Stablecoins are an emerging technology that moves money globally. They’re faster and cheaper than traditional methods, and they work the same for anyone with an internet connection. Beyond tech startups and crypto traders, mainstream companies and fintech platforms are exploring stablecoins as a tool for global payments and new financial products; they’re also seeing an uptick in usage for retail-level transactions in some developing economies.

Below, we’ll cover what stablecoins are, how they work, their benefits and risks, and how they might fit into your global business strategy.

What’s in this article?

• What is a stablecoin?
  
• How does a stablecoin work?
  
• What are the benefits and risks of using stablecoins for business?
  
• How do stablecoins compare to traditional payment rails?
  
• What businesses can benefit most from using stablecoins?
  
• How Stripe Payments can help
  

What is a stablecoin?

A stablecoin is a digital currency designed to hold a steady value. It’s usually pegged to something familiar, such as the US dollar or gold. Unlike Bitcoin (BTC) or Ethereum (ETH), which constantly rise and fall in price, stablecoins aim to stay flat—with 1 coin equaling $1 (if it’s pegged to USD).

Many stablecoins do this by holding reserves. When you buy one, the issuer takes your dollars and puts them into a reserve account (typically cash or short-term treasuries), then it issues you an equal amount of digital tokens. When you redeem the tokens, you get your dollars back, and the peg stays intact because there’s actual money as backing. USDC and USDT are widely used examples of this model.

Stablecoins offer the benefits of cryptocurrencies without the volatility. You can also use stablecoins to send money globally, at any time of day, without a bank. And since the value doesn’t swing, stablecoins work well for payments, payroll, and even holding value in unstable economies.

There are four types of stablecoins:

• Fiat-backed: These are pegged to a national currency and backed 1:1 by reserves held in a bank or by a custodian. They dominate the market and are generally considered the most reliable, as they combine the predictability of traditional currency with the speed and accessibility of crypto infrastructure.

• Commodity-backed: These are pegged to physical assets such as gold. They aren’t as volatile as other cryptocurrencies, but they do fluctuate with the price of the asset.

• Crypto-backed: These are collateralized by other cryptocurrencies (such as ETH or BTC) and usually overcollateralized to absorb price swings. They’re often managed by smart contracts.

• Algorithmic: This type isn’t backed by anything directly. They rely on software and market incentives to stay stable, but TerraUSD’s collapse in 2022 was a reminder of what can happen when the peg fails.

Transparency matters greatly: the more you can verify what’s backing a stablecoin through audits, regular disclosures, or regulatory oversight, the safer it is to use in a business setting. USDC, for example, provides monthly attestation reports to build consumer confidence.

How does a stablecoin work?

On the surface, using a stablecoin is similar to sending any digital payment. You open a wallet, type in an address, and hit send. Here’s what’s happening behind the scenes for a USD-backed stablecoin:

• Issuing the coin: You add money to your wallet to cover the payment (say, $10,000). The wallet operator sends the payment in USD to the issuer, which holds that amount in reserve and mints 10,000 tokens that each represent $1. Then the issuer sends the tokens to your digital wallet operator, which then passes them to you. You now hold digital dollars, and the issuer holds the $10,000.

• Transacting: Once issued, stablecoins live on public blockchains such as Ethereum, Base, or Solana. You can send them globally in minutes. Transactions are verified by the network and permanently recorded.

• Maintaining the peg: If the market price drops below $1, traders buy up the stablecoin and redeem it with the issuer for a full dollar to pull the price back up. If it rises above $1, the issuer sells more coins into the market. These price corrections happen constantly behind the scenes, typically without users noticing.

• Redeeming: When you want your cash back, you return the stablecoins to the issuer or a participating exchange. The issuer burns (i.e., destroys) the tokens and gives you back the equivalent in dollars.

There are variations depending on the type of stablecoin. Crypto-backed stablecoins such as DAI rely on smart contracts and overcollateralization. Algorithmic stablecoins use supply-and-demand mechanisms instead of reserves. But many businesses choose to use fiat-backed coins for their predictability and ease of use.

