Stablecoins offer no systematic cost advantage for remittances
A Banca d'Italia mystery shopping study testing 200 USDC transfers across ten corridors found that stablecoins offer no systematic cost advantage over traditional channels. Total transfer costs ranged from 0.30 percent to nearly 9.0 percent, driven primarily by fiat on- and off-ramp fees.
The fiat sandwich bottleneck
The empirical study executed 200 USDC transfers between Italy and five partner countries—Argentina, Brazil, South Africa, the United Arab Emirates, and Japan—to measure end-to-end efficiency.
On-chain Ethereum transfer costs accounted for a marginal share of total expense, averaging just 0.4 percent across corridors.
However, total transaction costs varied widely from 0.30 percent for Italy-to-Argentina to 8.96 percent for Argentina-to-Italy and 8.95 percent for UAE-to-Italy.
Conversion fees, exchange trading markups, and funding method surcharges constituted the primary cost drivers.
For instance, funding via credit card in the UAE incurred a 3.8 percent fee, while exchange withdrawal charges further eroded transfer value for retail users.
Speed follows domestic rails
Domestic payment infrastructure dictates settlement speed more than blockchain architecture.
In corridors linked to instant payment systems such as Brazil's PIX, Argentina's Transferencias 3.0, or Euro Area TIPS, end-to-end execution completed in under 20 minutes.
Conversely, reliance on standard bank transfers in South Africa extended settlement to one or two business days.
Furthermore, regulatory fragmentation heavily influences market access; strict rules in Japan forced the use of un-hosted intermediate wallets, creating operational hurdles for ordinary retail users.
No magic bullet for remittances
Stablecoins are touted as a cure for remittance costs, but this paper exposes that promise as premature.
Blockchain speed matters little when friction at local bank gateways adds days and heavy conversion fees.
Without direct real-economy usability, crypto transfers cannot replace traditional cross-border payment networks.