remittances

The central bank poured cold water on the claim that stablecoin can make cross-border remittances cheaper.

A new study from Italy’s central bank challenges one of the crypto industry’s biggest selling points: that stablecoins can make cross-border remittances cheaper and faster than traditional payment networks.

Banca d’Italia’s research examined remittance corridors involving Italy, Argentina, Brazil, South Africa, the United Arab Emirates, and Japan, comparing USDC transfers against established money transfer services. Its conclusion was sobering.

Stablecoin transfers showed no systematic cost advantage, with total costs ranging between 0.3% and nearly 9%, meaning digital-dollar transfers were sometimes more expensive than conventional remittance providers.

Payment industry veterans addressed the findings, highlighting a critical distinction often overlooked in discussions about digital money: the difference between low-cost blockchain settlement and the expensive legacy networks surrounding it.

Size Matters in Remittance Costs

“The [central bank’s] test was fundamentally flawed,” said Daniela Sozzi, founder of London-based fintech strategy firm DNYC.

Why? Because of the relatively small transaction size used by the study’s authors ($200). In an email to Global Finance, Sozzi explained that the use of stablecoins is economically advantageous only for sums of at least $100,000. These are still relatively small compared to “traditional” wholesale transactions using traditional correspondent banking services, such as $1 million and above, she pointed out.

“So, stablecoins are cheaper for certain types of transactions, not universally cheaper,” said Sozzi.

But that $200 threshold isn’t arbitrary — it’s the standard transaction size the World Bank uses to benchmark its Remittance Prices Worldwide index, which put the global average cost of sending money through traditional channels at 6.36% in the third quarter of 2025.

The index of major international money-transfer operators, such as Western Union, came in at 5.52% — squarely inside the 0.3% to 9% range the Italian central bank found for stablecoins, underscoring Sozzi’s point that at this size, the two systems are comparable.

Still, Banca d’Italia’s findings track with a broader body of research on stablecoin remittances. A BIS paper published in March scrutinized how cross-border payments, “particularly remittances and retail transactions, remain more costly, slower, less accessible, and less transparent than domestic payments.”

Where Are Costs Coming From?

Rather than viewing the report as a rejection of digital money, payment industry experts say the findings point to a broader structural issue: while settlement on the blockchain is fast and cheap, moving money into and out of legacy networks remains costly.

These expensive friction points stem from legacy bank networks, explained Alexander Taskey, CEO of global settlements platform Frame.

“Much of the cost around stablecoins comes from on- and off-ramping, since that requires moving in and out of legacy payments infrastructure,” Taskey wrote in an email to Global Finance.

London-based Frame operates as a programmable settlement layer, enabling financial institutions to orchestrate and route funds across both legacy banking rails and on-chain networks.

“Once funds are on blockchain rails, the cost of transacting collapses to near zero,” Taskey added.

‘Blockchain Cost Isn’t the Issue’

Pankaj Bengani, founder and CEO of payments infrastructure company Meld, said that the friction lies at the edges. “The cost on the blockchain is not the issue. Once the fiat — whether it’s euro or U.S. dollar — is on the blockchain, the costs are very, very low. All the cost is baked into the on- and off-ramps.”

Because of this, both executives agree that judging stablecoins solely on current consumer remittance pricing misses the broader trajectory of payment rails.

Bengani likens today’s stablecoin ecosystem to the early days of global container shipping, where efficiency gains only materialized after shipping ports and logistics networks matured. Similarly, Frame’s Taskey said that end-user priorities will ultimately drive how these backend systems evolve.

“Ultimately, customers don’t care which rails are being used,” Taskey added. “They simply want payments that are cheaper, faster, and more secure.”

While consumer remittances in developed corridors like Europe and the U.S. remain highly optimized via traditional rails, stablecoins are finding immediate traction where traditional systems fall short — such as high-fee corridors or markets with volatile local currencies where businesses and consumers prefer holding USD balances.

The Future Is Hybrid

Looking five years ahead, industry leaders see stablecoins operating not as a total replacement for traditional banking, but as one part of a larger, hybrid settlement architecture.

“Five years from now, I expect stablecoins to coexist alongside legacy fiat rails as one option among many,” said Taskey. “The challenge for banks will be tying it all together and consolidating fragmentation into a single, interoperable platform.”

