In such a crowded cross-border payment arena, where is the next stop for the future?

Author: Steven, Payment 201

Last week, I attended the opening event of Unlimit's Shanghai office, and on the way back, my companions were discussing: various PSPs are clustering to enter the Chinese market.

Institutions like Tazapay and TerraPay are also continuously hiring, reaching out to clients, and building local teams in China. Last month, a friend from the largest domestic payment PSP mentioned to me that they have recently felt a significant impact from virtual card products like Slash in some markets, driven by aggressive pricing policies.

This article is purely a reflection of my thoughts. Over the past year or two, observing cross-border payments has indeed given me a strong sense of disconnection and absurdity.

On the surface, there are weekly iterations of financing stories, asset mergers, and newly packaged narratives; beneath the surface, there is a price war among institutions accepting payments at prices of 0.01% to 0.02%, with PSPs, acquirers, agents, and ISOs engaged in close combat in a shrinking profit pool.

The industry seems lively, but in reality, many businesses have devolved from "competing on payment capabilities" to a survival game of "using investors' money to subsidize transaction volumes," "increasing risk acceptance boundaries for scale," and "continuing to finance based on stories and valuations."

In such a crowded field, where will the underlying breakthrough points be in the future? Where are the opportunities for ordinary practitioners? This article aims to discuss some more specific industry thoughts from several dimensions, including the dramatic changes in fiat currency regulation, the essence of arbitrage, network effects, and the real deconstruction of Web3.

Chapter One: Deconstructing the Fiat Currency World, Breaking the "Going Overseas Myth" of Chinese PSPs

1. Fragmented Fiat Currency Regulation: The Illusion of Arbitraging Stablecoins is a Reversed Causality

Many people are optimistic about stablecoins, subconsciously holding a dangerously flawed assumption: it seems that as long as assets are converted into USDT/USDC and circulate on-chain, all compliance, regulation, and friction in the traditional fiat currency world will automatically disappear.
This is actually an illusion.

Stablecoins have never been a currency that can operate independently from the real world; they are more like liquidity shadows of traditional fiat currencies extended into the digital world.

The premise for stablecoins to arbitrage, circulate, and generate efficiency dividends is the compliance and smoothness of the entry and exit points of fiat currencies, also known as On/Off-Ramp, which exist due to information asymmetry on both sides.

The reality is that over the past year or two, global fiat currency regulation has not only failed to converge but is instead undergoing a severe and fragmented tightening.

• Brazil is becoming increasingly sensitive to large transactions, abnormal transactions, and cross-border capital flows under the PIX system;
• India is becoming stricter regarding the flow of non-resident funds, foreign exchange declarations, and local compliance requirements under the UPI framework;
• Although Russia is actively embracing crypto for cross-border transactions to counter sanctions, it is still deliberating on establishing a strict digital currency circulation system;
• Payment-related policies in Latin America and CIS countries are in a state of frequent adjustments.

The fiat currency world has not been flattened; rather, it has become increasingly fragmented by regulation.

This gives rise to a fatal pain point: if you don't even understand the "last mile" of fiat currency in each country—who can receive payments, who can make payments, who explains the source of funds, who bears local KYB/AML, who handles disputes, refunds, and chargebacks, and who faces banks and regulators—then the stablecoins in your hands can only circulate on-chain and cannot achieve true large-scale cross-border hedging and settlement in major commercial scenarios.

In short: if you haven't figured out fiat currencies, it will be very difficult for stablecoins to arbitrage on a large scale.

Theoretically, as infrastructure evolves, the hard arbitrage space brought by information symmetry will only decrease. But the world will not become completely transparent due to technological advancements. The regulatory and banking systems in many countries are not as precise and consistent as outsiders imagine. On the surface, everyone uses similar compliance language, but beneath the surface, they are constrained by local politics, banks' risk preferences, foreign exchange pressures, industrial interests, and macro cycles, with execution often filled with elasticity.
This means that the boundaries of policy and compliance will always experience tidal changes. The space is always there, but the real challenge is how to see through these long-term information asymmetries and transform them into your own cognitive barriers, compliance interpretation abilities, and local resource capabilities.

