Many financial entities have entered the stablecoin arena in recent years, but Visa’s exploration of digital assets for cross-border payments could be a game changer. It marks the first adoption of a stablecoin by a major payment rail that already processes the lion’s share of international transactions. While this is an important step forward, stablecoins are still a long way from becoming the default solution for cross-border payments.
Visa’s pilot program will allow businesses to prefund Visa Direct transactions using stablecoins rather than fiat currency. By treating stablecoins as equivalent to funds on deposit, buyers and sellers can enable instant payouts without leaving capital tied up across multiple currencies until needed.
Visa is positioning the stablecoin option not just a convenience, but a tool to improve liquidity management. In the past, businesses had to lock up significant amounts of capital in advance and endure multi-day settlement for cross-border transactions. With stablecoins, those inefficiencies can be greatly reduce.
“It’s definitely a significant development in the space,” said Hugh Thomas, Lead Analyst of Commercial and Enterprise at Javelin Strategy & Research. “By offering the ability to move money in and out of stablecoin accounts with Visa Direct—the way you might move money in and out of your bank account—you open up a much broader set of potential users. Users don’t have to adopt fewer familiar providers and technology, and they get the assurances that come with a familiar and trusted brand as an overlay to less familiar payment products.”
Stablecoins Are Transforming Cross-Border
Stablecoins have proven highly useful in cross-border payments. Because these tokens are pegged to stable assets—usually the U.S. dollar—they provide predictability in settlement and reduce exposure to market volatility. Cross-border markets have responded quickly to these benefits, driving widespread adoption of stablecoins in a short period.
“Stablecoin settlement volumes surpassed Visa and Mastercard’s settlement volume combined last year,” said Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research. “SWIFT and Mastercard’s blockchain solutions show us that these new rails are where it’s all headed—normalizing tokenized dollars for cross-border payments. But it will take some time to build it all out.”
Visa executives noted that regulatory clarity also encouraged them to incorporate stablecoin technology into their payments infrastructure. The passage of the GENIUS Act in the U.S. in July established clear rules for stablecoin issuers. This followed the European Union’s Markets in Crypto Assets (MiCA) regulations, which provide a comprehensive framework for stablecoin usage in the region. Such guardrails have bolstered confidence in digital assets, especially among legacy financial institutions.
High transaction costs have historically been another stumbling block. In Latin America, inefficiencies have been a particular struggle. According to Mastercard, the average cost of sending remittances in Latin America is 6.3%, well above the 3% target established by the United Nations. With stablecoins, transactions are often nearly and eliminate the need for currency conversion, which can complicate expense planning.
A Flood of Stablecoins
Many financial entities have introduced—or are considering introducing—their own stablecoins, including the Mexican government, which is developing a coin pegged to the peso. Zelle’s proposed coin appears designed to enable entry into the cross-border market, which is currently inaccessible to its 150 million users. PayPal has also launched its own stablecoin, but it has long supported peer-to-peer cross-border transaction through its Xoom platform.
In contrast, Visa’s program works with existing stablecoins rather than creating a new one, leveraging the more than $200 billion already circulating in the market.
“It would make more sense for Visa to build its own stablecoin-focused layer 1 network, rather than issue a stablecoin,” said Hugentobler. “Their edge is already connecting moving parts, like consumers, businesses, and financial institutions. They should stay on the path of ‘owning the airport’ rather than becoming a single airline through issuing their own stablecoin.”
Thomas added: “Visa and Mastercard are payments networks and switches. They don’t absorb any of the risks entailed in making payments, which is a big part of why the market loves their stocks. Launching a stablecoin would feel a bit like starting a bank for Visa. It would be out of their core competencies and would risk suggesting to the market that they’re shifting away from the focus that’s so well-appreciated by investors.”
Toward a Tipping Point
Given their popularity and increasing momentum, it may sometimes seem as though stablecoins are approaching a tipping point—destined to become the default vehicle for cross-border payments, potentially replacing the traditional correspondent banking system. Yet, Thomas notes that there is still a long road ahead.
“The Nobel laureate economist Jean Tirole has talked about the need for payments systems to be built on public infrastructure, not speculative tokens,” Thomas said. “His points echo those raised by fellow Nobel winner Paul Krugman and others, who have talked about concerns related to previous regulatory failures like with money market funds, instruments built to project security that eventually failed, requiring government bailouts. Tirole points out the fines Tether received for misrepresenting reserves, and how Circle had its reserves jeopardized by the collapse of Silicon Valley Bank.”
Past breaches of trust are likely to keep many players on the sidelines for now. However, heightened regulatory guardrails, coupled with the confidence that comes only with experience, could go a long way toward solidifying stablecoins’ role in the cross-border process.
Visa, for its part, is taking a measured approach, testing the waters through a pilot program set to run into 2026 before deciding whether to launch a full-time stablecoin platform. Perhaps that will mark the true tipping point.
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