Is Western Union’s stablecoin a serious gambit?
Fintech competitors should worry if the legacy remitter passes efficiency gains to users rather than shareholders.
You know you’re in a hype cycle when companies reposition themselves as the hot new thing, like Kodak’s rebranding as a blockchain company: it enjoyed a short-lived stock surge in 2018 but soon returned to penny-stock status. Kodak is not a blockchain company.
So what to make of Western Union’s launch of its own stablecoin?
For at least a decade now, WU has been the fintech industry’s poster-company for a disruptable incumbent. It and its pre-fintech peers charge high fees for remittances. It’s been easy for challengers to color this as exploitative. That Filipino nurse or Bangladeshi construction worker shouldn’t have to pay double-digit fees as a portion of the money they are remitting to their families. Legacy rails bad, digital payments good.
The crypto industry has seized on stablecoins as a moral justification. Poor people or hard-pressed micro entrepreneurs in emerging markets have turned to USDT or USDC to handle cross-border payments. It’s fast and the settlement bit is practically free. No more relying on lousy correspondent banks, nor on politically compromised SWIFT messaging, and definitely not on dinosaur remittance players like Western Union.
It’s easy to believe that WU’s issuing its own stablecoin is a cynical ploy by a sunset business, meant to delay its inevitable demise, but not to be taken seriously by the broader payments industry.
This could even turn out to be true, but there are reasons to take this seriously.
Revenues and costs
Western Union makes most of its money from fees and FX spreads on consumer money transfers. Its stablecoin, USDPT, is an attempt to protect those flows, but also to monetize them in a new way, by internalizing float and settlement economics. In short, the WU business model is expensive to run, and USDPT can in theory eliminate many of those internal costs.
Revenue is linked to transaction volume, principle amounts, corridors (and pricing per corridor). Digital flows provide WU a higher margin, but a lot of its business remains rooted in cash-to-cash transfers.
That requires an expensive set of enablers: agent commissions, payout partners, and network costs. Plus compliance, risk and operations, including AML/KYC, fraud monitoring, and regulatory overhead. This is a major part of WU’s administrative costs, separate from its operating costs: it’s overhead. Most of all, WU has to duplicate that overhead in every country where it operates, which is just about everywhere: the company says it’s active in more than 200 countries, and 600,000 retail agent locations. In 2025 it spent $200 million on licensing, risk, and compliance, according to MatrixBCG, an online research seller.
There’s a further cost that WU absorbs, which is capital. WU must pre-fund ‘nostro’ balances with agents and banks worldwide to make instant payout possible. This not only ties up capital, but can even result in negative float: in some jurisdictions, WU has to pay for that liquidity.
Fintechs like Revolut and Wise have the same model, with a corporate treasury that manages bank balances in the markets where they operate. The user experiences cheap, instant money transfers, but it’s due to the fintech being able to move internal balances. However, these fintechs focus on well-off consumers in well-off places. WU’s business is to cater to low-income people, micro business owners, and anyone who needs to get money in or out of a challenging market.
No growth
This heavy cost is also WU’s strategic advantage. It controls the last-mile of cash payouts, often in countries that other businesses don’t touch, including fintechs. In busy corridors such as US-Mexico, it also competes on its brand and on its physical presence. Of course it charges high fees: not just to cover its costs, but because few others bother to get down’n’dirty in so many markets. And, because it can.
That’s changing, though. Anything involving account-to-account payments, bypassing agents and middlemen, undermines the WU system.
Payment fintechs also specialize in last-mile services, such as Thunes, Remitly, or TerraPay. WU lost the China-related market to AliPay and WeChat Pay, and it struggles against business-oriented fintechs such as Nium and Airwallex. With a far lighter footprint, these digital companies can charge lower fees and more competitive FX rates.
Moreover, WU has seen its direct competitors pivot on-chain. Moneygram has introduced stablecoins into its consumer app. Its users can receive and store funds in Circle’s USDC, via the Stellar network. Moneygram has avoided marketing this as crypto; instead the app is a “digital vault” that defends against local currency volatility. The tool, behind the scenes, is USDC.
As a result of these pressures, WU’s revenues have been flat or down in recent years. Top-line revenues in 2023 of $4.3 billion have been eroding, to $4.1 billion in revenues for 2025. Although operating margins have improved, there has been no growth for three years. Its stock price has lost 66 percent of its value over the past five years: a real dog!
