Author:Steven,Payment 201
Last week, I attended the opening event of Unlimit's Shanghai office. On the way back in the evening, colleagues in the industry were discussing: all kinds of PSPs are swarming into China to compete.
Institutions like Tazapay and TerraPay are also continuously deploying people domestically, engaging with customers, and building local teams. Last month, an old friend from the number one domestic collection PSP also mentioned to me that in some markets, they've recently clearly felt the strong impact of virtual card products like Slash, driven by aggressive pricing policies.
Writing this article is purely a spur-of-the-moment feeling. Looking at cross-border payments over the last couple of years, one really gets a strong sense of fragmentation and absurdity.
On the surface, there are weekly updated financing stories, asset acquisitions, and packaged new narratives. Under the surface, it's a price war among institutions for acceptance rates down to 0.01% or 0.02%, with PSPs, acquirers, agents, and ISOs engaged in close-quarters combat within a shrinking profit pool.
The industry seems lively, but in reality, many businesses have degenerated from "competition on payment capabilities" to a survival game of "using investor money to subsidize transaction volume," "exchanging scale for pushing risk tolerance boundaries," and "relying on stories and valuations to continue financing."
In such a crowded track, where exactly are the underlying breakthrough points for the future? Where are the opportunities buried for ordinary practitioners? This article wants to discuss some more concrete industry thoughts from several dimensions: the dramatic changes in fiat regulation, the essence of arbitrage, network effects, and a real deconstruction of Web3.
Chapter One: Deconstructing the Fiat World, Breaking the "Going Global Myth" of Chinese PSPs
1. Fragmented Fiat Regulation: The Illusion of Stablecoin Arbitrage Superstition, a Case of Putting the Cart Before the Horse
Many people are optimistic about stablecoins with a highly dangerous subconscious assumption: it seems that as long as assets are turned into USDT/USDC and circulated on-chain, all the compliance, control, and friction in the traditional fiat world will automatically disappear.
This is actually an illusion.
Stablecoins are never a currency that can operate independently of the real world. They are more like a shadow of liquidity extended by traditional fiat currency into the digital world.
The premise for stablecoins to arbitrage, circulate, and generate efficiency dividends is that the entry and exit points at both ends of the fiat currency, the On/Off-Ramps, are compliant, smooth, and have pricing differentials due to information asymmetry on both sides.
The reality is that over the past year or two, global fiat regulation has not converged but is undergoing a dramatic, fragmented tightening.
- Brazil is becoming increasingly sensitive to large-value, abnormal transactions, and cross-border fund flows under the PIX system;
- India is becoming stricter regarding non-resident fund flows, forex declarations, and local compliance requirements under the UPI framework;
- While Russia actively embraces Crypto for cross-border anti-sanction transactions, it is still reviewing the establishment of strict digital currency circulation systems;
- Payment-related policies in Latin American and CIS countries are in a state of constant high-frequency adjustment.
The fiat world is not being flattened; on the contrary, it's being increasingly fragmented by regulation.
This gives rise to a fatal pain point: If you haven't even figured out the "last mile" of fiat currency in each country—who can collect, who can pay, who explains the source of funds, who bears local KYB/AML, who handles disputes, refunds, and chargebacks, who faces banks and regulators—then the stablecoins in your hands can only circulate empty on the chain. They fundamentally cannot achieve truly large-scale cross-border hedging and clearing & settlement in major commercial scenarios.
In a nutshell: If you don't understand fiat, it's hard to achieve large-scale stablecoin arbitrage.
Theoretically, as infrastructure evolves, hard arbitrage space from information symmetry will only decrease. But the world won't become completely transparent just because of technological advancement. Many countries' regulatory and banking systems globally are not as precise and consistent as outsiders imagine. On the surface, everyone uses similar compliance language; under the surface, they are constrained by local politics, bank risk appetite, foreign exchange pressure, industry interests, and macro cycles, with implementation standards often full of elasticity.
