OPINION | Hidden Tax On Migrant Workers Costs Billions. Stablecoins Want To End It

High remittance fees quietly reduce the value of money sent by migrants. Stablecoins and digital payment rails could make global transfers faster and cheaper.

Stablecoins could transform global remittances by reducing fees and making cross-border payments faster and cheaper.

Source : ABPLIVE AI

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Key points generated by AI, verified by newsroom

• High remittance fees significantly reduce money's economic impact.
• Stablecoins offer lower transaction costs, nearing 1%.
• Banks and networks are integrating stablecoins for efficiency.
• Regulatory clarity and consumer trust are key for adoption.

Global cross-border transactions are estimated to hit $208 trillion in 2025. Remittances to India alone crossed $135 billion. Impressive figures, but they only tell part of the story. The deeper question is how much more value these flows could generate if the pipes carrying them weren't so leaky. Remittances have always done more than move money. Over the years, they have quietly funded households, seeded small businesses, financed real estate purchases, kept children in school, and kept labour markets ticking.

They create multiplier effects in local economies, driving secondary demand, supporting industrial activity, and even boosting tax revenues. The tragedy is that unnecessary friction, fragmented frameworks, technological incompatibilities, and punishing interbank fees have consistently blunted that impact.

Quiet Tax On Migrant Workers

A decade ago, the global average cost of sending $200 abroad hovered between 7.7% and 8.7%. The World Bank's latest estimate brings it down to 6.49%.

Though this is progress, it is not nearly enough. In Sub-Saharan Africa corridors, the average still sits at 8.78%, meaning $8 disappears on a $100 transfer from Dubai. Sending that same $100 to Delhi costs around 5.15 AED in fees alone. These numbers are more than double the UN's Sustainable Development Goal target of 3%. Hitting that target is not just symbolic, as it could expand the global remittance market to $900 billion and meaningfully widen the TAM for cross-border transactions overall. 

High fees do something more insidious than dent market size, though. They function as a direct tax on development. In economies with shallow financial sectors, remittances substitute for formal credit.

When fees erode those flows, it is often migrants who lose. These are the people who might otherwise be investing in a small business, putting a deposit on a home, or supporting a local market that institutional capital never reaches. Reducing remittance costs isn't a fintech talking point. It is one of the highest-return development interventions available to policymakers. 

Why Are Stablecoins A Structural Answer? 

Cryptocurrencies have been floated as a fix for remittance costs before, with mixed results. Stablecoins though are a different proposition, and there's momentum behind them.  

World Bank data shows stablecoin transfer fees via blockchain rails typically running under 1% in optimized corridors, against a 6.5% average through legacy systems. The Payments Association estimates stablecoin transaction volumes reached $11.4 trillion in 2025, with real payment activity around $390 billion, more than double the prior year.

The incumbents are reading the room. Western Union, MoneyGram, and PayPal have each moved to build or expand stablecoin capabilities. The calculus isn't ideological. A $900 billion remittance market with compressed margins is simply more defensible than clinging to high fees in a market that is gradually turning against you.

Card networks are accelerating too. For instance, Visa expanded its stablecoin settlement services to Central and Eastern Europe, the Middle East, and Africa through a June 2025 partnership with Yellow Card. To date, Visa has processed over $225 million in settlements globally. Meanwhile, Mastercard's tie-up with Triple-A signals an intent to thread crypto-linked rails through mainstream payment infrastructure.

To be sure, one of the more instructive developments sits outside the pure stablecoin space. Take for instance, the India-Singapore UPI-PayNow link, operational since July 2025. It enables real-time cross-border remittances over existing mobile payment infrastructure and is expected to halve transaction costs in one of the world's busiest corridors. It is also a useful reminder that the goal is frictionless settlement and the underlying architecture is secondary.

Confidence Problem & Its Solution

The remaining friction is not primarily technical. It is regulatory and behavioural. FIS Global research finds that nearly 75% of consumers would consider using stablecoins if offered by their own bank, which suggests the technology is not the issue. The concern is with unregulated entities, not the underlying rails. That concern is being addressed.

The US GENIUS Act, enacted in July 2025, requires stablecoin issuers to hold 1:1 reserves in high-quality assets, including US Treasury bills, a meaningful floor for consumer protection. Europe's MiCA framework has established its own reserve requirements and anti-money laundering standards. Neither framework is perfect, but the direction of travel is clear.  

As regulatory clarity compounds, the cost advantage of digital rails will do more of the convincing. If that convergence plays out, the cost of wiring $200 from London to Lagos or Mumbai to Manila could fall to something approaching the cost of a text message. The communities that stand to benefit most are not in financial centers. They are the households, MSMEs, and local markets at the other end of those transfers, waiting for money that arrives whole..

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