The new strategy
The company has responded with a large (but unspecified) investment into digital infrastructure. It is thinking boldly. Instead of just leveraging someone’s stablecoin, WU is launching its own, on top of its Digital Asset Network. WU intends to maintain its walled garden. Giuseppi Tomasi de Lampedusa would have been proud.
The company says its stablecoin, USDPT, will transform its costly, pre-funded liquidity- and correspondent-banking model into a treasury function that generates yield and offers more flexible economics.
It can hold customer settlement balances as tokenized dollars backed by T-bills and deposits. What’s been a negative float in some markets could become a way of generating positive interest on reserves. WU is working with Anchorage Digital Bank, a US-regulated trust bank, which handles the minting and burning. WU pays it for issuance but keeps the float yield. Anchorage settles on Solana, chosen for its high throughput and low fees, which is better suited to lots of small-value transactions rather than the kind of industrialized volumes of a corporate treasury. (See J.DB’s article on how Circle is building rails for nano-payments.)
DAN is the on/off-ramp and distribution system. It’s the connective tissue between USDPT and various fiat currencies and physical cash. It allows crypto holders to convert into local money.
With reserves earning interest, WU expects this will incentivize its partners and agents want to hold capital in their ecosystem for longer, rather than just to meet immediate liquidity needs for customer payouts.
This isn’t about making payments faster, but overhauling WU’s balance sheet and its income. WU will maintain its cash-out locations, where most crypto projects can’t handle last-mile distribution.
All the excited talk about stablecoins enabling fast and free settlement is true, but ignores FX, pay-in/pay-out, and compliance. WU is using its Digital Asset Network to remain the dominant on/off ramp for cash into crypto, and will sell that capability to other wallets and fintechs.
If WU launches a ‘stablecard’ offering similar to Moneygram’s, DAN (Solana) will be the settlement layer, giving Western Union the opportunity to engage in interchange-like economics. It doesn’t have to pitch the card as a crypto thing, just as a debit card. It’s not a play for credit-card customers, but to build retail products for people in high-inflation countries who want to spend off a a US dollar-based account. It’s a play for Tether customers.
So why should users not just stick with using USDT or USDC? These stablecoins are the most liquid in the world. They trade on multiple crypto exchanges, are more integrated into other financial networks, and have nascent but real track records in building resilience.
Treasury, agent, card
However, WU’s target users aren’t people who trade crypto. It’s people who need remittances, some of whom have made their way to Tether because it’s been the best alternative. Also, coin holders still need to rely on third parties to handle cash.
The logic for WU is to think of the stablecard as the final step. The intermediate stage is DAN and getting agents to connect with it for cash-out and FX services. This is a B2B2C model.
If WU can settle USDPT within minutes, agents reduce settlement risk and some banking friction. The agents won’t need to maintain their own large pre-funded balances with WU or a local bank. And by connecting to DAN, agents can become cash-out points for other wallets or exchanges; so far it appears WU is not forcing them into exclusive relationships.
WU also intends to use its proprietary coin to program compliance, transaction limits, and local partner incentives. It’s another way to cut operating costs. Working with Anchorage lends the network some compliance credibility (as opposed to Tether, particularly its primary business outside the US).
Rivals can always stitch together all the same components, but WU is betting it will get better economics by hubbing everything in-house. WU won’t win crypto-native users, and it will still struggle to make headway against fintechs and superapps with direct local rails and wallet ecosystems.
Sunset or new dawn?
Is Western Union’s strategy sound? Is this a blockchain company?
One sign of whether WU is beign strategic rather than extractive is to gauge how much of the margins from USDPT-based services flow back to customers, versus how much WU takes in high fees plus the float. If WU’s goal is to squeeze out the last penny, then we’ll know it regards itself as a sunset business (especially if it continues to charge the same FX fees). If it matches the pricing of its fintech and wallet competitors, that will signal that WU’s stablecoin gambit is meant for the long haul.
A second factor is openness. If DAN is positioned as low-cost infrastructure that third parties can leverage, that will indicate WU is confident about pivoting to a new kind of digital remittance company. But if it keeps others out, or charges high fees, then this suggests its main strategy is just a more capital-efficient machine to milk an old cow.
WU operates a toll booth. That hasn’t changed. But this stablecoin strategy will scare competitors if WU passes those efficiency gains to users and agents. If it’s just another means of defending pricing power, then WU would be acknowledging its no-growth phase is terminal. Fighting back harder – that is, choosing customers over shareholders, at least for now – implies it is ambitious and optimistic about regaining the lead in the growing world of digital payments.