This means the boundaries of policy and compliance are always subject to tidal changes. The space always exists, but the real difficulty is how to see through these long-term information asymmetries and turn them into your own cognitive barriers, compliance interpretation capabilities, and local resource capabilities.
By 2026, the core logic behind Wooshpay securing investment from Yunfeng Capital, Payoneer being acquired by Nuvei, and Primer raising a new $100 million mega-round is that some capital has understood the core truth: The decisive factor for victory or defeat in the stablecoin era still firmly lies in traditional fiat local infrastructure; the fiat world still offers considerable room for action. The first principle of cross-border payments has never been "cross-border," but "local."
2. Breaking Path Dependence: The Vast Majority of Domestic PSPs Have Not Truly Entered Overseas Local Mainstream Markets
Talking about internationalization, we must frankly admit one thing: Over all these years, what most Chinese PSPs call "successful going global" is essentially following Chinese merchants, Chinese supply chains, and Chinese cross-border e-commerce out into the world.
This is certainly a kind of success, but it does not equate to truly localized success in the meaningful sense.
The past playbook in Chinese circles naturally had a path dependency: starting from China, seeing where to open accounts, where to get MSOs, where to apply for EMIs. Either everyone swarmed to the lowest-threshold Hong Kong MSO, competing fiercely at extremely low rates; or they aggressively charged into the most expensive, most competitive traditional paths like Singapore MPI, UK EMI, Hong Kong SVF.
This is more like an extension of "overseas entity + Chinese clients + Chinese playbook."
Much of the business went out with Chinese manufacturing and Chinese cross-border e-commerce sellers. We caught the dividend of the Chinese cross-border e-commerce era but haven't truly built deep enough local financial penetration capabilities overseas.
In other words, the going global of many Chinese PSPs solved the problem of "how Chinese merchants collect, settle, and spend money overseas." But they haven't yet truly solved on a large scale the problems of "why local overseas merchants should choose you, why local overseas banks should deeply support you, why local overseas ecosystems can't do without you."
Many overseas local mainstream merchant ecosystems cannot be penetrated by English emails and online business development alone. The European and American markets have mature industry circles and trust networks; the Latin American market relies more on Spanish, local relationships, and long-term offline engagement. Local societies highly value acquaintance networks and trust built on long-term contact. Sitting in Shanghai or Hong Kong sending English emails, people might not even look at them. Without Spanish, you can't even find the door to negotiate safeguarding accounts with local banks, discuss APIs with local payment companies, or understand the real pain points of local merchants.
This is also why Chinese PSPs haven't actually contacted many true local overseas merchants in the past. Leaving the comfort zone of Chinese e-commerce and Chinese merchants, many are not as strong overseas as imagined.
But does this mean Chinese PSPs have no chance?
On the contrary, the product capability of Chinese PSPs is very strong worldwide.
Look at current American institutions; many are comparing themselves to Airwallex, even calling to be the "American Airwallex." But from an Asia-Pacific perspective, many top-tier domestic and overseas PSPs already have very mature product interfaces, interactive experiences, account system integrations, collection and disbursement path design, reconciliation experiences, and full-link ecosystems. For example, the product architecture and experience of Photon Pay could be considered a dimensional reduction attack in many overseas markets.
Chinese PSP products and systems are top-tier tanks; they just weren't deployed in the right battlefield before.
If we can break out of the single perspective of "serving Chinese sellers," sit down from another country's standpoint, bring that product capability to a broader middle ground, and seek regulatory arbitrage space and infrastructure combination art, opportunities are still significant.
There are a few directions here worth long-term study.
First is leveraging underlying sponsor capabilities. For example, using U.S. local banks as bin sponsors and local fintech infrastructure as underlying capabilities to target Asia, Latin America, or other emerging markets. This approach is completely different from the traditional Chinese PSP path of hard-scraping local banks in Asia. In the U.S., you can do card issuance business without a license, relying on bank relationships.
