In another sign that fintech firms are increasingly beginning to rival major banks for the provision of core mainstream personal finance services, money transfer startup TransferWise announced in April that it has been accepted to join Britain’s Faster Payments Scheme.
Faster Payments was introduced in 2008 to speed up the time it takes for money to reach customer’s accounts, and this is only the second time a non bank has been able to join the scheme, after challenger bank Monzo, who joined the network in 2017.
Kristo Käärmann, co-founder of London-based TransferWise which reportedly makes revenues of more than £8 million every month, told Reuters:
“It is going to open the gates for tech companies to build much better product than they were able to do. Just because we were reliant on banks and couldn’t access the infrastructure directly.”
Instead of having to build a relationship with a major bank (as they had done with Raphael’s Bank) in order to gain access to the faster payments network, TransferWise will no longer have that problem. The Bank of England’s governor, Mark Carney, welcomed the move, commenting that a new member of the scheme would “stimulate competition and innovation” and increase “diversity and risk-reducing payment technologies”.
Joining the Bank of England’s Real Time Gross Settlements (RTGS) scheme will allow TransferWise to use Faster Payments, Bacs and Visa and also reduce the administrative costs of processing transactions which will in turn drive down customer costs, the startup believes.
The company plans to offer instant transfers to GBP from its borderless accounts, as well as for customers using credit and debit cards.
TransferWise are now calling for more countries’ central banks to provide access to their fastest payment processing systems, used by the big banks. In a press release the company said that:
“Companies that operate in many different countries, like TransferWise, need to connect to payment schemes across jurisdictions to see a tangible impact. If the BofE’s efforts are successful in efficiently increasing competition and innovation, we expect other countries to explore how they might allow more fintechs to get access to such schemes.”
TransferWise processes more than £1.5 billion in payment transactions every month. Richard Branson is one of the company’s key backers, sharing founder Käärmann’s vision:
“I truly believe that money should move around the world as quickly and as cheaply as email, and this is a vital step on that journey.”
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