Remittance and money transfer operators

Key facts (as of 29 October 2026)

• Cost: the global average cost of sending US$200 was 6.36% in Q3 2025, against the UN Sustainable Development Goal target of under 3% by 2030 (World Bank, Remittance Prices Worldwide; UN SDG target 10.c).
• Volume: the World Bank forecast that remittances to low- and middle-income countries would grow 2.8% in 2025 to US$690bn (a forecast, not an outturn) (World Bank, via the Federal Reserve).
• Banking access: in World Bank surveys, 28% of MTO principals and 45% of agents said they could no longer access banking services. Over 69% of banking authorities named MTOs as the most affected by correspondent-banking withdrawal.
• US tax: since 1 January 2026, a 1% federal excise tax applies to US-to-foreign remittances funded with cash, money orders, cashier's cheques or similar physical instruments; transfers funded from bank accounts or US-issued cards are excluded (26 U.S.C. § 4475, IRS).
• Stablecoin payouts: on 21 October 2026 Western Union selected Noah to settle Receiver Redirect payouts in USDPT, issued by Anchorage Digital Bank, across more than 200 countries and territories. No launch date was given (Equity Ledger).
• Prefunding: Visa Direct's stablecoin prefunding went into production in October 2026 through Inyo Global, whose platform serves money transmitters and pays out to more than 180 countries.

How a remittance works

flowchart LR
    S[Sender] -- Cash, card or bank transfer --> MTO[MTO or agent]
    MTO --> C{KYC, sanctions and fraud checks}
    C -- Pass --> FX[FX and corridor settlement]
    C -- Fail --> X[Reject or report]
    FX -- Correspondent banks or prefunded account --> PP[Payout partner]
    PP --> R[Recipient: cash, bank, mobile wallet or card]

1. The sender pays in, at an agent, by card or by bank transfer.
2. The MTO runs KYC, sanctions and fraud checks.
3. The MTO arranges FX and moves value to the payout country, through correspondent banks, a payout partner or a prefunded account.
4. The recipient is paid by cash pickup, bank deposit, mobile wallet or card.

Step 3 is where cost and delay sit. Payout partners usually need to be prefunded, which ties up capital in many countries at once. See Prefunding.

Why MTOs are de-risked

According to the World Bank, banks named four main reasons for closing MTO accounts: profitability, pressure from correspondents or law enforcement, lack of confidence in MTOs' procedures, and reputational risk. Perceptions differ sharply. 88% of MTOs said their sector was adequately supervised, but only 52% of banks agreed. Of MTO principals without bank access, 75% kept operating through alternative channels.

The FSB noted that the impact is "particularly acute" in developing countries where remittances are a large share of GDP. Its March 2018 stocktake made 19 recommendations in four areas to improve access.

Rails compared

Where stablecoins fit

WarningRemittance is heavily regulated. Licences are needed in send and receive markets. The Travel Rule, sanctions screening and transaction monitoring apply in full, and they apply to stablecoin legs too. See Travel Rule and Sanctions screening.

NoteThe MTO sector shows the main argument for stablecoin settlement in high-risk payments: when fewer banks will hold your money, cutting how many you need in each corridor matters.

Jurisdiction notes

Illustrative example: prefunding a corridor

Illustrative example. The MTO, corridor and figures are invented.

A US MTO sends US$30m a month to Mexico through a payout partner that must be prefunded in US dollars. Weekend sending peaks at US$1.5m, so the MTO keeps US$3m at the partner from Friday to Monday. If the partner accepts USDC top-ups on weekends through a licensed provider, the MTO can hold US$1.5m and top up as needed. Freed capital: about US$1.5m. The compliance checks on each remittance, and the partner's own licence in Mexico, are unchanged.

Timeline

Q/A

Do stablecoins remove FX costs?

No. They move dollar value. Converting into the recipient's currency still involves FX at a local off-ramp or payout partner.

Which MCC applies to money transfer?

Visa's money transfer code is MCC 4829.

Will stablecoins hit the 3% cost target?

Unclear. They can cut the settlement leg, but cash-in, cash-out, compliance and FX still cost money.

Does the US remittance tax apply to stablecoin transfers?

The tax applies to cash and similar physical instruments used to fund a remittance transfer. How it applies to a specific product needs tax advice.

Who is responsible for Travel Rule data on a stablecoin leg?

The VASPs on each side. An MTO using a licensed provider must ensure that provider sends and receives the required data.

Why do MTOs use prefunding at all?

Payout partners will not pay recipients before they hold the money. Prefunding removes credit risk for the partner, at the cost of the MTO's capital.

Sources

• World Bank, Remittance Prices Worldwide (Q3 2025): https://remittanceprices.worldbank.org/sites/default/files/2026-04/RPW_main_report_and_annex_Q325.pdf
• Federal Reserve, global remittances cycle (27 February 2025): https://www.federalreserve.gov/econres/notes/feds-notes/global-remittances-cycle-20250227.html
• World Bank, surveys on de-risking practices: https://www.worldbank.org/en/topic/financialsector/publication/world-bank-group-surveys-probe-derisking-practices
• FSB (16 March 2018): https://www.fsb.org/2018/03/stocktake-of-remittance-service-providers-access-to-banking-services/
• 26 U.S.C. § 4475: https://www.law.cornell.edu/uscode/text/26/4475
• IRS, proposed regulations on the remittance transfer tax: https://www.irs.gov/newsroom/treasury-irs-issue-proposed-regulations-on-the-new-remittance-transfer-tax-established-under-the-one-big-beautiful-bill
• Equity Ledger (23 October 2026): https://www.equity-ledger.com/articles/crypto-payments-weekly-review-2026-10-23
• Visa, Visa Direct stablecoin prefunding (October 2026): https://investor.visa.com/news/news-details/2026/Visa-Direct-Launches-Stablecoin-Powered-Money-Movement-as-Pilots-Move-to-Production/default.aspx
• CoinDesk (18 October 2026): https://www.coindesk.com/business/2026/10/18/stablecoin-supply-stalls-but-payments-jump-45-as-visa-mastercard-and-stripe-connect-crypto-to-cash
• 15M, payments and fintech news: https://15m.com/news/payments-fintech/
• World Bank, Remittance Prices Worldwide homepage (global average 6.36%): https://remittanceprices.worldbank.org/
• United Nations, SDG Goal 10 (target 10.c): https://sdgs.un.org/goals/goal10