Second is the loop of licenses and card schemes. Payment licenses are not collectibles; they are just entry tickets. The key is whether a closed loop can be formed between the license, bank, card scheme, clearing network, and customer scenarios. Specific licenses in certain countries may offer greater advantages in Visa/Mastercard connections, bank account opening, and virtual asset business expansion. The regulatory frameworks of some smaller markets may instead support you in creating differentiated products.
Third is regulatory framework and capability combination. Regulatory arbitrage is not simply finding loopholes. Good regulatory arbitrage is finding the optimal solution between cost, efficiency, customer needs, and compliance boundaries under the rules of different jurisdictions. Bad regulatory arbitrage is running wherever it's looser, ultimately turning oneself into a risk transit station.
Payments is not about collecting licenses; licenses are just entry tickets. What's truly valuable is turning licenses into products, products into networks, and networks into capital efficiency. As long as you can truly change perspectives, start locally, and piece together products, licenses, banks, and scenarios, the product capability of Chinese PSPs has every opportunity to reopen the game in many markets.
Chapter Two: Breaking Single-Channel Thinking, Building Capital "Networks" Based on Macroeconomic Flows
1. Single-channel Business Is Destined to Inevitably Incur Fierce Competition; Only the Capital Network Model Can Build Long-term Barriers
If you only focus on single channels and single markets—like doing only e-commerce collections or only virtual card issuance—your fate is solely to compete on price. Today you quote 30 bps; tomorrow someone else subsidizes down to 10 bps with funding. As long as there's no exclusive resource, channel-type businesses have zero customer loyalty. Customers buy cost, success rate, stability, settlement cycles, and risk underwriting, not sentiment.
The ultimate long-term development of cross-border payments inevitably evolves from single-channel service providers to cross-border capital network operators.
A true network is not simply saying you cover 100 countries, support 50 currencies, and connect 200 banks. Those are just nodes, not a network.
A complete network means heterogeneous capital flows from different countries, currencies, and clients can achieve internal linkage and self-digestion within your underlying system.
Channels earn spreads on fees; networks earn structural efficiency.
Suppose you have acquiring in Country A, payout in Country B, local merchant settlement in Country C, and supplier payments in Country D. If your underlying clearing routing can internally conduct multi-directional matching, position reuse, and netting settlement among these capital flows, minimizing actual cross-border currency conversion and pre-deposited capital usage at the bank level, your cost structure will form a dimensional reduction attack on single-channel companies.
Single-channel companies need to find costs, positions, channels, and banks anew for every transaction. Network-type companies internally organize and optimize efficiency between different capital flows.
The endgame of payments is not channel fees, but capital efficiency.
(Note: The network effect is already a "standard feature" for PSPs in mature markets like Europe and America. This paragraph aims to discuss the deep network effect of regional local market capital.)
2. The Practitioner's Breakthrough Approach: Breaking the Cognitive Wall of "Latin America/Africa," Building Regional Clearing Hubs Based on Macro Capital Flows
Since many people find it difficult to truly break into mature local mainstream merchant ecosystems in Europe and America in the short term, where should ordinary practitioners or growing institutions turn their breakthrough gaze?
First, we must break a habitual way of thinking. This world is big, with 8 billion people and a huge global GDP; but it's also small in a sense, as everyone in the industry is now talking about Africa and Latin America, as if there were no new markets to explore globally besides these two places.
Behind this blind flocking is the entire payment circle's "cognitive laziness" towards global micro-geographic flows.
True disruptors should shift their gaze away from these overhyped, already fiercely competitive star regions and look at real macro trade and population flow data at the national level. Seek out those corridors—specific regional corridors—where flows are extremely frequent but financial infrastructure is poor due to geopolitical gaps or neglected by mainstream giants.
It's not just about goods flow but also people flow. Goods flow includes real large-scale trade flows, like China and Central Asia, Latin America and the US, South America and Southeast Asia, specific CIS country local currency pairs. People flow includes migrant labor export, payroll disbursement, study abroad, overseas freelancer settlement, tourist travel, inbound consumption, and cross-border family remittances.