By 2026, with Wooshpay receiving investment from Yunfeng Capital, Payoneer being acquired by Nuvei, and Primer securing a new round of $100 million financing, the core logic behind it is that some capital has understood the core truth: the competitive edge in the stablecoin era is still firmly held in the hands of traditional fiat local infrastructure, and there is still significant potential in the fiat currency world. The first principle of cross-border payments has never been cross-border; it has always been local.

2. Breaking Path Dependence: The Vast Majority of Domestic PSPs Have Not Truly Entered Mainstream Overseas Markets

When discussing internationalization, we must candidly acknowledge one thing: for many years, the vast majority of Chinese PSPs' so-called "success in going overseas" has essentially been following Chinese merchants, Chinese supply chains, and Chinese cross-border e-commerce to go abroad.

This is certainly a form of success, but it does not equate to true localization success.

The past strategies within the Chinese community naturally have a path dependence: starting from China, looking for places to open accounts, where to obtain MSOs, and where to apply for EMIs. Either everyone rushes to get the lowest threshold Hong Kong MSOs, competing in extremely low rates; or they push hard into the most expensive and competitive traditional paths like Singapore MPI, UK EMI, and Hong Kong SVF.

This is more like an extension of "overseas entities + Chinese customers + Chinese strategies."

Many businesses have gone out alongside Chinese manufacturing and Chinese cross-border e-commerce sellers. We have reaped the benefits of the Chinese cross-border e-commerce era, but we have not truly established a deep enough penetration capability in overseas local finance.

In other words, many Chinese PSPs' overseas ventures solve the problem of "how Chinese merchants receive payments, settle, and spend abroad"; but they have not yet truly solved on a large scale the questions of "why overseas local merchants should choose you, why overseas local banks should support you deeply, and why the overseas local ecosystem cannot do without you."

Many mainstream local merchant ecosystems overseas cannot be penetrated simply by sending English emails and online business development. The European and American markets have mature industry circles and trust networks, while the Latin American market relies more on Spanish, local relationships, and long-term offline contacts. Local societies place great importance on familiar networks and trust built on long-term interactions. If you sit in Shanghai or Hong Kong sending English emails, they might not even glance at them. Without Spanish, you won't even be able to negotiate safeguarding accounts with local banks, discuss interfaces with local payment companies, or understand the real pain points of local merchants.

This is also why the number of overseas local merchants that Chinese PSPs have truly engaged with in the past has been limited. Leaving the warm bed of Chinese e-commerce and Chinese merchants, many are not as strong overseas as imagined.

But does this mean that Chinese PSPs have no opportunities?

On the contrary, Chinese payment products are strong globally.

Look at the current American institutions; many are comparing themselves to Airwallex, even claiming they want to create an "American version of Airwallex." But from an Asia-Pacific perspective, many leading domestic and overseas PSPs have already matured significantly in product interface interaction, account system integration, payment link design, reconciliation experience, and full-link ecosystems. For example, the product architecture and experience of Photon Pay are actually a dimensional reduction attack in many overseas markets.

Chinese PSPs' products and systems are top-tier tanks; they just haven't been deployed on the right battlefield.

If we can break out of the singular perspective of "serving Chinese sellers" and sit down from the perspective of another country, bringing our product capabilities to a broader middle ground to seek regulatory arbitrage space and the art of infrastructure combinations, there are still significant opportunities.

There are several directions worth long-term research.

The first is leveraging underlying sponsors. For example, using local banks in the U.S. as BIN sponsors and local fintech infrastructure as underlying capabilities to penetrate Asia, Latin America, or other emerging markets. This approach is completely different from the traditional path of Chinese PSPs chewing through local banks in Asia. In the U.S., without a license, you can still engage in card issuance through bank relationships.

