London Stock Exchange-listed FinTech giant Wise (formerly TransferWise) aims to close gap in cross-border payments in Malaysia as it continues its effort to expand its businesses in the Asia region.

“The domestic payments system in Malaysia has grown by leaps and bounds in the last decade, thanks to innovations in real-time payments infrastructure like ‘DuitNow’ and the emergence of digital-first payment methods like e-wallets,” Wise Malaysia Country Manager Lim Paik Wan told TechNode Global in an interview. “Domestic digital payments today are convenient and fast, but cross-border payments, however, still lag behind in terms of cost, speed, convenience and transparency. Our focus is on solving the cross-border payments problem as we see a gap in the market for a low-cost, fast, easy and transparent way for people in Malaysia to manage their international transactions.

Although Wise did not apply for the digital banking licenses in Malaysia and in Singapore, the FinTech firm is looking to expand its businesses in these two countries and regionally.

On Wednesday, Hong Kong’s virtual bank ZA Bank and Wise has jointly announced a partnership to offer low-cost and quick international money transfers to Hongkongers. This partnership marks two firsts: ZA Bank becoming the first bank in Hong Kong to provide international money transfers with no exchange rate mark-ups or hidden fees, as well as Wise Platform’s launch in Hong Kong with ZA Bank as its first neo-bank partner in East Asia.

Earlier this month, Wise announced that it has received a capital markets services license in neighboring Singapore, from the Monetary Authority of Singapore (MAS), which will enable the firm to bring its new investment product, Assets, to Singapore in the coming quarters. Currently available in the UK, Assets gives Wise business and personal customers more choices about how their money is held, and potentially earn a return on their money in over 50 currencies.

Last month, Wise also said it is bolstering its Asia ambitions, with the company on track to hit over 400 employees in Singapore by the end of 2022, doubling its team here since the start of the year.

Co-founded by Taavet Hinrikus and Kristo Käärmann, Wise launched in 2011 under its original name TransferWise. It said it is one of the world’s fastest growing, profitable tech companies. Currently, 13 million people and businesses use Wise, which processes over £9 billion ($10.72 billion) in cross-border transactions every month, saving customers over £1 billion ($1.19 billion) a year.

Wise, one of British largest and best-known FinTech unicorns, came into the limelight last year when the money transfer firm opted to list in London through a direct listing, a rare method of going public pioneered by music streaming firm Spotify in the US in 2018. Rather than raising money in an IPO, Wise’s private backers are selling their existing shares to the public, CNBC reported.

Wise’s early investors include Peter Thiel’s Valar Ventures and Andreessen Horowitz, among others. Wise, which makes money through cross-border transaction fees, has been profitable since 2017, according to earlier reports. In its 2021 fiscal year, the company doubled profits to £30.9 million ($42.7 million) while revenues climbed 39 percent to £421 million. Trading at £616.6 per share, Wise has a market capitalization of £6.32 billion at the time of writing.

Meanwhile, in the interview with TechNode Global, Lim also shared why Wise’s services would be appealing to Malaysians, the payment firm’s strategy to expand further in the country and the challenges it faces.


Below are the edited excerpts:

How do consumers benefit from the rise of multi-currency accounts?

Wise is a global technology company, building the best way to move money around the world. Co-founded by Kristo Käärmann and Taavet Hinrikus, Wise launched in 2011 under its original name TransferWise when our founders realized how much money it costs to transfer money between the UK and Estonia. It was here that Wise’s mission; money without borders – instant, convenient, transparent and eventually free, was born.

The Wise account is the most universal account allowing people to send, spend and receive money like a local anywhere they go, making it easier than ever to live a global lifestyle. It offers instant, affordable money transfers at the mid-market rate to 80 countries, the ability to hold more than 50 currencies in a multi-currency account and an accompanying debit card to spend in more than 150 countries.