Global geopolitical conflicts continue to drive de-globalization waves, but rigid capital demand driven by labor export, cross-border consumption, and regional trade has never stopped.
In standard markets like Europe/America, Hong Kong, Singapore, everyone can connect to Stripe, Adyen, Airwallex, WorldFirst; capabilities are becoming increasingly transparent, prices increasingly similar, with little scarcity.
But in those complex, restricted, even overlooked "unsexy" long-tail markets, if you can combine your local resources and system capabilities to close the loop of collection, payout, currency conversion, and settlement for specific tightly-linked trade pairs at the underlying level, you can become an irreplaceable clearing hub in that corridor. The harder, the less touted in PPTs, the harder the network node's barriers. Combining your own resource endowments and local capabilities to create closed loops for these nationally linked trade pairs is the real solution.
Chapter Three: The Truth of Web3 Payments, and Deep Integration with Local Fiat
1. Don't Just Shout Slogans on X: Respect and Embrace the "Old Guard"
Friends who know me know I'm long on stablecoins and also bullish long-term on Web3, DeFi, and RWA's transformation of financial infrastructure. But I don't think Web3 will quickly overturn traditional fiat payments.
Many Web3 practitioners have a misconception: they think traditional finance is inefficient, costly, and slow, so as long as money is put on-chain, redone with stablecoins and smart contracts, it can naturally replace banks, card schemes, clearing networks, and PSPs.
This judgment is too optimistic. The fiat world is inefficient, of course, but it doesn't exist in a vacuum. Behind it are banking account systems, regulatory trust, clearing networks, reserve assets, legal liabilities, dispute handling, anti-money laundering rules, sanctions screening mechanisms, and decades of credit systems built with real money.
These things seem cumbersome, but they solve the most fundamental problems in the real world: When something goes wrong with money, who's responsible? Where are the assets? How do users redeem? Who do regulators go to? Would banks dare to connect? Would merchants dare to accept? Would large institutions dare to buy?
So, stablecoins and on-chain payments can improve efficiency, but they cannot bypass these problems.
A more realistic path is not "Web3 veterans overthrowing traditional finance," but the "old guard" in traditional finance—banks, card schemes, licensed payment institutions, asset management companies, clearing institutions—gradually embracing and domesticating Web3, turning it into new clearing tools, new asset vehicles, and new capital networks within their systems.
What regulators and nations truly like has never been pure decentralization, but "controlled innovation."
Stablecoins can improve cross-border clearing efficiency, but regulators will certainly ask: Who is the issuer? Where are the reserve assets held? How is reserve auditing done? Is the redemption mechanism stable? How is KYC/KYT done for on-chain addresses? How are sanctioned addresses screened? How are abnormal transactions reported? Who underwrites a run? Who provides bank accounts? Who bears custody liability?
Without clear answers to these questions, stablecoins will find it hard to truly enter large-scale B2B payments, corporate settlements, merchant acquiring, institutional capital management, and mainstream asset allocation.
This is also why traditional giants like Stripe, BlackRock, Visa, Mastercard, PayPal are all deploying in stablecoins, RWA, and on-chain payment infrastructure. They haven't suddenly converted to a decentralized faith, but they see the optimization of on-chain technology for clearing costs, capital utilization efficiency, and asset circulation efficiency.
But more crucially, they know how to fit these new technologies into compliance frameworks, how to make banks willing to connect, regulators able to understand, institutional funds able to enter, and ordinary users able to use them. This is how Web3 truly enters the mainstream world.
It's the same with DeFi and RWA. There are certainly long-term opportunities, but not just packaging an asset on-chain, writing a few nice APY numbers, and posting a few X microblog essays can claim to transform finance.
