Richard Branson-backed TransferWise eyes Australia

Richard Branson-backed global money transfer group TransferWise is ramping up its push to battle Australia’s big banks.

Sir Richard Branson is a high profile backer of TransferWise. Picture: AFP

RichardBranson-backed global money transfer group TransferWise is ramping up its push to battle the big banks’ dominance in Australia, as this market sits among its top five for cross border payment volumes.

The technology group is expanding in Australia as local regulators lament how expensive it is to transfer money overseas through incumbent players such as the major banks.

TransferWise’s renewed push in this market sees it rolling out free direct debit functionality for Australian customers and instant cross-border payments between its customers, activated by using just their mobile number.

TransferWise doesn’t provide market specific data but Australia is among its top five markets by volume across its products – including those that send money internationally, a multi-currency account and accompanying debit card and its business product.

The company’s customers around the world hold £2 billion ($3.6bn) in deposits in multi-currency accounts.

TransferWise chief executive and co-founder Kristo Käärmann told The Australian he was keen to expand in Australia, including through new services and even partnerships with banks.

“It’s something we have been doing in the last couple of years,” he added, noting TransferWise had a pipeline of potential tie-up opportunities in this market. “Banks have been coming to us in different shapes and sizes – and smaller and challenger types like Up – and also the more traditional ones.”

Last year, TransferWise partnered with Bendigo and Adelaide Bank-backed digital player Up to let consumers move money overseas ­directly from their transaction ­account.

That made Up the first Australian bank to provide international transfers with no ­exchange rate mark-ups.

The high cost of international money transfers from Australia has long been on local regulator’s radars.

Reserve Bank of Australia assistant governor Michele Bullock last week told a webcast Morgan Stanley conference that cross border transfers were among the “most challenging” areas in domestic payments. That is because prices charged by incumbents were still relatively expensive, despite new entrants seeking to shake-up the market.

“I’m pretty disappointed that we haven’t made much progress on that in many years,” she said at the time. “They (cross border payments) still seem very expensive … There have been some new players come into the market here which are offering much cheaper options than particularly the major banks.

“I expect that sort of thing to continue.”

The Australian Competition and Consumer Commission went into detail on the topic in a 2019 report. It found consumers who used the big four banks to send international transfers in US dollars and British pounds during 2017–2018 could have collectively saved about $150m if they used lower-cost providers.

In 2018, the World Bank found Australia was the third most expensive Group of 20 economy for money transfers.

Trans­ferWise is a technology-led foreign exchange group, which was last year valued at $US3.5bn. More than seven million people use TransferWise globally, with some £4 billion in payments processed every month.

But some global banks are, though, already pushing back on players like TransferWise. Banco Santander earlier this year launched PagoFX, a low-cost money transfer service, in the UK.

TransferWise’s renewed push in Australia will see instant cross-border payments between its customers activated, using just their mobile number.

It allows sending of domestic as well as cross-border transfers instantly between those with TransferWise accounts, in more than 50 currencies.

The company said the functionality was “further evidence of a new global standard, which eliminates

legacy banking, reliant on bank details for international transfers”.

The launch of TransferWise’s new services also allow local personal and business customers to set up free direct debits from their Australian dollar balance to pay bills, subscriptions, mortgages, rent and other payments from anywhere in the world.

That follows the rollout of similar direct debit options in the UK and Europe.

In Australia, TransferWise banks with Macquarie Group as it is yet to secure a direct link to payments infrastructure.