How Stablecoins are Claiming the $900 Billion Remittance Market

For over a century, the business model for global remittances has been simple: charge a staggering fee to the people who can least afford it. The global average to send money home is 6.4%. For the $905 billion sent home annually, that's a $50 billion+ tax on the world's working class. Now, a new technology stack is challenging that monopoly, and the incumbents like Western Union are being forced to join the revolution or be rendered obsolete by it.

This isn't a theoretical "use case" anymore. The largest and oldest money-movers on the planet have publicly conceded that their own rails are broken and are now actively building their future on public blockchains.

This shift is about more than just cost and speed. It represents a fundamental rewiring of the financial system, moving from a "dumb" pipe that just moves money to an "intelligent" network that can program it. This is not just a technical upgrade; it's a paradigm shift. And I know, because my team and I were one of the first to build it.

The Old Stack: A Rube Goldberg Machine of Money

To understand the revolution, you must first understand the old regime. When a migrant worker in Chicago sends $200 to their family in Lagos, the money doesn't actually move.

Instead, that $200 is taken by a local agent. That agent notifies a central Western Union hub, which then draws from a different, pre-funded pool of Nigerian Naira already sitting in a bank in Nigeria. A local agent in Lagos is then authorized to dispense the cash. This system, a complex, 150-year-old web of correspondent banks, nostro/vostro accounts, and pre-funded liquidity, is the reason a digital transfer can take 3-5 business days and cost 10% of its value. It's a Rube Goldberg machine of finance, and the friction is the business model.

This is a literal lifeline. In countries like Tonga, remittances account for a staggering 41% of the entire nation's GDP. For Tajikistan, it's 39%; for Lebanon, 31%; and for Samoa, 28%. When the global average cost to send money is 6.4%, it's not a convenience fee; it's a direct tax on national economies.

The New Stack (Layer 1): The Great Rail Replacement

The first layer of the new stack rips out that 150-year-old plumbing. It replaces the private, fragmented web of correspondent banks with a single, open, global settlement rail: public blockchains.

A stablecoin like USDC is a digital dollar that runs on these rails. It can be sent from Chicago to Lagos in three seconds, for a fraction of a cent, 24/7/365. It eliminates the intermediaries, the 3-day settlement delays, and the entire pre-funding quagmire.

This is the "faster, cheaper" argument, and it has already won. The most powerful proof is not in a whitepaper; it's in the strategy pivots of the incumbents themselves.

1. MoneyGram + Stellar: MoneyGram's partnership with the Stellar Development Foundation was the first major shot fired. It allows users to use their global cash-agent network as a physical on/off-ramp for USDC. In early 2024, they announced a non-custodial wallet, allowing users to hold, send, and cash out USDC directly, effectively bridging their 20th-century physical footprint with 21st-century blockchain rails.

2. Western Union + Solana: This October, Western Union made an even more profound move. They announced they are launching their own proprietary, federally regulated stablecoin... on the Solana blockchain. This is a full pivot. Western Union is no longer just a user of the financial system; it is becoming a protocol player, issuing its own token on a high-speed public chain.

2. Remitly & Sendwave (Zepz): The digital-native disruptors are also all-in. This August, Remitly announced a major stablecoin integration, including a new wallet and, critically, the use of tokenized dollars for its own internal treasury operations. Just weeks ago, in October 2025, Sendwave (owned by Zepz) launched its "Sendwave Wallet," also built on Solana and using USDC for peer-to-peer transfers.

The trend is undeniable. The entire industry, from the 150-year-old giant to the modern digital apps, has publicly declared that high-speed blockchains like Stellar and Solana are the new settlement rails for money.

A Founder's POV: Why Faster and Cheaper Isn't Enough

But I saw this coming, and I also know that cost and speed are only half the story. The real problem with remittances is that they are a "dumb pipe."

Back in 2017 & 2018, my team at AID:Tech partnered with the United Nations Development Programme (UNDP) in Serbia to tackle this very issue. We were tasked with delivering social welfare payments to vulnerable populations. The problem wasn't just the cost of delivery; it was the lack of transparency and control. Cash could be lost, stolen, or spent on things other than its intended purpose.

Our solution was to create one of the world's first stablecoins for conditional remittances. We used a blockchain and digital identity to issue digital tokens to beneficiaries. But these were not just dumb tokens; they were programmable. They could be designated only for specific, verified merchants, such as grocery stores or utility providers.

We proved that money could be intelligent. A sender could send $100 home with programmable rules attached: "$50 only for my mother's electricity bill," or "$50 unlocked only at the local utility for gas payments."