The real value of RWA isn't the act of "going on-chain" itself, but whether it can reduce the costs of asset issuance, registration, trading, clearing/settlement, custody, and information disclosure. If an asset on-chain doesn't see improved liquidity, more transparent risk, clearer legal relationships, or smoother exit mechanisms, it's just a repackaging, not a financial infrastructure upgrade.
DeFi, if it wants to accommodate traditional capital, must also learn to explain risk in language traditional finance understands.
The first question traditional capital cares about is never "how high is the return," but "how is the principal protected." What is the underlying asset? Who manages it? Who audits? Who custodians? How are defaults handled? How is smart contract risk controlled? How is oracle risk controlled? What about hacker attacks? Can redemptions still happen under extreme market conditions?
Especially with the AI explosion, on-chain attacks, automated phishing, address pollution, fake identities, anti-money laundering countermeasures will only become more scalable and hidden. Without truly strong risk control and compliance foundations, DeFi can hardly carry large-scale traditional capital.
Of course, this doesn't mean Web3 payments have no opportunity.
On the contrary, U-cards, over-the-counter trading, stablecoin on/off-ramps, on-chain payroll, Web3 merchant acquiring, cross-border freelancer salary disbursement, stablecoin B2B payments—as payment ecosystems—still have significant room for transaction volume growth.
But for these scenarios to truly achieve adoption, they can't rely solely on a phrase of decentralization ideology or a few gunslingers charging ahead. They must understand the Web2 world and rules: how banks think, what regulators ask, how merchants accept, how users use, how risks are underwritten, how funds return to local accounts.
So I've always felt that the biggest future opportunity for Web3 payments isn't building a new stove separate from traditional finance, but combining the lightness, speed, and low cost of stablecoins with the heaviness, stability, and regulatability of traditional finance.
Those who can respect the old guard, understand the old guard, and ultimately make the old guard willingly use new tools are more likely to reap the large-scale dividends of Web3 payments.
2. The Ultimate Solution: A Hybrid Clearing Foundation of Local Fiat + Stablecoin
Returning to the initial question: In such a crowded track, where exactly is the future? I think the answer is clear: Local Fiat + Stablecoin, the deep integration of local fiat and stablecoins.
The blueprint for the next generation of cross-border payment companies will inevitably be comprehensive operators capable of bidirectionally navigating these two mountains and overlaying networking capabilities in between.
One end is extremely heavy local fiat capabilities: local accounts, local acquiring, local payments, local wallets, local clearing, local banks, local foreign exchange, local compliance.
The other end is extremely light stablecoin-native capabilities: stablecoin collection/payment, issuance or distribution, on-chain clearing/settlement, wallet systems, address risk control, on-chain KYC/KYT, reserves and redemption, institutional-grade custody, cross-chain and multi-chain liquidity.
In the middle is the core capability of network hedging and netting settlement: capital reuse, position management, internal matching, netting settlement, risk identification, and pricing capabilities among multiple countries, currencies, scenarios, and clients.
Only understanding fiat, not stablecoins, means lacking future new clearing efficiencies. Only understanding stablecoins, not fiat, means forever stuck at the last mile of on/off-ramps and local scenarios. Connecting both sides is the basic future table-stakes capability.
The Achilles' Heel in the Deep-Water Breakthrough Zone: The Ability to Acquire Local Liquidity
In seemingly perfect system architectures, the biggest difficulty in implementation is never the code, but how to secure local regulatory relationships, local banks, clearing networks, foreign exchange pathways, and real clients to obtain deep liquidity for the corresponding corridor.
This liquidity isn't bought by clicking a button on an exchange, nor solved by connecting a few APIs. It heavily relies on comprehensive capabilities of positive licensing acquisition, long-term local operation, real trade flow accumulation, and cross-border rigid-demand business hedging.
In many complex markets, business logic is never determined solely by technical APIs, but jointly decided by local banks, regulatory interpretations, foreign exchange policies, industry resources, trade structures, and long-term trust.
No matter how good the technology or product of a Chinese team, if they always stand from an external perspective, viewing the local area merely as a connectable market, it's hard to truly obtain deep liquidity.
