Plasma XPL: People often point to SWIFT, ACH, and wire transfers as the main traditional payment systems. In practice, they sit in the messaging and clearing layers, not on the ledger where money finally settles.
Final settlement usually happens on a central bank RTGS system, or between banks through nostro and vostro accounts for cross-border flows. These extra steps add time, cost, and operational complexity.
With SWIFT instructions and wire messages, banks still need to update balances later on their correspondent accounts or central bank ledger. This can take one to several days, especially for cross-border transfers and weekend cut-offs.
Cross-border transfers often involve high fixed fees, for example 20 to 80 USD per payment at many banks, plus FX spreads taken at each step in the chain. For large payments, total costs can reach hundreds of dollars.
By contrast, a stablecoin transfer settles onchain in one step. Sender and receiver see final balances within seconds or minutes, and network fees are often a few cents to a few dollars, depending on the chain.
Domestic payments in the United States also involve several layers. ACH is a batch clearing network. Banks send files with payment instructions, the network nets positions, and settlement later occurs over the central bank RTGS system.
End users often experience ACH transfers as taking one to three business days. Delays come from batch windows, weekends, holidays, and extra risk checks or holds that banks apply before posting funds.
These multi-step processes create friction for eCommerce, gig workers, and any use case that needs fast settlement. Limited tracking tools also create a transparency gap, so businesses may not know where a payment sits until it arrives.
This uncertainty and cash flow risk is hard for modern businesses and individuals to manage. It is one reason why some choose stablecoins and other onchain rails for cross-border payouts, treasury flows, or frequent small transfers.
