Hidden FX Spreads Reach 2% in Stablecoin Bank Tests

Woofun AI reports that an investigation into the fiat infrastructure of five emerging stablecoin banks—RedotPay, EtherFi, KAST, Avici, and Gnosis Pay—reveals that hidden costs are dictated by underlying providers rather than the platforms themselves. While these services present a uniform user interface, the backend architectures rely on disparate suppliers like OpenPayd and Bridge to manage account opening, transfer processing, and foreign exchange conversions.

This structural dependency means that critical variables such as supported currencies, exchange rate spreads, and KYC verification protocols are determined externally, creating significant variance in actual user costs despite similar front-end experiences. The analysis, originally compiled by Paymentscan and Luffy for Foresight News, aimed to quantify these discrepancies by testing real-world transaction flows. By depositing and withdrawing substantial euro amounts, the study exposed how the choice of banking partner directly impacts profitability and usability, challenging the assumption that all stablecoin banking solutions offer equivalent value.

The methodology for this assessment involved rigorous testing of fiat channels across the selected platforms, specifically focusing on euro payment flows to isolate foreign exchange variables. Between July 21–23, a standardized test deposit of 5,000 euros was executed for each entity, with the corresponding dollar equivalent established at $5,704.7 based on the starting exchange rate. To ensure accuracy amidst market volatility, data points were adjusted by up to 40 basis points to align with this baseline.

The tests evaluated both deposit and withdrawal speeds, as well as the total cost of a complete 'deposit-withdrawal' cycle, which includes foreign exchange spreads and explicit fees. For dollar-based channels, the analysis relied on official fee tables, examining fixed costs associated with ACH, wire transfers, and SWIFT networks, alongside any percentage-based charges. The identification of underlying providers was achieved through forensic analysis of branded KYC domain names, specific bank account details, and direct inquiries to customer service teams, ensuring that the attribution of costs to specific infrastructure partners was precise.

General findings from the testing phase highlighted stark contrasts in processing speeds and cost structures across the different platforms. Deposits typically arrived within a few minutes, demonstrating the efficiency of modern digital banking rails, whereas withdrawals consistently required several hours to settle, reflecting the slower nature of traditional banking clearance processes. The total cost for a complete round-trip transaction varied dramatically, ranging from a low of $2 to a high of $130, depending on the platform's chosen provider and fee policy. For dollar payment channels, the total cost for a $5,000 deposit and withdrawal via ACH ranged from $2 to $16, indicating that domestic transfer fees are relatively standardized and low.

However, the reliance on local settlement networks for withdrawals, while efficient, often masked significant hidden costs in the form of foreign exchange spreads. These discrepancies underscore the importance of looking beyond advertised fees to understand the true economic impact of using these new banking interfaces.

RedotPay’s infrastructure relies heavily on OpenPayd, a provider that also serves major platforms like eToro and Kraken, to offer virtual accounts for euros and pounds, though it does not support dollars. The cost to open a virtual account for any of these currencies is $7, a fee not charged by the other tested platforms. In the test, a 5,000-euro deposit, which should have arrived within a few minutes, was delayed by approximately 60 hours due to additional manual verification requirements.

RedotPay maintains an independent euro balance, meaning deposited funds are not automatically converted into stablecoins. When manually converted, the user received 5,591.01 USDC, resulting in an effective fee of $113.69, or 2%, which was the highest among all tests. This high cost suggests a deliberate strategy to generate additional revenue through foreign exchange spreads. For withdrawals, the system deducted 5,722.58 USDC to send 5,000 euros, with a fee of $17.88, or about 0.3%.

Notably, withdrawals are processed by a different provider, Red Dot Payment, and take less than 1 minute. RedotPay’s local withdrawal functionality covers over 30 currencies across Latin America, Asia, and Africa, with fees typically amounting to a few dollars, though dollar withdrawals can reach as high as $50.50. A test withdrawal in Singapore dollars was transferred via the partner iSend, further illustrating the fragmented nature of its backend partnerships.

EtherFi offers a more comprehensive banking channel, providing virtual accounts for dollars, euros, Brazilian reals, Mexican pesos, Colombian pesos, pounds, and UAE dirhams, with additional withdrawal support for Canadian dollars, Hong Kong dollars, Honduran lempiras, Israeli shekels, and Indian rupees. This extensive coverage is facilitated by two service providers: Bridge and Due. The euro virtual account provides two separate IBANs, allowing users to choose whether deposits are credited as EURC or USDC.

In the test, 5,000 euros were deposited through Due’s virtual account and credited as USDC, resulting in 5,695.12 USDC and an effective fee of $9.21, or 0.16%. Withdrawing 5,000 euros using the USDC balance deducted 5,714.04 USDC, with a fee of $9.34, also 0.16%. Initially, the interface displayed an euro account offered by Bridge, but this option was later removed. Analysis of an earlier email receipt for a 5-euro deposit and withdrawal revealed that Bridge’s bid-ask foreign exchange spread exceeded 0.

