Are Stablecoins in International Money Transfers Competitive?
Stablecoins have emerged as a competitive alternative in the international money transfer market. However, their effectiveness largely depends on the ease of on/off ramping in both the origin and destination countries. To explore this, we conducted an analysis on Yellow Card, the largest stablecoin on/off ramp in Africa. We focused on Africa as it has the highest commission rates for money transfers globally. According to the World Bank, Africa remains the most expensive region to send money to, with an average total cost of 7.39% in Q3 2023.
Stable Coin Performance Analysis in African Remittances
Our analysis covered the period from June 20, 2024, to July 18, 2024, tracking 19 corridors. Yellow Card consistently ranked among the top three providers, however not always the top one. Specifically, Yellow Card offered the best rate 14 times and was within the top three approximately 80% of the time. When not leading, their rates were typically within 1% of the best rate, except for Ghana, Uganda, Kenya, and Cameroon.
Leadership Rates Snapshot
| Corridor | Payout for 100 Currency Eqv. | Ranking | Lead | Spread from Top |
|---|---|---|---|---|
| US-BJ | XOF61,756 | #2 | LemFi | 0.39% |
| US-BF | XOF61,756 | #1 | YellowCard | 0.00% |
| US-BW | BWP1,326.00 | #1 | YellowCard | 0.00% |
| US-CI | XOF61,756 | #2 | LemFi | 0.39% |
| US-CM | XAF62,000 | #4 | VertoFX | 2.64% |
| US-CG | CDF180,000 | #1 | YellowCard | 0.00% |
| US-GA | XAF62,000 | #2 | VertoFX | 2.64% |
| US-GH | GH₵1,540.00 | #1 | YellowCard | 0.00% |
| US-KE | KSh12,974 | #5 | VertoFX | 1.24% |
| US-ML | XOF61,756 | #1 | YellowCard | 0.00% |
| US-MW | MWK235,000 | #1 | YellowCard | 0.00% |
| US-NG | ₦157,000 | #10 | Nala | 0.83% |
| US-RW | FRw136,400 | #1 | YellowCard | 0.00% |
| US-SN | XOF61,756 | #2 | LemFi | 0.39% |
| US-TG | XOF61,756 | #1 | YellowCard | 0.00% |
| US-TZ | TSh285,133 | #1 | YellowCard | 0.00% |
| US-UG | USh366,632 | #4 | TapTapSend | 1.58% |
| US-ZA | ZAR1,857.00 | #1 | YellowCard | 0.00% |
| US-ZM | ZK2,663.00 | #1 | YellowCard | 0.00% |
- Yellow Card consistently ranked #1 or #2 in the corridors from the US to Benin, Burkina Faso, Botswana, Ivory Coast, Congo, Ghana, Mali, Malawi, Senegal, Togo, Tanzania, South Africa, Zambia.
- US to Cameroon: Yellow Card ranks #4, with a spread from the top rate of 2.64%. The top provider in this corridor is VertoFX.
- US to Kenya: Yellow Card ranks #5, with a spread from the top rate of 1.24%. The top provider in this corridor is VertoFX.
- US to Uganda: Yellow Card ranks #4, with a spread from the top rate of 1.58%. The top provider in this corridor is TapTapSend.
- US to Nigeria: Yellow Card ranks #10, with a spread from the top rate of 0.83%. The top provider in this corridor is Nala.
- US to Gabon: Yellow Card ranks #2, with a spread from the top rate of 2.64%. The top provider in this corridor is VertoFX.
Competitiveness in Less Common Corridors in Africa
Yellow Card’s true value may lie in less common inter-African corridors, such as Kenya to Nigeria or Nigeria to South Africa. While we do not track rate leadership in these markets due to fewer competitors, our analysis shows that their rates are within 5% of midmarket rates at worst and less than 1% at best—still significantly lower than average commission fees. It will be interesting to observe if Yellow Card can maintain its competitiveness as smaller players enter the market and attract investments.
Methodology and Rate Disclaimers
- We update rates multiple times daily, adjusting for competitiveness, volume, and client needs, and maintain historical data to track trends.
- The rates we provide for Yellow Card are retail rates, similar to other companies in our comparison, and do not include promotional rates or fees.
- VertoFX, the top provider in some corridors, is not available for retail and only provides B2B transfers.
- Yellow Card also provides infrastructure for some money transfer services in certain corridors.
Conclusions
Stablecoins offer a compelling alternative for international money transfers, especially in high-cost regions like Africa. By leveraging stablecoins, users can potentially benefit from lower fees and faster transactions, making them a competitive choice in the international money transfer landscape.
Stablecoins are a welcome competition if the goal is to reduce the cost of sending money from A to B to the absolute minimum. They provide a good alternative, especially if the origin and destination countries have easy on/off ramping practices. Whether they will be able to maintain their competitiveness against the myriad of international money transfer companies receiving investments, such as LemFi and Nala, remains to be seen.