Money transfer upstart TransferWise is finally rubbing shoulders with the Establishment, becoming the first non-bank direct member of the UK's Faster Payment scheme under a new settlement account policy directive initiated by the Bank of England.
The Bank of England extended direct access to RTGS accounts to non-bank payment service providers in July last year, as part of a wide-ranging effort to inject more competition and innovation into the UK's payments systems.
The move was designed to open up a competitive space which has long been the preserve of the UK's biggest incumbents, providing non-bank PSPs with direct access to the UK’s sterling payment systems that settle in central bank money, including Faster Payments, Bacs, Chaps, Link, Visa, and, once live, the new digital cheque imaging system.
Direct connection to RTGS and the Faster Payments Scheme should lower processing costs for TransferWise, which currently handles over £1.5 billion a month in payment transactions. It also means the company can offer instant transfers to GBP from its borderless accounts and for customers paying by debit and credit card around the world.
The company is calling on other central banks around the world to follow the Bank of England’s example, and allow technology companies to operate on a level playing field with the incumbent banks.
Kristo Käärmann, CEO and co-founder, TransferWise, says: "Today is game changing for TransferWise and millions of our customers around the world. The Bank of England is giving tech companies the same rights to process payments as the retail banks - enabling us to cut out the middlemen and offer people a faster, cheaper service. I truly believe that money should move around the world as quickly and as cheaply as email, and this is a vital step on that journey."