5%, a finding confirmed for other euro virtual accounts provided by Bridge. This high spread explains why EtherFi now defaults to showing Due’s bank account details. For dollar transactions, regardless of the provider, the fee structure is consistent: 0.1% for deposits and 0.2% for withdrawals, plus fixed network fees of $0.50 for ACH and $20 for SWIFT/wire transfers.

KAST utilizes two distinct service providers: Bridge for dollar accounts and Noah for euro accounts, which also supports withdrawals in over 20 other currencies. Unlike other platforms, KAST only provides a dollar balance, meaning a 5,000-euro deposit is automatically converted into dollars, resulting in $5,704.43 with a negligible fee of only $0.27. The withdrawal page lists a SEPA fee of $2, with the first three withdrawals per month being free.

However, the actual foreign exchange spread exceeds 1%, leading to a total deduction of $5,762.78 for the withdrawal and a comprehensive cost of $59.29. KAST offers significant subsidies for dollar deposit and withdrawal fees, charging $2 for ACH, $15 for wire transfers, and $30 for SWIFT transfers, with no percentage-based fees for these operations. Normally, a 0.5% fee is charged for withdrawals, but this is currently discounted. The disparity between the advertised low fees and the high actual cost due to foreign exchange spreads highlights a critical area of hidden expense for users relying on KAST for international transactions.

Avici’s dollar and euro virtual accounts are provided by Iron, which was acquired by MoonPay in 2025. The platform charges a fixed fee of $1 per dollar or euro transferred, plus $15 for wire transfers, with no percentage-based fees. Avici does not offer an euro balance; instead, a 5,000-euro deposit is directly credited to the dollar account, resulting in $5,702.81. After deducting the $1 fixed fee, the exchange rate equals the market mid-rate at that time. The same logic applies to withdrawals, with the system deducting $5,705.99. Avici’s team stated that no foreign exchange fees are charged for deposits or withdrawals, regardless of transaction size, making it the platform with the best overall fee performance in this test.

However, the KYC process managed by Iron’s partner, Sumsub, is extremely complicated and time-consuming. To unlock the initially deposited 5,000 euros, the tester submitted over a dozen personal documents within a week, including bank and exchange transaction records, tax statements, business registration files, and rental contracts. This rigorous due diligence process presents a significant barrier to entry for users seeking quick access to their funds.

Gnosis Pay serves as underlying infrastructure for new banks, with products such as Rebind, Picnic, and Zeal built on its architecture. It only supports euro virtual accounts, provided by Monerium. Deposits result in an equal amount of EURe stablecoins issued by Monerium, with zero fees, and withdrawals are also completely free. For a fair comparative analysis, the cost of converting EURe to USDC on-chain was calculated: 5,000 EURe converted to $5,705.39 USDC, incurring an additional cost of $0.

69, while converting 5,713.76 USDC back to 5,000 EURe cost $9.06. This model demonstrates a transparent fee structure where costs are either zero or explicitly defined by on-chain liquidity conditions, rather than hidden in foreign exchange spreads. The reliance on Monerium for EURe issuance ensures that the stablecoin is fully backed and compliant with European regulations, providing a secure foundation for users who prioritize regulatory clarity over multi-currency flexibility.

Woofun AI data shows that the fee range for dollar and euro virtual accounts is 0–0.3%, with significant subsidies typically offered during deposits, while euro SEPA transfers generally have no fixed fees but foreign exchange spreads vary greatly, ranging from 0% to 2%. The disparity in foreign exchange spreads is greater than expected, with KAST and RedotPay charging significantly higher fees than their competitors, which reduces the profit margin available to the new banks. Although it cannot be fully confirmed, the higher fees charged by KAST and RedotPay likely come from the platforms’ own revenue strategies rather than the costs of the underlying service providers.

In terms of coverage, the virtual accounts provided by OpenPayd, Due, and Noah offer the most currencies, covering dozens of currencies each. When asked why emerging banks choose these providers, compliance and banking relationships were cited as the main considerations. EtherFi, which uses Bridge and Due, mentioned compliance, product experience, settlement processes, and fees as key factors. Kolo, which recently integrated Due, also cited MiCA licensing and strict compliance capabilities as the core selling points of the service providers.

The competitive landscape for underlying clearing services in the new banking sector is becoming increasingly fierce, with many players vying for dominance. Although not included in this specific test, companies frequently mentioned in the industry include Dakota, Modern Treasury, Bastion, Unlimit, and Tazapay. These entities are expanding their offerings to meet the growing demand for compliant and efficient fiat-to-crypto on-ramps.

The current market structure suggests that while user experience may appear standardized, the underlying infrastructure choices have profound implications for cost and accessibility. As competition intensifies, users can expect more fee options and services to become available in one year, potentially driving down hidden costs and improving transparency across the sector. This evolution will likely force platforms to differentiate themselves not just through interface design, but through the efficiency and fairness of their backend financial partnerships.