(Bloomberg) -- TransferWise Ltd., one of Europe’s largest fintech startups, introduced a multicurrency online bank account that has reached more than $1 billion in deposits, marking growing demand for the company’s financial services.
Though it’s mostly small businesses that use the service today, the company is seeing more large businesses "start to use the same products that consumers and small businesses have already adopted," said Kristo Kaarmann, TransferWise Chief Executive Officer, in an interview with Bloomberg Television.
London-based TransferWise got a big boost earlier this month when it became the first non-bank to get access to a settlement account in the Bank of England’s Real-Time Gross Settlement system. The company, which is profitable, cuts costs by going directly to the BOE, rather than working through retail banks to process payments. It’s also able to significantly undercut retail banks on foreign exchange fees, eating into a lucrative revenue stream enjoyed for years by more traditional players.
"Startups get the same access to the payments system that banks do," said Kaarmann. "The cost of going directly through the bank of England is about 30 times cheaper than I was able to negotiate with the commercial banks in 2013."
Seven-year-old TransferWise started as a peer-to-peer international money transfer service that has since expanded into more banking services. The "Borderless" account rolled out last year, allowing small businesses and freelancers to hold money in more than 40 different currencies.
It links to local bank account numbers in the U.K., U.S. and Europe, allowing customers to receive and pay funds in those locations without paying international transfer and foreign exchange fees.
TransferWise, which holds a significant portion of the currency flowing through the account, is also rolling out debit card for customers to spend cash overseas.
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