What are the benefits and risks of using stablecoins for business?

Stablecoins can make moving money faster, cheaper, and more flexible—especially across borders. But they also carry distinct technical and regulatory risks. Let’s take a closer look.

The benefits of stablecoins

• Fast global payments: Stablecoin transfers settle in minutes, rather than days, and they work just as well between New York and Lagos as they do between two offices in the same city.

• Lower transaction costs: Compared to wire transfers or credit card fees, stablecoin transfers are less expensive. The savings on bank fees and currency exchange for international payments can be substantial.

• Always-on: Stablecoins don’t stop for weekends or holidays. They work 24/7, which makes a big difference when you’re managing global operations or remote teams across time zones.

• Access to new markets: In emerging economies or among unbanked populations, stablecoins give people a way to transact online. Stripe research found customers paying with stablecoins were twice as likely to be net new customers than those paying with other methods, which suggests they wouldn’t have been able to make the purchase otherwise.

• Protection against inflation: In countries with volatile local currencies, stablecoins offer a way to pay or get paid in a currency that holds its value.

• Transparency and automation: Transactions are recorded on public blockchains, so they’re traceable and auditable. They can also be automated to trigger payouts when specific events occur without manual approval.

The risks of stablecoins

• Reserve risk: When using stablecoins, you’re trusting the issuer actually holds the collateral it claims it does. If those reserves are shaky or opaque, you could end up holding a token that doesn’t hold its value.

• Regulatory uncertainty: Some countries welcome stablecoins, while others are still figuring it out. Compliance targets are constantly shifting, with US lawmakers passing new rules in 2025 for stablecoin issuers, including compliance with Anti-Money Laundering (AML) and sanctions regulations.

• Redemption and liquidity pressure: If too many holders rush to redeem and the issuer’s assets aren’t liquid enough, the peg can wobble. That’s why reputable issuers publish audits or attestations—that reassurance is important.

• Security and fraud: Stablecoin payments are final. If you send funds to the wrong address, there’s no bank to call for help, and crypto wallets are still a target for phishing and theft. Businesses need strong internal controls, secure custody setups, and fraud monitoring—especially for larger balances.

• Compliance: Stablecoins can make it easier to transact globally, but that also means higher stakes for AML, Know Your Customer (KYC), and fraud detection. Businesses need to work with platforms that meet local compliance standards and monitor transactions accordingly.

• Integration and infrastructure: Outages, wallet incompatibility, and clunky off-ramps can still be issues. Many businesses use providers such as Stripe to handle the infrastructure that lets them use stablecoins without building their own systems.

How do stablecoins compare to traditional payment rails?

Think of traditional payment rails (e.g., SWIFT, wires, card networks) as the old highways for moving money. Stablecoins offer a new one that’s faster, flatter, and built for the internet. Here’s how the two rails compare.

Speed

• Traditional payments: Domestic direct debits can take one to three business days. International wire transfers can take even longer, especially if they pass through multiple banks.

• Stablecoins: Stablecoin payments settle in minutes, at any time of day, any day of the week.

Cost

• Traditional rails: Wire transfers are usually costly with hidden currency conversion fees, and card payments carry processing and interchange fees that quickly add up.

• Stablecoins: The fees charged are typically just network costs—often pennies to a few dollars, depending on the blockchain. There’s no cut for banks or card networks.

Currency conversion

• Traditional rails: Payments across borders usually involve currency exchange, with banks or processors taking a margin.

• Stablecoins: These assets let you transact in a digital dollar (or euro, or any other currency) globally.

Global access

• Traditional rails: Payments are limited by banking infrastructure and hours. You can’t always send or receive payments on weekends or holidays.

• Stablecoins: Stablecoin payments work 24/7 and only require internet access and a wallet. That makes them especially valuable in markets where banking access is uneven.

Fraud and reversibility

• Traditional payments: These payments come with consumer protections, but there is also a risk of chargebacks for businesses.

• Stablecoins: Payments are final once they’re sent. There are no chargebacks or disputes. That can be great for businesses, but it also can be a risk if funds are sent in error or are compromised.

