International money transfer service is facing an embarrassing about turn after it was revealed that the company is in discussions with a number of UK and other European banks about imbedding TransferWise’s API into their systems. TransferWise which rose to fame in part due to its aggressive marketing campaign that suggested banks and other established service providers are ripping off consumers has apparently changed course which might represent a marketing risk but makes sound financial sense.
News emerged that TransferWise was in discussions with a number of banks after it announced a deal with LHV (the largest bank in Estonia). The new service will go live in early 2016. Commenting on the deal, Taavet Hinrikus, one of TransferWise co-founders said,
“This partnership is a significant milestone for the whole financial sector.”
The money transfer service is one of the most fragmented segments in the payments industry but also has significant long term potential and in recent years a large number of new money transfer services have received investment backing. With TransferWise only a medium sized fish in a large pond (the company is currently valued at more than $1 billion), the decision to change course and work with banks and other established service providers will only help the company grow and move towards the premier tier of companies like Western Union and MoneyGram and Ria Financial Services.
Overview by Tristan Hugo-Webb, Associate Director, Global Payments Advisory Service at Mercator Advisory Group
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