TransferWise is a privately-owned FinTech startup with remittance as its focus on a mission to make international money transfers cheap, fair, convenient, and fast by using the real mid-market exchange rates and with no hidden fees. The London based money transfer company was founded in 201l by two Estonians, Kristo Käärmann and Taavet Hinrikus, and since then has been growing exponentially. The company now serves over 8 million customers worldwide and moves over $5 billion each month in cross-border payments (reportedly saving $4 million in bank fees in everyday transactions).
The company is now valued at $5 billion after a secondary share sale as investors see the potential in the growth of online cashless payments amid the coronavirus pandemic. With this valuation, the company is among Europe's top valuable fintech start-ups which include Klarna, Revolut, and Checkout.com, all three valued at $5.5 billion.
TransferWise CEO Kristo Käärmann said that for the past few years, the company has been exclusively funded by their customers and didn’t need to raise external funding. The secondary offering worth $319 million brought in new investors and gave the chance to existing investors and employees who helped them succeed to sell a portion of their share. This means no money has been added to TransferWise's balance sheet.
The leading new investor is the D1 Capital Partners with Lone Pine Capital being the existing investor. Vulcan Capital is another new investor. Baillie Gifford, Fidelity Investments, and LocalGlobe also increased their existing holdings. British billionaire, Sir Richard Branson and PayPal founders Peter Thiel and Max Levchin also became investors among others.
TransferWise global expansion with the launch of Borderless account
Initially, TransferWise was primarily a consumer product facilitating peer-to-peer transactions like cross-border payments for overseas purchases, sending gifts, etc via their website or mobile app.
In May 2017, TransferWise launched a new product called the Borderless account. This meant that TransferWise would expand beyond the UK and Europe market and work on scaling globally. The Borderless account was built especially for businesses and freelancers looking for easy ways to send money abroad. The service was available in Europe and the United States at launch.
The company now has 14 offices in total and present in countries like the USA, Australia, Canada, Brazil, Singapore, Japan, UAE, etc. They have more than 2,200 employees worldwide.
TransferWise Business Account
You can open a TransferWise business account which is a multi-currency account that allows you to hold over 40 currencies in the same place and do international payments (with the real exchange rate) in over 70 different currencies which is 19x cheaper. Send money online either from your debit card or bank or from your business account balance.
You can receive payments with no currency conversion fee in major currencies of countries like the UK, US, Euro regions, Australia, and New Zealand.
Additionally, you can manage payroll and pay invoices, purchase inventory with the real exchange rate in more than 50 currencies.
Another great thing is your recipient doesn't have to open a TransferWise account to receive their money.
TransferWise expands operation with US Banks
TransferWise for banks allows banks and financial institutions to integrate with the TransferWise API so that their customers can use the TransferWise services and fees through their websites and apps. In other words, they will be able to do international money transfers at the same price and speed as TransferWise’s customers.
Bank Novo and Stanford Federal Credit Union are the first in the US to integrate with TransferWise API, gaining access to a cheaper and faster international money transfer services. TransferWise claims that the cost is 8x cheaper than traditional bank transfer fees for sending international wires.
Novo being a banking platform for small businesses, startup founders, and freelancers, the API integration means a low-cost option for international money transfer. Likewise, for alums, students, and Silicon Valley employees using Stanford FCU services.
TransferWise has also partnered with some neobanks such as Monzo in the UK, N26 in Germany, Bunq in the Netherlands, or banks like LHV in Estonia and BPCE in France.
Partnership with Mastercard
In 2018, a multi-currencies Mastercard debit card was launched for customers in the European Union, and the service was later extended to the US customers followed by other countries.
TransferWise debit Mastercard allows customers to hold more than 50 currencies at once and convert them anytime. So customers get to spend their money like the locals. The debit card is very convenient for travelers, freelancers, expats, and small business owners who often have to do cross-border transactions.
So far, TransferWise has issued over 1 million MasterCard cards all over the world.
Collaboration not competition is the trend that has been gaining ground. It is worth noting that the fight in the top tier of the payment industry has been Google Pay vs. Samsung Pay vs. Apple Pay. TransferWise has worked collaboratively to enable Apple and Google Pay, Fitbit and Garmin Pay for all TransferWise cards.
Recently, Mastercard and TransferWise announced their expanded partnership to increase the issuance of cards in new markets around the world where MasterCard is accepted and TransferWise is licensed for its multi-currency borderless account.
TransferWise has recently announced that it has secured the license from the UK regulators to offer investment and saving options via the TransferWise borderless account. The product is expected to launch in the next 12 months in the UK. The company CEO added that they do not have any plans to become a bank.