For now, the Banca d’Italia’s findings serve as a reminder that while blockchain technology offers near-frictionless settlement, the global financial infrastructure built around it still has significant ground to cover.

Anthony Noto covers corporate finance and private credit. Contact him at anoto@gfmag.com.

Remittances are surviving the new US tax—at least for now.

This article appears in the July/August issue of Global Finance Magazine.

The Dominican Republic isn’t just a tourist paradise; it has a more diversified economy than most Caribbean nations. Yet foreign remittances still reach four in 10 households. Last year, Dominicans abroad sent home a record $11.87 billion, up 10.3% from 2024, according to the Central Bank of the Dominican Republic (BCRD). 

For such a country, 2025 was a banner year. But as of January 1, Washington has been levying a 1% tax on remittances paid by cash, money orders, or cashier’s checks under the One Big Beautiful Bill Act, which President Trump signed last year.

Related: Country Report: The Dominican Republic Is on the Rebound

While the tax has heightened anxiety in migrant communities, the BCRD forecasts a mild impact on the country, with remittance growth slowing to 3.5% in 2026, or roughly $12.2 billion. Manuel Orozco, director of the Migration, Remittances and Development Program at the Inter-American Dialogue, a Washington-based think tank, broadly agrees, though for reasons rooted less in the tax than in how Dominicans send money.

“My estimate is about 4% growth this year,” Orozco says. “I wouldn’t argue that the slowdown is due to the 1% tax, but rather to the precautionary fear factor.”

Early data supports his analysis. Patricia Krause, economist for Latin America at Coface, a French trade-credit insurance company, says the levy has yet to leave a mark: “Although there was an expectation that it could affect remittance figures, that has not been the case for the Dominican Republic, at least so far. While remittances reached $4.1 billion in the first four months of 2026 — up 4% year over year — the increase was 11% year over year in April,” Krause notes. 

Broad Regional Trends

According to Orozco’s analysis, remittances across all of Latin America and the Caribbean are projected to grow by 4.7% in 2026, a growth rate that is down from 6.3% the previous year. This indicates that “the slowdown is regional rather than Dominican,” he says.

The reason the tax has landed softly thus far is the taxing mechanism; it applies only to transfers funded with physical cash or paper instruments, not to those paid from a bank account or card, and most Dominicans in the U.S. are able to avoid it. 

“More than 80% of Dominicans hold a bank account, and 60% were already sending money digitally before the tax arrived,” Orozco says. “That leaves roughly 40% who send cash, and that cash is not informal.”

Where Cash Remains King

Ninety-nine percent of money transfers originate through licensed companies like Western Union, and many of those senders also hold a bank account, he adds: “Instead of using cash, they may just use their debit card and avoid the charges.” At the receiving end of the corridor, cash remains king, with about 70% of transfers still collected as cash, a quarter of them through a home-delivery network Orozco likens to “DoorDash since the ’80s.”

That reflects the makeup of the Dominican diaspora, which is concentrated in the U.S. The fact that the country’s economy is not over-reliant on remittances also helps soften the tax impact. The inflows are worth close to 10% of GDP, Orozco says — 9% in 2024, according to World Bank data — but the country relies on a “much more dynamic” export-manufacturing base than its CAFTA trade partners.

Related: Dominican Republic Tourism Surges

Still, that 1% tax means a lot less cash coming into the country. The loss will total $230.7 million in 2026, according to Helen Dempster, co-director of the Migration and Displacement Program at the Center for Global Development (CGD), a Washington-based think tank. The CGD’s dataset “suggests the Dominican Republic is among the countries most exposed to the U.S. remittance tax,” she added.

However, Orozco’s own survey found that among migrants who send cash, the majority intend to continue doing so and absorb the tax rather than switch. “The impact is on the income of the cash sender,” he says. He ties the levy to the politics of the law that produced it. “It’s part of a broader political agenda aimed at migrant practices the administration deems unacceptable.”

Solly Boussidan is a contributing writer based in Brazil.

Gig platforms offer seamless checkout for buyers, but emerging market payouts remain broken for workers.

In June 2026, member states from more than 180 countries convened for the International Labour Conference to determine international labor standards for digital platform workers. However, even with those standards set, payments remain a big issue. 

