The global payments giant Western Union has unveiled a new pilot program testing the use of stablecoins for cross-border transactions, signalling a potential shift in the international flow of cash.
Handling approximately 70 million transfers each quarter across more than 200 countries and serving more than 150 million customers, the company aims to leverage blockchain settlement systems to reduce the need for traditional correspondent banking networks.
Why stablecoins?
Stablecoins and cryptocurrencies tied to the value of fiat money or other assets possess characteristics that make them suitable for remittance and international payments. In sectors plagued by high and sudden inflation, the transferred money is not at risk of devaluation as long as the US dollar index doesn’t drop overnight.
Stablecoins operate 24/7, enabling almost instantaneous settlements. By bypassing various intermediaries typically involved in traditional systems, they offer a significant improvement in speed, cost, and accessibility in the finance sector.
This initiative from Western Union can be viewed in conjunction with the evolving regulatory environment in the U.S. and other regions that are currently being clarified. The GENIUS Act is a significant legislative milestone, granting companies the ability to utilise stablecoins backed by the dollar with greater legal certainty.
Taking into consideration the operational aspects of Western Union’s pilot, three major advantages can be observed: faster settlement, potentially leading to the elimination of multi-day delays; reduction of costs by bypassing intermediary banks; and enhancement of capital efficiency through on-chain liquidity management.
Apart from Western Union, the payments industry is also gradually transitioning to the use of tokenised cash infrastructure. The 2025 Global Payments Report from McKinsey highlights that new-age rails, digital currencies, and programmable money are all playing a part in shaping the future of payments.
Meanwhile, analysts predict that the stablecoin market could grow to as much as $2 trillion by 2028, although the current volumes are “only” around $30 billion a day, according to the report.
Nonetheless, the transition carries risks. Companies will have to provide strong support for their reserves, follow the KYC and AML rules, and deal with the liquidity risks associated with tokenized operations.
The Bank for International Settlements (BIS) has also warned that stablecoins will face significant difficulty in demonstrating their capital traits as money — unit, availability, and soundness — without central bank backing.
What this means for the remittance sector
If successful, Western Union’s pilot could lead to the use of stablecoins in more remittance corridors, particularly those that are expensive, slow, and have limited access to traditional banking services. Moreover, it could boost the performance of other cryptocurrencies, resulting in potential changes on the crypto heatmap.
The combined effect of reduced cost and faster settlements could improve Western Union’s competitive position against fintech and crypto-native challengers.
Nevertheless, large-scale acceptance will depend on four factors: the chosen chain and token infrastructure (public vs. permissioned), liquidity and conversion facilities in destination markets, regulatory and legal protections in each jurisdiction, and the measurable cost-benefit in relation to present correspondent banking models.
Western Union’s stablecoin pilot program underscores the gradual transformation of traditional financial infrastructure. While the current use of stablecoins for international flows remains limited, the benefits they can provide — such as faster settlement, lower costs, and programmable rails — are highly attractive for cross-border payments.
If regulatory clarity continues to grow and companies develop larger-scale pilots, a lasting transformation in how remittances and global payments are processed can be observed.
The result, however, will be tightly linked to strategies, regulatory cooperation, and the extent to which tokenised rails can coexist with or replace legacy systems.