Stablecoins offer stable digital payments backed by fiat, crypto, or algorithms. They enable fast, low-cost transactions, especially for cross-border payments and DeFi.
February 18, 2025
General Counsel
A stablecoin is described as a type of cryptocurrency designed to maintain a stable value relative to an asset or basket of assets. In the payment industry the asset is typically a reputable fiat currency, such as the US dollar or Euro.
There are three types of stablecoins:
The attraction of stablecoins is that they can be used for trading and remittances and as a means of exchange in the DeFi sector.
A common card transaction relies on legacy banking platforms which involve a number of players. The players include, the issuer, issuer processor, card scheme, acquirer, acquirer processor, POS system, aggregators etc. Inevitably this leads to cost and speed issues with each payment transaction. On the other hand, there is no replacing the speed and ease that cash brings for in-person transactions. Or is there…
Blockchains bring a level of enablement that has the ability to reduce cost whilst also drastically reducing the speed of payments. Such advantages are already being experienced in the market today, with blockchain being used to facilitate cross border payments such as Ripple’s use case for fast and low cost international payments or Stellar which uses the power of blockchain to provide on- and off-ramp solutions for global currencies.
Like cash, Blockchain brings everyday consumers the ability to have self-custody of digital money. This was the goal when Bitcoin was introduced in 2009, to create a decentralised currency that brings the same freedom that in-person cash payments brings. Bitcoin allowed this to happen by facilitating direct in-person payments without needing to involve any intermediaries. Stablecoin introduces a stable value asset that serves as an effective medium of exchange and payment, harnessing the advantages of blockchain technology whilst eliminating the issues brought by asset volatility.
There are two key areas in payments which are driving the use of stablecoin. The first relates to consumers who have a desire to have a reliable currency, whilst living in economic environments that have extreme inflation and highly volatile local currencies, such as in parts of South America and Africa. The second is to do with cross border payments, where one party sends money to another party living/based in another country. Today, with so many people crossing borders to find work whilst leaving behind family and friends, cross border payments are increasing year-on-year. Additionally, millions of businesses contribute to the $40 trillion cross border payments each year. Such payments are timely and costly to both the individuals and businesses sending and receiving funds.
At Monavate, we support clients who have self-custody members by enabling them to provide payment cards as a service to members that wish to spend the assets in their self-custody wallets. Such card spending can transpire on two levels, namely, on-chain or off-ramp. On-chain refers to transactions that occur directly on the blockchain with transactions being recorded and verified on the blockchain network. Whilst off-ramp refers to transactions that occur using fiat created by converting crypto assets.
Monavate takes away all the cumbersome work that comes with being regulated to offer cards and becoming principal members of the card schemes. By integrating with the MonavateOne platform, clients benefit from a single payment tech stack that allows payment programmes to be run, which includes the ability to send and spend stablecoin globally.