The second is the closed loop of licenses and card organizations. Payment licenses are not collectibles; they are merely entry tickets. The key is whether a closed loop can be formed between licenses, banks, card organizations, clearing networks, and customer scenarios. Certain specific licenses in some countries may have greater advantages in VM integration, bank account establishment, and virtual asset business expansion; while the regulatory framework in some smaller markets may support you in creating differentiated products.

The third is the combination of regulatory frameworks and capabilities. Regulatory arbitrage is not simply about exploiting loopholes. Good regulatory arbitrage finds the optimal solution between costs, efficiency, customer needs, and compliance boundaries under the rules of different jurisdictions. Poor regulatory arbitrage is simply running to wherever the rules are lax, ultimately turning oneself into a risk transit station.

Payments are not about collecting licenses; licenses are merely entry tickets. What truly matters is turning licenses into products, products into networks, and networks into funding efficiency. As long as you can genuinely shift perspectives, starting from local conditions, and piece together products, licenses, banks, and scenarios, Chinese PSPs' product capabilities have the opportunity to reopen a game in many markets.

Chapter Two: Breaking the Single Channel Mindset, Building a Funding "Network" Based on Macroeconomics

1. The Endgame of Single Channel Business is Inevitable Involution; Only a Funding Network Model Can Build Long-term Barriers

If you only focus on a single channel and a single market, such as solely doing e-commerce payments or only issuing virtual cards, your fate will be to compete on price. Today you quote 30 bps, tomorrow someone uses financing to drop it to 10 bps. Channel-based businesses have no customer loyalty if they lack exclusive resources. Customers buy based on cost, success rates, stability, settlement cycles, and risk coverage, not sentiment.

The long-term development endgame of cross-border payments must evolve from a single channel service provider to a cross-border funding network operator.

A true network is not simply saying I cover 100 countries, support 50 currencies, and connect 200 banks. These are just nodes, not a network.

A complete network is the heterogeneous flow of funds from different countries, different currencies, and different customers that can achieve internal interaction and self-digestion within your underlying system.

Channels earn from fee differentials, while networks earn from structural efficiency.

Suppose you have acquiring in Country A, issuing in Country B, local settlement with merchants in Country C, and supplier payments in Country D. If your underlying clearing routes can internally match these fund flows in multiple directions, reuse positions, and net settle, minimizing actual cross-border foreign exchange and pre-funding requirements at the bank level, your cost structure will deliver a dimensional reduction attack on single-channel companies.

Single-channel companies must find costs, positions, channels, and banks anew for every transaction. Network companies, on the other hand, optimize internal organization and efficiency between different fund flows.

The endgame of payments is not channel fees but funding efficiency.

(The above is already a standard for PSPs in mature European and American markets, and this section aims to discuss the deep network effects of funds in local regional markets.)

2. Practitioners' Breakthrough Thinking: Breaking the Cognitive Walls of "Latin America and Africa," Building Regional Clearing Hubs Based on Macroeconomic Fund Flows

Since many people find it difficult to truly penetrate the mainstream local merchant ecosystems in Europe and America in the short term, where should ordinary practitioners or growing institutions focus their breakthrough vision?

First, we need to break a normalized cognitive inertia. This world is vast, with 8 billion people and a huge global GDP; but it is also small, as everyone in the industry is discussing Africa and Latin America, as if there are no new markets to explore beyond these two places.

This blind following stems from the entire payment circle's "cognitive laziness" regarding global micro-geographical flows.

True breakthrough players should shift their focus away from these overhyped, already-involution star regions and look at the real macro trade and population movement data at the national level. They should seek specific corridors where flows are extremely frequent but where financial infrastructure is poor due to geopolitical constraints or overlooked by mainstream giants.
Not only should they consider the flow of goods but also the flow of people. The flow of goods includes real large-scale trade flows, such as between China and Central Asia, Latin America and the U.S., South America and Southeast Asia, and certain specific CIS countries' local currencies. The flow of people includes labor migration, remittance services, studying abroad, overseas freelancer settlements, tourist spending, inbound consumption, and cross-border family remittances.

