Deconstructing the Stablecoin Payment System: Reshaping a New Paradigm for Global Fund Flow

Stablecoins, as the most representative tools in the digital currency space, demonstrate the innovation that blockchain brings to traditional financial payment systems. In the past year, the total market capitalization of stablecoins has grown by over 50%, currently surpassing $250 billion, and is on the brink of explosion. This scale is sufficient to support the efficient circulation of trillions of dollars in global payment funds.

Industry insiders understand the value of stablecoins: they perfectly embody the core advantage of blockchain's "instant transfer of funds and value," laying the foundation for building a closed-loop payment system on-chain. However, real enterprise-level payment scenarios are much more complex than simple "peer-to-peer transfers."

Currently, enterprise-oriented stablecoin applications mostly adopt the "stablecoin sandwich" architecture: using blockchain to replace traditional payment channels for horizontal value/fund transmission, while the upper and lower ends still rely on the traditional financial payment system. Although this design has brought significant improvements, it also limits the full utilization of blockchain advantages.

This article will explore how stablecoins can be applied to cross-border payments from the perspective of global fund transfers.

1. Analyze the structure of the existing global cross-border payment system;
2. Analyze the specific improvements of the stablecoin sandwich architecture in fund management, B2B payments, and card network settlement;
3. Discuss how to overcome the challenges at both ends of the stablecoin sandwich to achieve end-to-end integration of blockchain value.

1. The Development Background of Stablecoin Payments

Among the many applications of stablecoins, B2B enterprise payments are the most notable. The latest industry report shows that last year, monthly B2B enterprise payment amounts grew from $770 million to $3 billion. A certain payment platform reported that stablecoins accounted for nearly half of its platform's transaction volume, with 49% of customers actively using stablecoins for payments.

The internal data of leading companies can better reflect the scale of segmented markets. It is reported that a large payment company has an annual processing volume of approximately $15 billion, with about half coming from B2B corporate payments. Another company's annualized transaction volume is $10 billion, estimated to account for about 20% of the global B2B stablecoin cross-border payment market.

The popularity of stablecoin payments is mainly due to the advantages it highlights when traditional financial infrastructure is outdated. Although the traditional system facilitates over $100 trillion in global payments each year, businesses and banks still face significant complexity and delays.

2. Main Models of Global Cross-Border Payments

2.1 Bank Infrastructure Based on SWIFT

Traditional cross-border payments mainly rely on the SWIFT system. The entire process is divided into "message transmission clearing" and "fund settlement": SWIFT is responsible for transmitting interbank transfer instructions, while the actual flow of funds only occurs between banks that have previously opened correspondent accounts.

Only when both parties are connected to the SWIFT system and are partners can the final transfer be completed. Otherwise, it is necessary to link up with correspondent banks that have the appropriate interfaces and positions to complete the fund settlement. This model may lead to issues such as long settlement times, high costs, and difficulties in tracking.

2.2 Cross-border Fund Pool Model Based on PSP

The cross-border fund transfer provider (XBMT) has emerged, allowing businesses to complete global payments without directly using SWIFT. Its essence lies in the cross-border fund pool model, providing businesses with a multi-currency fund pool to achieve flexible payments between different countries.

XBMT is responsible for managing compliance and banking relationships, allowing enterprises to obtain a single multi-currency banking product, forming a "closed loop". The internal ledger is like the meat in a sandwich, while the local receiving accounts in various regions are the bread. Liquidity is managed internally among the accounts.

Despite its glamorous surface, XBMT is still built on the SWIFT framework, relying on sophisticated liquidity management to "create" an instant payment experience. Its speed and scale are always constrained by the available liquidity in specific countries and the settlement timing of the underlying clearing track.

2.3 stablecoin mode

Stablecoins represent a deeper leap: reconstructing the way internet commerce operates through blockchain technology. Their settlement cycle is equivalent to the block time of the issuing blockchain, which is much faster than traditional methods. More importantly, stablecoins are typically deployed on smart contract platforms, enabling innovative systems and workflows that traditional banks cannot achieve.

From a macro perspective, faster and more interactive financial payments can directly amplify global GDP. When the settlement cycle is compressed from "days" to "seconds" or "minutes", its ripple effects will sweep across the entire economy. At the same time, the existence of verifiable standards allows financial innovation to occur globally without permission for the first time.

3. The Application of Stablecoins in Global Payments

3.1 Corporate Fund Management

In traditional models, companies must consider payment preparation time, manage foreign exchange risk exposure, and increase operating expenses significantly. Stablecoins simplify this system by eliminating the requirement for controlling delays in international settlements.

The "stablecoin sandwich" structure, although still needing to touch the fiat currency system at both ends, has made the flow of funds in the middle smoother. The entire process is divided into local transfers within countries, with the blockchain completing the intermediate global liquidity settlement.

3.2 B2B enterprise payment

B2B payments are often more complex, and their success or failure may affect other aspects of business operations. In traditional models, payments may need to go through multiple international transfer routes, lack a clear progress reporting mechanism, and be restricted by banks' non-24/7 operating hours.

The application of stablecoins brings multiple benefits: both parties can monitor payment status in real-time; financing can be directly linked to delivery milestones; reduced risks lead to lower capital costs and faster turnover; the intermediary banking links and pre-financing needs are basically removed; the entire process is compressed from 3 days to a few seconds and is not affected by market closures.

3.3 Card Organization Network Settlement

In the card organization network, issuing institutions and acquiring banks conduct net settlement through a centralized system. A large card organization has begun trialing the use of stablecoin for settlement, replacing the traditional wire transfer process.

This model benefits partners within the network: it reduces the capital requirements needed for timely international transfers and avoids foreign exchange risks. The openness, verifiability, and programmability of blockchain lay the foundation for interbank credit and other financial infrastructures within the network.

IV. Outlook

Currently, most stablecoin applications are still stuck in the "sandwich" structure itself and have not been able to break through further. As long as any link still needs to touch the fiat currency track, it is necessary to add "bread" at both ends.

The ultimate goal of stablecoin payments is to completely eliminate the "bread" at both ends. When businesses and consumers fully embrace stablecoins, complete financial and commercial cycles can be accomplished on the blockchain, no longer constrained by traditional rails. Once financial institutions and businesses fully settle in stablecoins, it will unleash unprecedented business scale.

The essence of PayFi is: Stablecoin Payments + On-Chain Finance. If we can completely eliminate the sandwich structure and build more on-chain financial services at both ends, the speed of global capital/value circulation will reach unprecedented heights.