TransferWise nabs Australian banking licence from APRA

Written by Alex Hamilton
2nd December 2020

The Australian Prudential Regulation Authority (APRA) has granted European fintech TransferWise a restricted banking licence.

Kristo Käärmann, TransferWise co-founder and CEO

With the licence, TransferWise can connect directly to the country’s real-time payment system. Its official designation is that of an “authorised deposit taking institution”.

Australia’s payments platform is only available to those with the licence. Non-banks must access it through intermediaries.

Kristo Käärmann, TransferWise CEO, took to social media following the news.

“Our limited banking license came into effect today in Australia,” he writes. “Does that mean we’re becoming a bank? No.

“Your deposits are safe, we’re not going to start lending them out in mortgages and business loans.”

Käärmann says the licence is a “necessary step” to connect to local payment networks.

“32% of our transfers already arrive in under 20 seconds. This enables to do the same reliably for Australian people and businesses.

“It will also benefit our partners in Australia […] whose customers using our network will get these speed and price improvements out of the box.”

An existing TransferWise customer in Australia is neobank Up. The two signed a deal in August for cross-border transactions.

APRA, among other Australian governmental bodies, has been vocal in is criticism of existing payment options for banks and customers.

The country’s treasurer, Josh Frydenberg, said in a 2019 that there needs to be more competition in foreign exchange markets.

Rarer than a unicorn

TransferWise hit a valuation of $5 billion in July, following a $319 million liquidity round.

Käärmann said at the time his firm is building something “even more rare” than a unicorn.

“Nine years in, we’re saving our customers £1 billion in hidden fees every year,” he adds. “That’s a start, but only a small dent in what banks collect.”

TransferWise holds more than £2 billion in multicurrency current account deposits. It says it has issued more than one million debit cards since 2018.