Compliance and user experience

• Traditional rails: These come with decades of built-in compliance, reliability, and a low learning curve.

• Stablecoins: Digital assets are still maturing. AML and KYC requirements vary by provider, and wallet user experience (UX) is improving but not perfect. That said, companies such as Stripe are already supporting stablecoin payouts within familiar interfaces.

Stablecoins do what traditional rails can’t. They’re often a better option for global speed, low cost, and universal access. But traditional methods still have an edge for consumer familiarity and protections. Smart businesses are learning how they can use both.

What businesses can benefit most from using stablecoins?

Stablecoins aren’t just for crypto-native companies anymore—they’re showing up in global payroll, retail payments, cross-border commerce, and financial infrastructure. Here’s where they’re proving especially useful.

Businesses with global payments

If your business is moving money across borders (e.g., paying suppliers, contractors, or partners), stablecoins can cut costs and settlement times. Instead of waiting days for a wire transfer to clear, a stablecoin payment settles in minutes—with far fewer fees.

Stablecoins also help remote work platforms and distributed teams pay contractors in other countries, even where the local currency is unstable. Workers can get paid faster, in a currency they actually want to hold.

A Stripe survey found that companies processing more than $1 million per month in international transactions were 92% more likely to use stablecoins compared to other businesses. The more cross-border volume your business has, the more this strategy can pay off.

Digital-first companies with global customers

Accepting stablecoins can attract new audiences. Some customers in emerging markets can’t pay with a card or local bank transfer, but they can use a digital wallet and USDC. There’s a whole group of potential customers who couldn’t transact before who now can.

Fintech and financial services

Stablecoins offer fintech companies programmable, global money that settles fast. They can power remittances, international bill pay, embedded wallets, or treasury products—all without relying on legacy rails.

Stripe has built stablecoin infrastructure into its systems, which means startups can plug into this stack without rebuilding from scratch.

Retailers in high-inflation markets

In countries with inflation or currency restrictions, stablecoins can act as a digital version of the dollar or euro. A vendor in Argentina might prefer to receive payment in USDC instead of pesos, knowing it will hold its value. Businesses that operate in these markets can use stablecoins to protect their margins and settle with vendors. With Bridge, a Stripe company, businesses can issue their own custom stablecoin, earn rewards, and convert between their native stablecoin and any other fiat or digital currency.

Supply chain and trade finance

Stablecoins let you settle invoices instantly, rather than waiting for traditional payment methods to clear. They can also work with smart contracts; for example, a logistics company could automate payment release when a delivery is confirmed. This can help improve cash flow, reduce disputes, and make supply chains more transparent.

Stablecoins are most powerful for businesses that deal with complexity: multiple currencies, global payouts, high transaction costs, or markets with shaky infrastructure. If any of that seems familiar to your business environment, stablecoins might offer a better way to move money.

How Stripe Payments can help

Stripe Payments provides a unified, global payments solution that helps any business—from scaling startups to global enterprises—accept payments online, in person, and around the world. Businesses can accept stablecoin payments that settle as fiat in their Stripe balance.
Stripe Payments can help you:

• Enhance your checkout experience: Create a frictionless customer experience and save thousands of engineering hours with prebuilt payment UIs, access to more than 125 payment methods, and Link—a wallet built by Stripe.
  
• Expand to new markets faster: Reach customers worldwide and reduce the complexity and cost of multicurrency management with cross-border payment options, available in 195 countries across more than 135 currencies.
  
• Unify payments in person and online: Build a unified commerce experience across online and in-person channels to personalize interactions, reward loyalty, and grow revenue.
  
• Improve payments performance: Increase revenue with a range of customizable, easy-to-configure payment tools, including no-code fraud protection and advanced capabilities to improve authorization rates.
  
• Move faster with a flexible, reliable platform for growth: Build on a platform designed to scale with you, with 99.999% uptime and industry-leading reliability.
  

Learn more about how Stripe Payments can power your online and in-person payments, or get started today.