Banks, fintechs, or stablecoins? What the BIS "competing rails" paper found about cross-border payment costs

BIS Working Paper 1385, published in October 2026, compares bank wires, fintech money transfer operators, and stablecoin transfers on all-in cost. Its verdict: bank FX wires are expensive, fintechs have cut costs sharply, and stablecoins price the FX leg near wholesale rates but add new fees and intermediaries. Stablecoins help. They are "not a panacea."

The paper is "Competing rails for cross-border payments: banks, fintechs, and stablecoins" by Wenxin Du, Catherine Huang, and David Scharfstein of Harvard Business School (BIS, October 2026). It is the most detailed public cost comparison of the three rails so far. If the term "stablecoin sandwich" is new, start with what a stablecoin sandwich is.

Key takeaways

• Retail bank FX wires carried markups of roughly 200 to 400 basis points even on the most liquid currency pairs.
• Fintech money transfer operators cost about 40 to 150 basis points, with clear scale economies as transfer size grows.
• For major currencies, the FX leg of a stablecoin transfer prices close to benchmark rates, and gas fees are negligible.
• Exchange trading fees, fixed withdrawal fees, and ramp providers become the main stablecoin costs.
• Stablecoin FX liquidity is tiny next to traditional FX, which limits large transfers today.

What did the BIS paper actually measure?

It measured the all-in cost of sending money across borders on three rails, using one formula for all of them.

All-in cost = FX markup against a Bloomberg benchmark rate + explicit fees, both in basis points of the amount sent. A basis point is 0.01%, so 100 basis points is 1%.

The three rails:

1. Traditional banks. Correspondent banking, with SWIFT messaging and nostro/vostro accounts (balances banks hold with each other in foreign currencies).
2. Fintech money transfer operators (MTOs). Firms such as Wise, Remitly, and the digital arm of Western Union, which hold local accounts in each country and net flows internally.
3. Stablecoin transfers. Fiat converted into a USD stablecoin, moved on a public blockchain, and converted back into the local currency at the other end.

The data mixes several sources. MTO prices were collected every 30 minutes from public websites starting January 2026, across about 100 corridors and four sizes ($200, $500, $10,000, $50,000). Bank wire costs came from a small sample of the authors' own transfers. Stablecoin prices came from centralized exchange data via CoinDesk, exchange fee schedules, gas fee data, and DeFi trade data. The World Bank's Remittance Prices Worldwide database filled in historical remittance costs.

What are the paper's five findings?

The paper lists five takeaways, in this order.

Each one changes how a payments team should read a stablecoin pitch. The sections below take them one at a time.

Why are bank FX wires so expensive?

Because of how the rail is built and priced, not because currencies are hard to trade.

Wholesale FX is deep. The paper cites the 2025 BIS Triennial Survey: about $9.5 trillion of average daily FX turnover in April 2025, with EUR, JPY, and GBP trading against the dollar at bid-ask spreads of 6 to 9 basis points. Yet the authors' own wires through large international banks showed FX markups of about 230 to 470 basis points for EUR and USD pairs, before any wire fee.

The paper points to two causes. The fixed cost of running correspondent relationships. And banks' pricing power in retail FX. For a wire-by-wire breakdown of where the money goes, see hidden fees in international wires.

How did fintech money transfer operators cut the cost?

By paying out of local balances they already hold, so most transfers never cross a border at the moment the customer sends.

MTOs keep accounts in each country, offset customer flows going in opposite directions, digitize KYC (know your customer checks), and show a fixed fee plus a disclosed rate. The paper finds median costs of roughly 200 basis points for $200 to Tier 1 currencies (USD, EUR, JPY, GBP) and nearly 300 basis points to Tier 4 currencies. At $10,000, costs fall to about 40 to 60 basis points for Tier 1 and Tier 2 currencies and about 80 to 130 basis points for Tier 3 and Tier 4.

The catch: MTOs still rely on partner banks, pre-funded local liquidity, and wholesale FX to settle imbalances. They re-optimize the old architecture. They don't leave it.