Local partners care not about the financial innovation in your PPT, but whether you're willing to invest long-term, whether you understand local rules, whether you can bear compliance responsibilities, whether you can bring real incremental benefits to the local ecosystem.
So, the core of the deep-water zone isn't simply "finding channels," but completing the embedding into local interest structures and business networks.
This means teams cannot remotely control from Singapore, Hong Kong, or Shanghai alone, but must truly sink into the local area, establish bank relationships, regulatory communication mechanisms, merchant service capabilities, tax and legal interpretation abilities, and form long-term cooperation around real trade and real clients. Only when you transform from an external channel provider into a trusted link within the local capital network will deep liquidity steadily flow in.
The Final Profit Zone: Becoming the "Clearing Shovel" for Corridor Regions
Precisely because financial infrastructure in these corridor regions isn't mature enough—with insufficient bank coverage, inefficient foreign exchange pathways, fragmented local clearing, and obvious disconnects between on-chain and off-chain—the arbitrage friction and efficiency premiums in between are high enough.
The big future opportunity is definitely not going to Europe/America to make another fancy checkout button for standard merchants, but someone willing to patiently dig down and gradually break down the fiat obstacles and on-chain disconnects in these difficult, complex corridor regions.
It's not necessary to always stand in front competing globally with international giants, nor to necessarily build the biggest merchant brand yourself. Often, a better position is standing at the underlying level, being the clearing infrastructure for specific regions, currencies, and capital flows.
As long as you can solidify the hybrid clearing foundation of Local Fiat + Stablecoin for a certain complex, high-barrier region—like the Middle East and Southeast Asia, China-Russia, Latin America, CIS, Central Asia, or specific Southeast Asian local currency pairs—providing underlying clearing APIs to other PSPs, Web3 licensed institutions, becoming this "clearing shovel" and underlying infrastructure for that specific region, this remains a market that can generate high profits with solid barriers. Because what you're selling isn't single channels, but local liquidity, compliance interpretation capabilities, capital routing efficiency, and network-inherent hedging capabilities.
Future competition will no longer be "how many standardized channels I have" in the shallow water, but several hardcore questions in the deep water:
- Can you help merchants collect money locally in complex or restricted countries?
- Can you safely, compliantly, and low-costly pay money out?
- Can you, through network-inherent liquidity, allow clients to exchange less currency, pre-deposit less, and occupy less capital?
- Can you make stablecoins move from virtual to real, truly entering local consumption, merchant supply chains, B2B trade payments, and corporate operations?
These questions are the real watershed for the next phase of cross-border payments.
Conclusion: Get in the Game, Dig for Gold in the Deep Water
In the most crowded shallow waters of the cross-border payment industry, profits are destined to be squeezed by capital subsidies to near zero.
Shallow waters compete on sales, rates, funding, and PPT stories. Deep waters compete on cognition, resources, compliance, capital 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, more stablecoin-native."
Whoever truly understands the weight and complexity of local fiat, while skillfully harnessing the lightness and speed of stablecoins, and melting it into the intricate local business networks, has the opportunity to anchor the next decade's golden future in this crowded track.
Ultimately, the truly profitable PSPs in this industry are often quietly working, while unprofitable institutions are still fiercely competing in those seemingly mainstream, sexy, suited-and-booted circles.
Information asymmetry in this world always exists. Truly high-profit opportunities often come from highly non-standard, difficult-to-replicate, hard-to-write-in-research-reports deep-water capabilities. Many truly profitable institutions aren't high-profile; they may resemble ordinary traders, distributors, or local service providers more than star companies standing on stage daily talking about global financial infrastructure stories.
WeChat official accounts will never show truly complete business opportunities; securities research reports can hardly write about underlying interest structures.
There are no shortcuts in cross-border payments. The only solution is still to get in the game, get in the game, truly get in the game.
Only by stepping into the mire do you have a chance to find gold.
