International payments app Wise granted Australian financial services licence by ASIC

London-based international payments app Wise will expand its services to its more than one million Australian customers after being granted an Australian Financial Services Licence.

Wise Australian manager Tristan Dakin and the company’s Estonian founder, Kristo Kaarman. Picture: Jane Dempster

London-based international payments app Wise will expand its services to its more than one million personal and business customers in Australia after being granted an Australian Financial Services Licence by the Australian Securities and Investments Commission.

The new licence will allow Wise, which launched in Australia in 2016 under the name Transferwise, to offer its “Assets” investment product to Australian customers.

This will allow them to invest in money market funds across multiple currencies with no minimum balances.

Australia customers already hold more than $1bn in balances on the Wise platform.

Wise Australian country manager Tristan Dakin said there had been great uptake of the Assets investment products in other markets, with customers in Britain, Europe and Singapore investing $5.6bn through Assets.

He said Wise wanted to give its Australian customers “a way to make money work for them”, adding the success of the products overseas was indicative of the potential demand in Australia.

“We’ve made a number of significant strides this past financial year and we’re excited to keep building on that momentum with the granting of this new licence and to bring Assets to Australia soon,” he said.

Wise customers will be able to access the Asset product later this year.

Wise was founded in 2010 and launched in 2011 by Estonian-born Kristo Kaarmann and his friend Taavet Hinrikus.

Living in London at the time, they become frustrated by the high cost of sending money to and from their home country.

The service now has more than 12.8 million active users around the world who move some $60bn a quarter across borders in more than 40 different currencies, making up 5 per cent of cross-border funds moved by individuals.

The company’s major clients are expats, travellers and people making international payments, including transferring offshore pension payments, as well as small businesses with international transactions.

It has a growing business providing its services on a “white label” basis to existing banks.

That includes a deal with Bendigo Bank’s digital bank, Up Bank, to handle customers’ foreign currency transactions.

Wise uses the Reserve Bank exchange rate for its money transfers, making its money by charging a disclosed fee per transaction.

Speaking on his first visit to Australia last year, Mr Kaarmann was critical of the charges levied by Australian banks for foreign currency transactions for retail customers and small business.

He said the Australian banks were effectively charging 3-4 per cent on foreign currency transactions by giving customers exchange rates worse than the official Reserve Bank rates.

“In Australia, people wanting to send money overseas get slammed with all of these hidden mark-ups on the exchange rate,” he said.

“We don’t believe it has to be that way.”

The company is one of the top 50 companies listed on the London Stock Exchange.

Mr Kaarmann said Wise’s goal was for people to be able to conduct their transactions in a range of countries where they might be operating for the same price as they would if they were dealing with their local bank.

He said Wise disclosed every fee at the time it was incurred which was different to the banks.

Mr Kaarmann said Australian banks did not regard foreign currency transactions by individuals and small businesses a priority.

“The banks in Australia are very focused on credit and lending,” he said.

“That’s really where they make their money.

“We provide services which are probably considered ancillary, and we do those things really well.”

Originally published as International payments app Wise granted Australian financial services licence by ASIC