UK fintech Wise has increased the average cost of money transfers for the first time since 2020 as it contends with high volatility in markets.
The average cost per transaction increased by 2 basis points to 0.64 per cent in the third quarter, compared with a year earlier. Matt Briers, Wise’s chief financial officer, said that reflected higher levels of foreign exchange volatility.
“We’re committed to a fair, transparent pricing structure, but also a sustainable profitable business model,” he said. “In the long run, prices will go down but it’s not a straight line.”
Nevertheless, the payments company announced in a trading update on Tuesday that customer volumes and revenues had continued to grow, leading Wise to upgrade its outlook for the year.
“In the first quarter, we were cautious around expectations for the rest of year, but in the second we’ve seen momentum continue,” said Briers. “There will be volatility and uncertainty through the rest of the year but we’re seeing healthy interest and demand.”
Wise, which listed in London last year, said that in the three months to September 30, 2022, total income rose almost 75 per cent year on year to £229mn, driven largely by the growing volume of money transferred for both personal and business customers.
Rising interest rates also provided a boost, with Wise receiving £17.5mn in net interest income on customers’ balances, compared with a loss of £600,000 a year earlier.
The UK fintech expected total income growth for the full year of 55-60 per cent, compared with 30-35 per cent previously. It expected growth would remain above 20 per cent over the medium term.
“We see no reason why revenue growth should not remain above 20 per cent also in the coming years as the group continues to take market share mainly from the banks,” said analysts at Numis. “Wise is a profitable and cash generative disrupter of a huge market.”
Wise has faced a number of challenges over the past year. Its shares are down close to 25 per cent from its listing, suffering due to the market sell-off that has hit other fintechs.
In June, it was revealed that the Financial Conduct Authority was investigating Wise chief executive Kristo Käärmann over deliberately defaulting on tax payments, and in August, an Emirati regulator fined a Wise subsidiary $360,000 over failures in its anti-money laundering controls.