Cross-border transfers

A cross-border transfer (remittance) is sending money from one country to another: through a bank, a money transfer service or, increasingly, with stablecoins on a blockchain.

How it works

A classic bank transfer passes through a chain of correspondent banks. Each can take a fee, and currency conversion adds a markup in the rate. That is why it can take several days, and the receiver often gets noticeably less than was sent.

A stablecoin transfer works differently: the sender buys, say, USDT (on-ramp), sends it on the blockchain in minutes, and the receiver sells it for local currency (off-ramp). The transfer itself is cheap, but money is lost on the way in and out: service fees and exchange rates.

Every route has rules. Banks and crypto services check the sender and receiver, and transfers between crypto providers fall under the Travel Rule. Some countries restrict or ban crypto transfers, so check local law on both ends.

Example with numbers 1

You send $500 through a bank. The bank charges $25, and the conversion loses about another 2%, or $9.50. The receiver gets the equivalent of about $465.50.

Example with numbers 2

With a stablecoin: buying USDT at 1% ($5), a $1 network fee, and selling on the other side at 1% (about $4.94). The receiver gets the equivalent of about $489. But this only works if the receiver has a legal, reliable off-ramp.

Common mistake

A common mistake is comparing only the sending fee and forgetting the exchange rate and the receiver's costs. Work out how much money actually ends up with the receiver in local currency. And do not use random P2P exchangers for large sums: if it is a scam, getting the money back is nearly impossible.

Questions and answers

What is a cross-border transfer in simple terms?

It is sending money to a person or company in another country, through a bank, a transfer service or crypto.

Is sending money through crypto cheaper?

The blockchain transfer itself is often cheap and fast, but you have to count the fees for buying and selling the crypto. Sometimes the total beats a bank, sometimes not.

How long does an international transfer take?

A bank transfer takes one to several business days. A stablecoin transfer on-chain takes minutes, but buying and selling on each end can take longer.

Cross-border transfers

How it works

Questions and answers

Related terms

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