to replace the old one. It is happening within the system itself.

While cross-border payments have been constrained by the limitations of domestic systems, that divide is now closing. Real-time payment networks are proliferating rapidly across major economies, from Europe to Southeast Asia to Latin America.

More importantly, interoperability between these systems is improving. Bilateral and multilateral linkages are enabling funds to move directly between countries without defaulting to legacy correspondent banking chains.

And if speed has been the most visible pain point in cross-border payments, cost has been the most persistent. Foreign exchange spreads, intermediary fees and hidden markups have long made international transactions expensive and unpredictable.

But advances in treasury technology are enabling businesses to manage currency exposure more proactively, reducing the need for costly last-minute conversions. At the same time, a combination of increased competition, better pricing data and more efficient liquidity management is driving FX costs downward.

Perhaps most importantly, payment providers are rethinking how FX is integrated into the transaction flow. Instead of treating currency conversion as a separate, opaque step, it is increasingly embedded into the payment process itself, with real-time pricing and clear disclosures.

See also: B2B’s Biggest Innovation Isn’t Technology. It’s the Buying Experience

Payments Are Becoming Software

The third, and perhaps most transformative driver of change, is the rise of API-driven payment infrastructure. In the past, integrating with cross-border payment systems required significant manual effort, custom integrations and ongoing operational overhead. Payments were something businesses executed, not something they could easily embed into their products or workflows.

With APIs, however, instead of building separate processes for each market, companies can create unified payment experiences that adapt dynamically to local requirements. Collecting funds in multiple currencies, reconciling transactions and routing payments through the most efficient corridors can all be automated.

“There are expectations both on buyer sides and supplier sides for things to become a little bit more digital and automated,” Rene Stynen, senior vice president, EMEA, B2B Payments at Boost Payment Solutions, told PYMNTS in an interview this month.

“Embedded payments, where the payment becomes invisible in the procure-to-pay process, is what everyone wants,” Stynen added. “You don’t want the payment as a separate step.”

A company can, for example, accept payments in local currencies from customers around the world, hold those funds in multi-currency accounts, and disburse them to suppliers or partners without unnecessary conversions. The result is a more efficient flow of funds and a better experience for all parties involved.

For global businesses, this shift opens up new possibilities. Entering new markets becomes less about navigating complex payment infrastructures and more about executing a coherent go-to-market strategy. Managing suppliers and partners across borders becomes more predictable and less resource-intensive. And delivering a consistent customer experience becomes achievable, even in highly fragmented markets.

For all PYMNTS B2B coverage, subscribe to the daily B2B Newsletter.