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TransferWise, the international money transfer firm, has been granted direct access to the UK’s Faster Payments Service (FPS) via a partnership with private UK bank Raphaels Bank.
FPS enables payments within the UK to be made instantly at any time. TransferWise is currently testing the integration, and a full launch is expected later this summer.
Direct access to FPS gives TransferWise a number of advantages: Better service for UK customers. TransferWise will be able to initiate transfers for UK customers as soon as it receives the funds from the customer’s bank, including overnight or on weekends. Previously, TransferWise could only send or receive customers’ money during regular banking hours. It’s worth noting that FPS does not enable instant international payments, so these transfers could still take a number of days.
It’s no longer reliant on banks’ infrastructure. TransferWise’s direct integration to FPS means its payments no longer rely on a third-party bank. This means that TransferWise can now avoid delays caused by the policy of a third party or downtime.
TransferWise’s long-term aim is to take advantage of the Bank of England’s plan to open up settlement accounts to nonbanks. Right now, nonbanks can only access settlement services via one of four agent banks. Having their own settlement accounts would allow fintechs like TransferWise to be completely independent of legacy banks, likely resulting in a significant increase in competition in the financial services industry.
That competition is driving the most profound era of change for financial services companies since the 1970s brought us index mutual funds, discount brokers and ATMs.
No firm is immune from the coming disruption and every company must have a strategy to harness the powerful advantages […]