Another feature of the Wise account is the ability to get bank details for the UK, Eurozone, New Zealand, Singapore, The US, Canada and more. With just a few clicks, and without needing a local address in any of those countries, Malaysians can start receiving payments like a local from others in those countries. The main benefit of having a Wise account over a traditional bank account is being able to transact without foreign transaction fees or unfair exchange rates.

With Wise, users always get the real, mid-market exchange rate and low fees across all our features.

The Wise account is game-changing because when you look at the current offerings in Malaysia, it’s often costly, difficult, slow, and non-transparent whenever you need to transact in another currency.

This is where Wise stands out as an account that works easily for anyone that needs to transact in multiple currencies. So, whether you work or have family abroad, pay for overseas mortgages, shop online at international stores, a traveler, an international student — Wise lets you manage your life between countries and currencies with financial ease in a low-cost, convenient manner.

When shopping using foreign currency, how do users get to track hidden fees and mark-up exchange rates? What is Wise’s approach to help Malaysians take control of their finances?

People are often unaware of the hidden charges associated with foreign currency transactions. Consumers think they’re getting a better deal than they actually are, or they don’t realize how much costs they pay for exchange rate mark-ups. With foreign currency transactions, there are typically two costs:

a. The upfront fee (the advertised cost). Fees vary but can often be portrayed as low transaction fee or even “free international transfers”. But be aware that the upfront fee may not represent the total cost of the transfer.

b. The exchange rate (the hidden cost). When you look up an exchange rate on Google, you are shown one figure: the mid-market exchange rate. This is the mid-point between the “buy” and “sell” rates on the global currency markets. The mid-market rate is considered the most fair and the “real” exchange rate and it’s the same one you will find on finance authorities like Reuters or Google.

Banks and other service providers are not obligated to use the mid-market exchange rate to convert your money — in fact, many usually don’t. Often, you will find that an undisclosed markup has been added to the exchange rate. The difference between the rates result in a hidden fee, costing people extra unknowingly when they send money.

Up to £150 billion ($177 billion) is lost globally in hidden fees on foreign currency transfers yearly, which is an enormous problem and this is primarily due to the low awareness about costs associated with foreign currency transactions (transaction fee and marked up exchange rate).

An independent report from Edgar, Dunn and Company, with research undertaken in January 2021, shows that over £150 billion is paid in fees to traditional banks each year. These fees are either extracted through an exchange rate mark-up or a rate mark-up plus additional fee. The same research shows that only 4 percent of surveyed bank customers understand what they are being charged in these transactions.

In Malaysia, our study revealed that Malaysians had spent MYR10.5 billion ($2.29 billion) in total card fees (card ownership and miscellaneous fees, transaction fees and exchange rate margin fees) when shopping overseas from 2015 to 2020 and MYR1.5 billion ($327.8 million) was paid in transaction fees and hidden exchange rate markups yearly when shopping overseas, based on yearly average calculated from the total amount on card transaction fees and exchange rate margin fees only on overseas card spend from 2015 to 2020.

Wise doesn’t markup the exchange rate. We use the mid-market rate which anyone can look up on Google and Reuters, always show our fees upfront and only charge customers a low, upfront fee.

What is Wise’s targeted segment in Malaysia? What opportunities Wise see in Malaysia?

Wise customers are anyone who needs to spend, send, receive and manage money in multiple currencies. For example, we would see expats who live in Malaysia needing to send money back home. We would also have locals who may have lived overseas previously, or have family living abroad, and have a need to send or receive money in multiple currencies quickly and cheaply.

There are also people who often shop from international sites using Wise, as well as avid travellers who need a low cost, transparent way to make purchases while abroad.The domestic payments system in Malaysia has grown by leaps and bounds in the last decade, thanks to innovations in real-time payments infrastructure like ‘DuitNow’ and the emergence of digital-first payment methods like e-wallets.

Domestic digital payments today are convenient and fast, but cross-border payments, however, still lag behind in terms of cost, speed, convenience and transparency. Our focus is on solving the cross-border payments problem as we see a gap in the market for a low-cost, fast, easy and transparent way for people in Malaysia to manage their international transactions.