Imagine a freelance developer in Lagos, who successfully completes a project for a client in London on Upwork. While the client’s payment is secured instantly, the developer faces a mandatory five-day security hold on their funds, followed by conversion to Naira at unfavorable rates, and fees of up to $20 per withdrawal, all eroding a significant portion of their earnings. 

The Booming Gig Economy in Emerging Markets

The gig economy has taken off like a rocket around the world, making up for 46% of the global workforce in 2025. Global projections state that it is set to increase to $2.52 trillion by 2035 from $674 billion in 2026. And it is expanding aggressively in the Global South. According to recent Compound Annual Growth Rate (CAGR) numbers, emerging markets have growth rates of roughly 21% in India, 17% in Egypt, and 16% in Argentina and Brazil. 

Platforms such as Uber Inc. for drivers and Upwork for freelancers offer great opportunities for a second or even a primary income. However, while these companies provide seamless purchasing options for their services, they have largely not adapted their payout structures for workers in emerging markets. 

Beyond the lack of stability and control that can come with side hustles, paying workers simply and on time remains a challenge for many gig economy platforms. 

Funds get stuck between payer and recipient as they navigate local currencies across fragmented banking and mobile money ecosystems, compliantly and at speed. For all the sophistication of modern payment infrastructure, the last mile of the payout stack remains one of the most technically underserved problems in the industry.

The Fragmented Payment System

Paying is harder than it looks. There are dozens of local currencies, many with volatile exchange rates and limited convertibility. To pay in a timely, consistent manner, platforms must have local liquidity ready to go, which can be cumbersome when applied globally. Compliance complexities, such as know your consumer (KYC) and AML requirements, vary by region, while worker classification and tax withholding obligations differ. 

Additionally, many workers rely on being paid via mobile money such as M-Pesa in Africa, digital wallets, and cash-out networks rather than bank accounts, which have low penetration in some regions. 

There are no dominant payout rails, meaning a platform operating in Kenya, Nigeria, Brazil, and Colombia is working with M-Pesa, bank transfers, PIX, and PSE simultaneously. Each comes with unique settlement times, failure rates, and reconciliation requirements. These issues result in delays, unfavorable exchange rates and high cash-out fees that are all absorbed by workers.

Beyond a minor inconvenience, these issues can mean not eating or paying rent for some who live day to day. As a result, workers switch to whichever platform pays fastest, while platforms face churn and risk their local reputations. Marginal inefficiencies, such as failed transaction fees, can add up significantly for platforms such as Rappi and Glovo, which process millions of transactions per week. 

Regulatory pressure is also building. The ILC conference this month will determine standards for digital platform workers, including employment classification, pay transparency, and social protection.

Smooth Payments With a Single API

Platforms are exploring multiple solutions for workers’ payment issues in emerging markets.

Aggregator models with multiple partners are one model that helps, but simultaneously increases operational overheads, with ongoing liquidity issues. Local wallets that are pre-funded require capital and incur high management costs, making them a barrier of entry for small to medium businesses. Earned wage access ensures workers are paid on time; however, it doesn’t resolve fees. Partnerships with local in-market banks provide faster settlements, with platforms owning compliance and currency conversions. 

Single APIs may increase costs for platforms; however, they handle the complexities of local rails, currencies, payment methods, and compliance across multiple markets, making it seamless for platforms to pay workers with minimal overhead. 

It can’t be denied that side jobs and flexible working are an attractive opportunity for many, particularly in emerging markets. However, delayed payouts for workers who live paycheck to paycheck is one practical aspect that impedes on a stable standard of living and erodes trust. Those looking to expand their billion-dollar businesses must ensure that the experience is seamless not only for the customer but for all parties involved.

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Carlos Menendez, chief operating officer of dLocal, is a seasoned general manager with extensive global experience in creating and scaling businesses. Prior to dLocal, he spent 14 years at Mastercard, most recently as president of the Global Commercialization Office, and 14 years at Citi, serving senior roles such as COO of Western Europe Retail Banking, EMEA Bankcards regional director, and CFO of Citibank USA. He holds a BA in Economics from Harvard University, an MBA in Finance from The Wharton School, and an MA in International Studies from the Lauder Institute at the University of Pennsylvania.