TransferWise Steps Toward Banking With Multicurrency AccountBy
Will allow businesses to keep money in 15 different currencies
Limited account signals upstart’s ambitions to challenge banks
TransferWise, one of the biggest London-based fintech startups, is introducing a new foreign exchange account in its first step into financial services beyond simple international money transfer.
The "Borderless" account, launched Tuesday, will allow small businesses -- including individual freelancers -- to hold up to 15 different currencies, while also linking to separate local bank account numbers for the U.K., U.S., and Europe. This enables customers to receive and pay funds in those locations without paying international transfer and foreign exchange fees.
Co-founder and Chief Executive Officer Taavet Hinrikus said in an interview that TransferWise was looking to expand into other financial services adjacent to the money transfer product it first launched in 2012. "We really think we have the opportunity to become a new kind of financial institution," he said.
TransferWise, which has received more than $116 million in venture capital funding and was valued at $1.1 billion last May, has been profitable since the start of the year, Hinrikus said, although he declined to say exactly how much the company made. "We are continuing to invest in the business and to hire people," he said. "So having a profit target is not something we want to concentrate on."
The U.K. company in February announced a deal with Facebook Inc.’s Messenger that will let people set up foreign exchange transactions over the chat service.
TransferWise currently employs 700 people around the world. It said it is currently processing one billion pounds worth of transactions every month and is "on track" to have about 100 million pounds in revenue this year. The company said one million people had registered with its service and that it expected to have an additional one million customers by the end of the year.
TransferWise will charge between 0.5 percent and 1 percent for moving money between different currencies in the new multi-currency account or for making an outbound payment in a different currency.
Unlike traditional accounts, the new offering charges no set up or monthly fees, and users can receive money for free. It does not pay any interest on account balances. All funds in the account are physically stored in TransferWise’s own bank accounts in the U.K., U.S. or Australia, the company said.
For the moment, the account does not allow customers to schedule regular payments or receive direct deposits, but Hinrikus said he hoped to add these features soon.
The company is launching the account for customers in the U.K., the European Economic Area, Switzerland, India, Pakistan and the Channel Islands, the company said. It said it plans to roll the product out globally later this year, starting with the U.S. "in a couple of weeks."