Santander launches UK money transfer app PagoFX to take on TransferWise and other fintechs – TechCrunch


An internal Santander memo leaked in 2017 likely set the wheels in motion. Supposedly written by the bank’s chief innovation officer, the missive warned that much of the Spanish incumbent’s profits were at risk – especially those generated by international money transfers – due to the growing success fintech challengers, such as TransferWise, headquartered in London.

Fast forward three years, and today Santander is launching a standalone money transfer app, presumably in an effort to avoid the pitfalls of the innovator’s dilemma. The new proposal is open to Santander and non-Santander clients and was developed by a team working largely outside the bank – a startup within a multinational corporation, if you will – and has grown to around 50. team members working across Madrid. , London and Brussels.

Dubbed ‘PagoFX’ and first launched in the UK, the mobile app allows anyone with a UK debit card to send money abroad at claimed mid-market exchange rates. and with low transparent fees. In addition, it offers “bank-level” security and customer support via in-app chat, web and email.

During a virtual press briefing, Pago’s Marketing Director, Victoria Yasinetskaya, explained that Pago’s unique positioning is that it effectively offers the best of both worlds: banking-level security and trust (the app is co-branded with Santander) combined with the competitive pricing, convenience and experience of a modern fintech solution. The idea is that a segment of customers always trusts an incumbent bank more than a challenger, and therefore an autonomous money transfer application supported by Santander can find a place in the market.

During the same press conference, Pago CEO Cedric Menager explained that PagoFX is essentially an open-market version of Santander’s existing international money transfer service “One Pay FX”, which offers transfers. international companies to existing Santander customers in various countries in Europe and the Americas. . He also revealed that Pago’s team was primarily made up of big tech and fintech, with various team members having worked at companies such as Amazon, PayPal, and Intuit, and a number of anonymous startups.

On the price, and without making a forensic comparison, PagoFX appears to be broadly competitive with the challengers, but not necessarily the cheapest, depending on how you like the payment method (e.g. card vs bank transfer) or the speed.

“The transfer of money to the euro area, Switzerland, Norway, Sweden and the Czech Republic represents 0.70% of the amount sent. For transfers to the United States, Poland and Denmark, the charge is 0.80% of the amount sent, ”explains Pago. (At launch, however, fees are waived on transactions up to a limit of £ 3,000 per user to help customers during the coronavirus crisis).

Statement from Ana Botín, Executive President of Banco Santander Group (who reportedly gave the project the green light after seeing a demonstration of TransferWise by her son): “PagoFX makes it easy to transfer money internationally, at low cost. cost, and with the security and peace of mind of a regulated entity backed by an international bank. This is a unique proposition and we hope it will help many people and businesses. It leverages our world-class technology and talent to deliver a new, highly relevant service to everyone in the open market ”.

Meanwhile, I asked two UK fintech money transfer competitors for comment.

“It’s great to see a large legacy financial institution moving to give clients a better deal as they catch up with the fintech industry,” Azimo co-founder and chairman Michael Kent told me, on Whatsapp. “By improving their product and bringing the prices closer to ours and other digital players, they can finally save their customers money at an uncertain time when everyone is watching pennies and pennies.”

He also pointed out that, as it stands, Pago is not the most direct competitor as it does not cover developing and emerging markets, which is Azimo’s main corridor.

In a statement given to TechCrunch, Kristo Kaarmann, CEO and co-founder of TransferWise, said: “Banks and brokers have misled customers about the true cost of international payments for decades, advertising transfers as ‘free’ or “0% commission. ‘then adding a large mark-up on the exchange rate. But there are promising signs that PagoFX signals a more transparent approach from Santander. If so, this is proof that the transparency and low prices we pioneered are fast becoming the new industry standard as customers demand better service ”.

Kaarmann also issued a warning to existing Santander customers regarding the exchange rate offered to them in existing Santander banking applications. “While it is necessary to download PagoFX separately to ensure transparency, customers using Santander’s standard service will continue to run out of changes,” he says.

His argument is that PagoFX, like One Pay FX before it, will only benefit the most price conscious consumers. “We urge Santander to go further and adopt full transparency on all of their international money transfer services as a standard, not just on specific products and currency routes,” he adds.

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