What does a stablecoin transfer cost in the BIS data?

The FX leg can be close to free for major currencies. The rest is not.

The paper splits a stablecoin transfer into four costs: the FX cost of converting between fiat and stablecoins, exchange trading fees, blockchain gas fees, and fiat on- and off-ramp fees such as withdrawal charges.

• FX cost. For EUR, GBP, CHF, and SGD, stablecoin-implied rates tracked the benchmark closely on average.
• Gas fees. Average fees were "well below one dollar" even on Ethereum, and a few cents or less on most other networks.
• Trading fees. 0 to 60 basis points on five of six centralized exchanges sampled, with one charging 100 basis points to traders under $10,000 a month.
• Withdrawal fees. Often fixed (the paper's example is €1), which makes small transfers expensive in percentage terms.

The paper's verdict: centralized exchanges play "a role analogous to correspondent banks." The rail swaps one set of intermediaries for another. That matches what the Federal Reserve's March 2026 FEDS Note said: stablecoins can shorten the intermediary chain, but large banks may keep a role in liquidity and compliance.

Why do stablecoins look cheaper in some emerging markets?

Because of capital controls, not better technology.

In several emerging-market corridors, the stablecoin rate was more favorable than the official benchmark for money sent from the US. The paper calls this a stablecoin access premium: where residents face limits on buying dollars, they pay extra for dollar stablecoins, so a sender converting into local currency gets a better rate. The authors are blunt: these advantages "arise from capital control distortions, not from technological efficiency."

How much liquidity do stablecoin FX markets have?

Very little next to traditional FX.

The USD stablecoin to euro pair is the deepest, at about $185 million a day on centralized exchanges and about $15 million on decentralized exchanges. Traditional FX turns over about $2.7 trillion a day in EUR. Beyond the euro, only five currencies (KRW, TRY, BRL, GBP, and THB) averaged more than $10 million a day against USD stablecoins.

Thin markets mean volatile prices and slippage on large tickets. The paper concludes stablecoins may compete for retail-sized payments, while their ability to displace traditional rails in high-value institutional transfers "is currently limited." For how this plays out in a payout quote, see onchain liquidity vs off-ramp liquidity.

What did the IMF discussant add?

A caution on comparability, and a second cost estimate.

Tobias Adrian of the IMF, discussing the paper (included in the same BIS publication), noted that bank figures exclude wire fees while fintech figures are all-in, so the three rails are not measured identically. He cited forthcoming IMF research covering 270 corridors that put the average cost of a $200 stablecoin transfer at about 2.2%, with a range of roughly -2% to 8%. In that work, the cheapest traditional option still beat the cheapest stablecoin option in about one-third of corridors.

What does this mean for a business sending cross-border payments?

Three practical rules fall out of the paper.

1. Price the whole sandwich. The on-chain hop is the cheap part. Ask for the delivered amount after both conversions and every fee.
2. Check your currency's liquidity. EUR and a few others are deep. Many currencies are not, and the price moves with size.
3. Size matters both ways. Fixed fees punish small payments. Thin liquidity punishes very large ones.

Our own cost per delivered dollar method applies the same all-in logic to a single payout.

How does BlindPay handle this?

BlindPay prices the whole conversion up front. A payout quote locks the exchange rate and fees for a specific bank account and expires after 5 minutes, and the response shows the exact amount the recipient receives (payout quotes). BlindPay combines a monthly plan with per-transaction fees that vary by rail and network, disclosed in the live quote before execute. Payouts land over local rails: Pix, PIX Safe, and TED in Brazil, SPEI in Mexico, ACH Colombia, Transfers 3.0 in Argentina, ACH, wire, and RTP in the US, SEPA, Faster Payments, and SWIFT (POBO/COBO) with UETR tracking and MT103 confirmations.

What to do next

Pick your three busiest corridors. For each, get a same-minute quote from your bank, a money transfer operator, and a stablecoin payout provider at your typical payment size, then compare the amount the recipient receives. That is the comparison the BIS paper says matters.