Global geopolitical conflicts continue to drive a wave of de-globalization, but the rigid demand for funds generated by labor exports, cross-border consumption, and regional trade has never ceased.

In standard markets like Europe, America, Hong Kong, and Singapore, everyone can connect to Stripe, Adyen, Airwallex, WorldFirst, and capabilities are becoming increasingly transparent, with prices converging, leaving little scarcity.

However, in those complex, restricted, or even "not sexy" long-tail markets, if you can combine your local resources and system capabilities to create a closed loop for specific tight trade pairs regarding payments, settlements, currency exchanges, and disbursements, you can become an irreplaceable clearing hub in that corridor. The harder it is to operate in a country, the stronger the barriers of network nodes become. Combining your resource endowments and local capabilities to create closed loops for these national-level tight trade pairs is the real solution.

Chapter Three: The Truth of Web3 Payments and the Deep Fusion with Local Fiat

1. Don't Just Shout Slogans on X: Respect and Embrace the "Old Guard"

Friends who know me understand that I have always been long on stablecoins and have long been optimistic about the transformation of financial infrastructure by Web3, DeFi, and RWA. However, I do not believe that Web3 will quickly disrupt traditional fiat payments.

Many Web3 practitioners have a misconception: they always feel that traditional finance is inefficient, costly, and slow, so as long as they put money on-chain and redo it with stablecoins and smart contracts, they can naturally replace banks, card organizations, clearing networks, and PSPs.

This judgment is overly optimistic. The fiat currency world is indeed inefficient, but it does not exist in a vacuum. Behind it are banking account systems, regulatory trust, clearing networks, reserve assets, legal responsibilities, dispute resolution, anti-money laundering rules, sanction screening mechanisms, and a credit system built over decades with real money.

These elements may seem cumbersome, but they solve the most fundamental problems in the real world: if something goes wrong with the money, who is responsible? Where are the assets? How do users redeem? Who does the regulator contact? Will banks accept it? Will merchants accept it? Will large institutions buy it?

Therefore, while stablecoins and on-chain payments can improve efficiency, they cannot bypass these issues.

A more realistic path is not "Web3 old-timers overthrowing traditional finance," but rather the "old guards" in traditional finance—banks, card organizations, licensed payment institutions, asset management companies, and clearing institutions—gradually embracing and taming Web3, turning it into a new clearing tool, new asset carrier, and new funding network within their systems.

What regulators and countries truly favor is never purely decentralized but rather "controllable innovation."

Stablecoins can enhance cross-border clearing and settlement efficiency, but regulators will certainly ask: Who is the issuer? Where are the reserve assets held? How is the reserve audited? Is the redemption mechanism stable? How is KYC/KYT conducted for on-chain addresses? How are sanctioned addresses screened? How are abnormal transactions reported? Who covers the risk in case of a run? Who provides the bank accounts? Who bears the custody responsibility?

If these questions are not clearly answered, stablecoins will find it very difficult to enter large-scale B2B payments, corporate settlements, merchant acquiring, institutional fund management, and mainstream asset allocation.

This is also why traditional giants like Stripe, BlackRock, Visa, Mastercard, and PayPal are all laying out stablecoins, RWA, and on-chain payment infrastructure. They have not suddenly converted to a belief in decentralization; rather, they have seen the optimization of on-chain technology regarding clearing costs, funding occupation efficiency, and asset circulation efficiency.

But more critically, they know how to fit these new technologies into compliance frameworks, how to make banks willing to accept them, how to make regulators understand them, how to allow institutional funds to enter, and how to enable ordinary users to use them. This is the true way for Web3 to enter the mainstream world.

DeFi and RWA are the same. There will certainly be opportunities in the long run, but it is not enough to just package an asset on-chain, write a few attractive APYs, and publish a few articles on X to claim that one is transforming finance.

