The news: Zelle will use stablecoins to break into cross-border payments, per a press release.

It’s unclear whether parent company Early Warning Services will develop its own stablecoin to facilitate these payments or use a third-party coin like Fiserv’s FIUSD.

Why this matters: Zelle’s entrance into cross-border payments could disrupt the US remittances market, which will hit $92.58 billion in outflow this year, per our forecast. 

Longstanding players like Moneygram and Western Union as well as fintechs like SoFi have a right to be worried: Zelle’s $1 trillion domestic market is broadly popular with consumers, especially for essential payments, and the ease of sending cross-border payments from a banking app has considerably less friction than opening a different app or walking to a store.

While Western Union has leaned into a storefront strategy to boost volume, and Moneygram and Sofi have app-based, on-chain consumer solutions, none of them have Zelle’s scale through its banking consortium—or its 110.3 million users, per our forecast.

Our take: Countering this integration will be challenging for all players, unless they can also find a pay-by-bank integration as convenient as Zelle with better incentives.

Incumbent remittance platforms like Western Union and Moneygram may be able to harness entrenched customer behaviors to their advantage. Many US remittance users feel safer dropping off cash for overseas loved ones at storefront locations versus using an app. 

Fintechs may be also able to peel off some competition by leaning on the underbanked within the remittance community, who may not have banking accounts with an institution in Zelle’s consortium.