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The new investment service from TransferWise will allow retail users to earn passive returns.
TransferWise, the fintech payments startup, is set to introduce an investment product to its staple of products. The privately held fintech payments company has obtained a license from the UK authorities to provide financial services.
The fintech company said it had already received the go-ahead from the UK’s Financial Conduct Authority (FCA). The provision of such services will be on a retail basis in tandem with its other products.
TransferWise to Offer Passive Returns on Investment
The new investment service will allow retail users to earn passive returns. The fund will go to partner investment firms.
TransferWise CEO and Co-founder Kristo Käärmann told sources:
“About three or four years ago we saw that people — and more so businesses — are not only sending money, they’re also receiving money internationally,”
Kristo had indicated that TransferWise users had been searching for alternatives to earn returns on their monies. He said that the TransferWise team sought to do things differently. Banks and other institutions usually lend or invest the monies and charge interest in the process.
“It’s not like if you put money into a savings account in a bank, money magically grows there.”
Fintech Startups Are Taking Over
Kristo has indicated that Transferwise isn’t going that direction. The firm doesn’t want to enter the brokerage business.
The investment product will be rolled out in the UK within the next year. International expansion is also expected after that.
TransferWise has been one of the startups that has changed the fintech landscape. The company was founded in 2011 and has attained enviable heights. Last year, the company was valued at $3.5 billion.
Today, the company has a global user base of 8 million people and counting. The firm also processes £4 billion worth of transactions monthly. TransferWise has heavy hitters among its investors. They include Richard Branson who needs no introduction, Andreessen Horowitz, and Valar Ventures owned by Peter Thiel.
The COVID-19 pandemic has upended things. Kristo remains optimistic about the companies profitability this year. Speaking of profits, the firm has been in profit for the past three years. This has endeared it to investors.
Speculation has been rife as to when the company will go public. The management has consistently said that the startup intends to remain private.
The fintech startup has also come up with other features such as its multicurrency debit card. This debit card also converts other currencies to local currencies when users are in transit.
“We’ve been very humbled in some ways and proud that customers are funding our mission.”
This is probably one of many reasons why TransferWise will have staying power in the coming decade.