The true value of RWA does not lie in the act of "going on-chain" itself but in whether it can reduce the costs of asset issuance, registration, trading, clearing, custody, and information disclosure. If an asset goes on-chain but does not improve liquidity, does not make risks more transparent, does not clarify legal relationships, and does not streamline exit mechanisms, then it is merely a change in packaging, not an upgrade of financial infrastructure.

DeFi must also learn to explain risks in a language that traditional finance understands to attract traditional funds.

The first question that traditional funds care about is never "how high the returns are," but "how to protect the principal." What are the underlying assets? Who is managing them? Who is auditing them? Who is providing custody? How are defaults handled? How is smart contract risk controlled? How is oracle risk controlled? What happens in case of a hacker attack? Can it still be redeemed in extreme market conditions?

Especially after the explosion of AI, on-chain attacks, automated phishing, address pollution, fake identities, and anti-money laundering countermeasures will only become more scaled and covert. Without a truly strong risk control and compliance foundation, DeFi will find it difficult to carry large-scale traditional funds.
Of course, this does not mean that Web3 payments have no opportunities.

On the contrary, U cards, acceptance, stablecoin deposits and withdrawals, on-chain payroll, Web3 merchant acquiring, cross-border freelancer payments, and stablecoin B2B payments still have significant room for growth in transaction volume as a payment ecosystem.

However, for these scenarios to achieve true adoption, it cannot rely solely on a decentralized ideology or a few hard pushes. It must understand the world and rules of Web2: how banks think, how regulators ask, how merchants collect, how users use, how risks are covered, and how funds return to local accounts.

Therefore, I have always believed that the biggest opportunity for Web3 payments in the future is not to break away from traditional finance to start anew, but to combine the lightness, speed, and low cost of stablecoins with the heaviness, stability, and regulatory compliance of traditional finance.

Those who can respect the old guards, understand them, and ultimately make them willingly use new tools are more likely to reap the large-scale dividends of Web3 payments.

2. The Ultimate Solution: An Amphibious Clearing Foundation of Local Fiat + Stablecoin

Returning to the initial question: in such a crowded field, where is the future? I believe the answer is clear: the deep integration of Local Fiat + Stablecoin.

The prototype of the next generation of cross-border payment companies must be comprehensive operators capable of navigating both of these mountains and overlaying networking capabilities in between.

On one end is the heavy capability of local fiat: local accounts, local acquiring, local payments, local wallets, local clearing, local banks, local foreign exchange, and local compliance.

On the other end is the lightweight native capability of stablecoins: stablecoin payments, issuance or distribution, on-chain clearing and settlement, wallet systems, address risk control, on-chain KYC/KYT, reserves and redemptions, institutional-grade custody, and cross-chain and multi-chain liquidity.
In the middle lies the core capability of network hedging and net settlement: the reuse of funds, position management, internal matching, net settlement, risk identification, and pricing capabilities across multiple countries, currencies, scenarios, and customers.

Understanding fiat currencies without understanding stablecoins will lead to a lack of new clearing and settlement efficiencies in the future. Understanding stablecoins without understanding fiat currencies will forever be stuck at the last mile of deposits and withdrawals and local scenarios. Bridging both sides is the basic capability for future participation.

The Deep Water Deadlock: The Ability to Acquire Local Liquidity

The biggest challenge in implementing what seems to be a perfect system architecture is never the code but how to establish local regulatory relationships, local banks, clearing networks, foreign exchange paths, and real customers to acquire the corresponding deep liquidity of the Corridor.

This liquidity cannot be bought by simply pressing a button on an exchange, nor can it be solved by connecting a few APIs; it heavily relies on the comprehensive ability to obtain licenses, operate locally for the long term, accumulate real trade flows, and hedge cross-border essential business needs.

In many complex markets, business logic is never solely determined by technical APIs but is jointly decided by local banks, regulatory stances, foreign exchange policies, industry resources, trade structures, and long-term trust.

No matter how good the technology or strong the products of Chinese teams are, if they always stand from an external perspective, viewing the local market merely as a connectable market, it will be very difficult to truly obtain deep liquidity.

