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The Hidden Mechanics of "Instant" Payments and Why Stablecoins Make Them Obsolete

Raj Parekh

Raj Parekh

@rparekh (opens in new tab)
Published on
· 7 min read

You may have seen terms like "instant payments" in your favorite app or service like Venmo, Chime, or Airbnb, but what's actually happening underneath the hood is very different and actually expensive.

Stablecoins and blockchains like Monad are the only instant payment and low-fee rail in the world today and poised to make existing instant flows obsolete!

In this article, we'll break down how traditional instant payments work and how stablecoins change the game completely.

What's actually happening

None of these companies are speeding up the payment rails. They're fronting you the money.

Here's the flow: the company maintains a prefunded account, essentially a pool of cash sitting in a bank, ready to go. When you request an "instant" payout, they push funds from that pool to your debit card using rails like Visa Direct or Mastercard Send, which can settle to your account in minutes. Then, days later, the original payment settles through normal channels (ACH, etc.) and replenishes the pool.

That fee you're paying, typically 1.5-1.75%, is the cost of the company lending you money for a few days.

How big is this business?

Bigger than you'd think.

Venmo generated an estimated $1.1 billion in revenue in 2023, and PayPal told investors that Venmo can top $2 billion in revenue by 2027. Instant transfers at 1.75% (capped at $25) are a meaningful chunk of that. With Venmo processing roughly $69 billion in payment volume per quarter, even a small percentage of users opting for instant payouts generates significant fee revenue.

Chime's fee-free overdraft feature SpotMe has covered over $30 billion in spotted transactions. While SpotMe itself doesn't charge fees, it drives the engagement and direct deposit behavior that fuels Chime's interchange revenue. Chime surpassed $1.6 billion in revenue in 2024, built largely on the premise of giving people access to their money faster. Their newer product, MyPay, lets members access up to $500 of their paycheck early, with over 2 million enrolled members since launching in July 2024, charging $2 for instant delivery.

Airbnb processed $81.8 billion in gross booking value in 2024. Their Fast Pay feature charges hosts 1.5% per payout (capped at $15) to receive earnings within 30 minutes via Visa Direct or Mastercard Send instead of waiting the standard 5-7 business days for a bank transfer. On a platform with five million hosts, even modest Fast Pay adoption translates to meaningful revenue on top of their $11.1 billion in total revenue.

Across the industry, "getting your money faster" has become one of fintech's most reliable monetization strategies. And the mechanism is always the same: prefund, push, charge.

Why prefunding exists

This entire model exists because of two constraints in traditional finance.

First, banking hours. ACH doesn't run 24/7. Wires are expensive and limited to business hours. The rails themselves are slow, so someone has to bridge the gap with capital.

Second, cost of capital. Maintaining that prefunded pool isn't free. The company needs to park millions (or billions) in liquid accounts, and that capital has an opportunity cost. The fees you pay subsidize that.

Every "instant payment" product is really just a short-term loan dressed up as a feature.

Enter stablecoins on Monad

Now consider what happens when the underlying rail is a stablecoin like USDC running on Monad.

Monad is a Layer 1, EVM-compatible blockchain delivering 10,000 transactions per second with sub-second finality and near-zero fees. That's not "fast for crypto." That's faster than tapping your debit card.

Monad is built around a simple but critical premise: blockchains should meet real-world latency requirements, not force financial systems to work around them. And because Monad is fully EVM-compatible at the bytecode level, developers can deploy existing Solidity contracts and use familiar tooling without modification.

On a chain like Monad, settlement is final in under a second. It works 24/7/365. There's no banking hours constraint. There's no multi-day float. And critically, there's no need for a prefunded pool, because the actual money moves in real time.

What this looks like in practice

Take the Airbnb example. Today, a guest books a stay and pays upfront. Airbnb holds those funds in escrow, then releases payment to the host 24 hours after check-in. If the host wants the money quickly, they pay 1.5% for Fast Pay, and Airbnb pushes from a prefunded pool to the host's debit card via Visa Direct. The guest's original payment eventually settles days later through traditional banking rails.

Now imagine that same flow on Monad. The guest pays in USDC. The smart contract holds the funds in escrow on-chain, transparently and programmatically. At check-in, the contract releases USDC directly to the host's wallet. Settlement is final in 800 milliseconds. No prefunded pool. No Visa Direct. No 1.5% fee. No waiting for banking hours. The host has real, spendable money in under a second, at virtually zero cost, and it works at 2am on a Sunday just the same as noon on a Tuesday.

The same logic applies to payroll. Instead of Chime fronting you $500 from a prefunded account two days before payday, your employer could simply release earned wages in USDC to your wallet in real time, daily, or even after every shift. The money moves the moment it's authorized. There's nothing to "advance" because there's no delay to bridge.

What still needs to happen

This won't flip overnight, and there are practical gaps worth acknowledging.

The biggest is the last mile. Even if a host gets paid in USDC in under a second, they likely still need dollars in a bank account for rent or a mortgage. That off-ramp back to fiat still touches traditional rails, which can reintroduce some of the friction this model eliminates. Over time, as more merchants and services accept stablecoins natively, this becomes less of an issue, but today it's still a real consideration.

There's also the question of adoption sequencing. Employers won't pay in USDC until employees want it, and employees won't want it until the experience of holding and spending stablecoins feels as simple as a bank account. Similarly, platforms like Airbnb will move to stablecoin payouts when hosts start asking for it, which will happen as wallet UX continues to improve.

Regulatory clarity is progressing but still uneven. Payroll in particular has compliance requirements around tax withholding and labor law that are built for the banking system. These are solvable problems, but they require time and coordination across jurisdictions.

None of these are fundamental blockers. They're sequencing challenges, and they're the kind of challenges that tend to resolve quickly once a critical mass of infrastructure is in place.

So where does that leave us?

The underlying thesis still holds: the fees consumers pay for "instant" access to their own money exist because of infrastructure limitations, not because moving money actually costs 1.75%.

The transition will likely start where the pain is highest. Crypto-native platforms, freelance marketplaces, creator economy tools, and cross-border payments will adopt stablecoin payouts first. As stablecoin wallets become as common as bank accounts, the mainstream platforms will follow.

The fee you're paying Venmo isn't for speed. It's for the absence of modern infrastructure. That absence is temporary.

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