What are the challenges expanding in Malaysia and how to address them?

One of the biggest challenges is hidden fees awareness. Because foreign exchange markup is rarely stated, we call this the hidden fees problem and even have a price comparison tool on our website for customers to know what it should really cost. Our teams also work hard to understand customer behaviour and develop campaigns and content that bring awareness to this problem so people can make informed choices on what’s right for them.

Secondly, continuing with the theme of understanding customer’s needs is making sure our product is relevant for local needs. Our users expect the best experience with sending, spending or receiving foreign currencies, but the way they use us can differ slightly based on their location. This is especially crucial in Southeast Asia, a region that is incredibly diverse in language, culture and technology adoption. For example, can we make prices even cheaper? Can we make the customer journey even more seamless? How should we make payments move faster? We’re always trying to improve our product and the customer journey that’s relevant to the local context.

To achieve this, we need to have a good understanding of the local user’s needs as well as the local market knowledge. When you’re committed to a market, it’s important to have boots on the ground which enables us to work smoothly with local partners and regulators to unlock ways we can develop relevant solutions that make a real impact on customers’ lives. So for example, one way we’ve done this is to build partnerships to integrate with ‘DuitNow’ to make it easier and faster for people in Malaysia to receive money from abroad.

Besides Malaysia, which are the markets Wise operates in within Southeast Asia and Asia? What other markets Wise plans to expand into? What’s Wise strategy for expanding into new markets?

Wise’s mission is to build money without borders — instant, convenient, transparent and eventually free. The problem of high fees, hidden exchange rate markups, delays and fine print on cross-currency transactions is universal, and our focus is on solving this problem for everyone, everywhere. Within Asia, people from Malaysia, Singapore, Hong
Kong, Japan and India can now use Wise to send money abroad.

We think of expansion across two dimensions:
● Launching in new markets: There are still a number of markets where we see demand for better cross-border services. Bringing Wise there involves working hard to secure the appropriate licenses to do so, including working with local regulators and partners, in order to bring our services to the market.
● Bringing new features to existing markets: Wise began 11 years ago as a remittance service for consumers. Since then we have grown to add a multi-currency account and accompanying debit card, which we launched in Malaysia in December 2021! We also work hard to ensure our product is relevant for local needs and explore ways to localise features. In addition to serving consumers, Wise also serves businesses through Wise Business, the account for business customers to grow globally without the high fees and headache of a traditional bank. We also built Wise Platform, our infrastructure which enables banks, financial institutions and enterprises like Shinhan Bank, Aspire, and Xero to offer their customers world-class cross-border services.

Wise Business and Wise Platform are products we continue to build on, in addition to bringing them to even more places around the world, including Malaysia (where it’s not yet available).

How is Wise different from other FinTech firms such as Airwallex which provide similar services? How does Wise differentiate itself? What is Wise’s competitive advantage?

For the most part, I’d say that the global banking network we’ve built to move money across the world cheaply, quickly and conveniently is what sets us apart. This has allowed us to make a significant impact on the speed, price, convenience and transparency of moving money around the world. In addition to serving consumers and businesses, our payment rails also powers the infrastructure of banks and financial institutions. For example, Monzo in the UK, Shinhan Bank in South Korea, and Aspire in Singapore use Wise Platform (our infrastructure offering for banks and non-banks) to offer their customers cheaper, faster, and more transparent cross-border payments.

With more digital banks/challenger banks coming up in Malaysia and Southeast Asia, what is Wise’s view on the FinTech space in Malaysia and in Southeast Asia?

Competition and variety in financial services are always good things, so it’s great to see both incumbents and new players innovate to respond to customer needs and make their services better. Within the cross-border payments industry, it’s a massive space expected to hit $156 trillion this year according to Ernst & Young, and we’re still only scratching the surface with much more to solve for the benefit of consumers.

United Kingdom’s Wise gets licence from MAS for investment product launch