Local partners are not concerned with the financial innovations you discuss in your PPT but rather whether you are willing to invest long-term, whether you understand local rules, whether you can bear compliance responsibilities, and whether you can bring real incremental value to the local ecosystem.

Thus, the core of the deep water area is not simply "finding channels," but embedding into the local interest structure and business network.
This means that the team cannot just remotely control from Singapore, Hong Kong, or Shanghai, but must truly immerse themselves locally, establishing bank relationships, regulatory communication mechanisms, merchant service capabilities, tax and legal interpretation abilities, and forming long-term cooperation around real trade and real customers. Only when you transform from an external channel provider into a trusted part of the local funding network will deep liquidity flow in steadily.

The Final Profit Zone: Being the "Clearing Shovel" for Corridor Regions

Because the financial infrastructure in these Corridor regions is not mature enough, with insufficient bank coverage, unsteady foreign exchange paths, fragmented local clearing, and clear gaps between on-chain and off-chain, the arbitrage friction and efficiency premium are sufficiently high.

The future big opportunity is not to create another fancy checkout button for standard merchants in Europe and America, but for someone to be willing to patiently work through the fiat barriers and on-chain gaps in these challenging complex corridor regions bit by bit.

You don't necessarily have to stand in the spotlight to compete with international giants, nor do you have to create the largest merchant brand yourself. Many times, a better position is to stand at the grassroots level, creating the clearing infrastructure for specific regions, specific currencies, and specific fund flows.

As long as you can solidify the amphibious clearing foundation of Local Fiat + Stablecoin in a complex high-barrier area, such as the Middle East and Southeast Asia, China-Russia, Latin America, CIS, Central Asia, or specific Southeast Asian local currency pairs, providing underlying clearing APIs for other PSPs and licensed Web3 institutions, being the "clearing shovel" and foundational infrastructure for that specific area remains a market that can generate high profits and has strong barriers. Because what you are selling is not a single channel but local liquidity, compliance interpretation capabilities, funding routing efficiency, and endogenous hedging capabilities within the network.

Future competition will no longer be about "how many standardized channels I have" in shallow waters, but rather about several hardcore questions in deep waters:

• Can you help merchants collect money locally in complex or restricted countries?
• Can you safely, compliantly, and cost-effectively make payments?
• Can you reduce currency exchanges, pre-funding, and capital occupation for customers through endogenous liquidity in the network?
• Can you make stablecoins transition from virtual to real, truly entering local consumption, merchant supply chains, B2B trade payments, and corporate operations?

These questions are the true dividing line for the next stage of cross-border payments.

Conclusion: Next, Go Dig for Gold in the Deep Water

In the most crowded shallow waters of the cross-border payment industry, profits are destined to be reduced to nearly zero by capital subsidies.
Shallow waters compete on sales, rates, financing, and PPT stories. Deep waters compete on cognition, resources, compliance, funding efficiency, and long-term patience.

The keywords for the next generation of cross-border payment companies will definitely not be "cheaper," but "more local, more networked, and more stablecoin native."

Those who can truly understand the weight and complexity of local fiat while skillfully managing the lightness and speed of stablecoins, and fuse them into the intricate local business networks, will have the opportunity to anchor the golden future of the next decade in this crowded field.

Ultimately, the PSPs that truly make money in this industry often work quietly, while those that do not make money are still caught up in seemingly mainstream, attractive, and well-dressed industries.

The information gap in this world will always exist. Truly high-profit opportunities often come from highly non-standard, difficult-to-replicate, and hard-to-articulate deep water capabilities. Many truly profitable institutions are not high-profile; they may resemble ordinary traders, channel merchants, or local service providers rather than star companies that stand in the spotlight telling stories about global financial infrastructure every day.

You will never see truly complete business opportunities on WeChat public accounts, nor will brokerage research reports be able to articulate the underlying interest structures clearly.

There are no shortcuts in cross-border payments; the only solution is to get into the field, get into the field, and truly get into the field.

Stepping into the mud is the only way to have a chance to touch the gold.