The New Stack (Layer 2): The "Last Mile" Bottleneck

A stablecoin sitting in a digital wallet is useless if you can't buy food with it. This is the "last mile" problem, the critical barrier between the digital world and the physical one.

This is the battleground for on-ramps and off-ramps, and it's not being fought in traditional banks. In many of the largest remittance-receiving countries, the dominant financial tool is the Mobile Money Wallet.

• In Kenya, M-Pesa is ubiquitous, with transactions accounting for over 50% of the country's GDP.

• In the Philippines, GCash has over 80 million users and a massive list of remittance partners, including Sendwave and WorldRemit.

These mobile wallets are the real "last mile" infrastructure. The biggest bottleneck and opportunity in remittances today is the seamless integration of stablecoins directly into M-Pesa and GCash wallets. The company that solves this, allowing a user to receive USDC in their GCash wallet as easily as they receive a peso, will own the user experience.

The Holy Grail: The Circular Economy

The next logical step? Eliminate the off-ramp entirely.

Why should a recipient in Manila pay a fee to convert their USDC to pesos, especially if their local currency is inflating? The ultimate goal is to create a "circular economy" where the stablecoin is the money.

This is already happening. Sendwave's new wallet explicitly states a future where customers can "directly use their USDC balance for real-world payments". In India, a shadow economy where stablecoins are used for remittance is emerging, driven by arbitrage opportunities.

When a recipient can receive USDC and use it to pay their rent, buy groceries, or pay for a data plan, all from the same wallet, we have achieved true disintermediation.

The New Stack (Layer 3): The Intelligence Layer (AI)

This new, open, programmable financial system creates an entirely new set of challenges that, in turn, require a new layer of technology: Artificial Intelligence.

If money is programmable, AI is what will program it. If rails are open, AI is the guardian that will secure them.

1. AI for Compliance: Traditional, rule-based AML/KYC systems are useless in a high-speed, on-chain world. AI is the only solution. AI models can monitor public blockchain transactions in real-time, trace crypto flows, recognize complex fraud patterns, and flag suspicious activity far more effectively than any human team.

2. AI for User Experience: The physical Western Union agent is being replaced by a "digital agent." This will be an AI-powered chatbot in a user's native language. It will guide a first-time user, help them set up their wallet, explain what a stablecoin is, and show them where they can spend it. This solves the critical "digital literacy" barrier.

3. AI for Treasury: As Remitly is already doing, AI will be used by providers to manage their own liquidity, hedge against FX volatility in real-time, and optimize settlement paths, further driving down costs for the end-user.

The Real Competition (And the Final Synthesis)

There is one final, powerful counter-argument to this entire thesis: "Why do we need stablecoins at all when domestic instant payment systems like Brazil's PIX and India's UPI are instant and free?"

It's a valid question, and the answer reveals the true, ultimate role of stablecoins.

These domestic systems are brilliant, but they are domestic. They are national intranets. PIX does not talk to UPI. The hard part of a remittance is not the domestic leg; it's the cross-border leg.

Stablecoins are the global bridge. They are the currency-agnostic, 24/7 "network of networks" that can connect all these national intranets.

The future of remittances looks like this:

1. A sender in the US initiates a transfer from their FedNow-enabled bank account.

2. A service like Remitly or Western Union instantly converts the USD to USDC.

3. The USDC is sent to Brazil in two seconds.

4. It is instantly converted to Brazilian Reals and deposited into the recipient's PIX-enabled wallet.

OKX is already doing this in Brazil, with direct PIX-to-stablecoin integration. This is the new stack in action. FedNow, PIX, and UPI are not competitors to stablecoins; they are the on-ramps and off-ramps.

Conclusion: The End of the Wire

We are witnessing a fundamental rewiring of the $860 billion remittance industry. The shift is from a high-fee, slow, "dumb" pipe to a low-fee, instant, "intelligent" network.

The incumbents like Western Union and MoneyGram are not adopting this technology because it is "cool" or "innovative." They are adopting it because it is a matter of survival.

They have realized that their most valuable asset is not their aging, expensive correspondent banking network. It's their trusted brand and their physical "last mile" agent footprint. By plugging that footprint into the new stablecoin rails, they have a chance to compete.

The future of "sending money" is not just faster and cheaper. It is smarter, programmable, and intelligent. The experiment my team and I ran in Serbia, proving that money could carry intent, is, at last, becoming the global standard. The wire is cut.