TransferWise Is First Non-Bank To Access BoE Payment System

The Bank of England (BoE) has been very strict with its stance of allowing only UK licensed banks to allow its real time payment systems. That changed this week as the BoE granted access to TransferWise – the first non-bank that was given access to UK payment systems.

TransferWise was established in 2011 with the objective of changing the financial system and challenging banks in the way they do business.

The company was against the ‘hidden fees’ that banks impose on their customers and wanted to change the way financial transactions were carried out.

UK Billionaire Sir Richard Branson and PayPal co-founder Max Levchin are some of the big name investors that have backed TransferWise. UK banks will now face stiff competition from the financial technology company as customers now have the option to process payments via TransferWise and not rely on a bank or third party financial institution. TransferWise now has access to the Real Time Gross Settlement system and will focus on removing all incorrectness from the banking system. The company is reported to process £1.5bn in overseas transactions each month.

TransferWise

TransferWise Expected To Change UK Financial System

BoE governor Mark Carney wasn’t very happy over the fact that new entrants to the UK market would be able to access the real time payment systems. Carey warned in 2017 that these new financial institutions could upset the traditional business model of UK banks as he expected UK customers to flock to companies like TransferWise in order to stop paying these ‘hidden charges’.

Earlier this week, Carney had a change of heart and said that he hoped the increased competition would help reinforce the financial stability of the UK market. TransferWise founders Kristo Käärmann and Taavet Hinrikus were very happy to see their company be given access to the real time payment system and called the decision a game changer.

In a statement, co-founder Kristo Käärmann said

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. Other central banks should be looking to follow the UK’s example.

Craig Tillotson who is in charge of the Faster Payments scheme in the UK said now that TransferWise can access the real time payment system, it was on a level playing field and could challenge the top banks in the UK.

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