TransferWise granted limited banking licence

George Lekakis

TransferWise Australia has taken another step in its bid to disrupt the local online remittance market after securing a special banking authority from APRA.

The prudential regulator yesterday announced that the Australian arm of UK-based TransferWise Ltd has secured a licence to issue purchase payments facilities (PPF) in its own right.

The company is the third payments player to secure a PPF licence after PayPal and Australia Post were granted the same authorities last decade. Australia Post has since relinquished its licence.

TransferWise Australia’s country manager Tim Cameron indicated the licensing approval would open new strategic options for the business including direct issuance of multi-currency cards and debit cards.

“The steps we have taken today which include taking on the additional regulatory requirements, is driven by our commitment to Australia, our mission, and to setting a new global standard to give millions access to truly competitive services, even if regulations have not kept up with the new breed of services fintechs provide,” he said.

“By becoming independent and cutting out the middleman, we’ll be able to save our customers even more money and time in the process.”

Another benefit of the licence for TransferWise is that it will also be able to connect directly to the New Payments Platform, rather than have its access intermediated by one of the major banks.

Cameron, who has long argued for a review of the NPP access regime, said the company would continue to work with regulators to help other fintechs secure smoother entry into live payments.

“Direct access to the NPP is still restricted to those with a banking licence despite repeated calls from TransferWise and various bodies like the Productivity Commission, the RBA and the government to democratise access to fintechs without the additional burden of becoming an ADI,” he said.

“We’ll also continue to work with regulators and policy makers to share best practice guidance from around the world with regards to direct access to payment systems.”

The APRA licence extends the global transaction management capability of TransferWise’s global operations.

In 2018 the company became the first non-bank to secure a settlement account with the Bank of England. Earlier this this year the bank obtained a settlement account with the Hungarian Central Bank and direct access to Hungary’s live payments system.

TransferWise is a standout among the big fintech brands that have muscled in on the cross-border payments market in that it has been trading in the black for the last four years.

Accounts filed with UK regulators show the group more than doubled its bottom line profit for the 12 months to the end of March to 21.3 million pounds sterling.

In 2019, TransferWise posted a consolidated net profit of £10.3 million.