Sending money to family or friends is fast in the digital age. Instead of going out to a bank or money-transfer service, it only takes opening an app to send money from your own home — or anywhere in the world.
Wise (LSE:WISE) is one of the firms that makes this really easy, and recently went public. This young firm has quickly grown to become one of the biggest money-transfer companies on the market, and it has a bold strategy very similar to PayPal (NASDAQ:PYPL). But can it be as good of an investment as PayPal was in its early years?
Wise makes its profits from charging transaction fees for transfers, and one reason for its widespread use is that it is very transparent about its pricing. Also, it usually charges a fraction of what banks and other services charge. This has allowed the company to grow quickly.
Wise is pushing into new areas and spreading its message, which should allow it to keep adding more customers. Also, Wise is going into other financial products and services, with banking being one of them. While the company began by only giving money-transfers, it has now given its customers the ability to store their funds in a digital wallet and has allied with banks to give a Wise-branded debit card. Its banking service is unique because it allows users to keep their funds in up to 50 currencies. Wise says this is a “multi-currency account,” and it has been very popular among immigrants and travellers who like to transfer money or spend money in numerous currencies.
Similarities with PayPal
PayPal also begun as a great money-transfer app when it was created over 20 years ago. And similarly to Wise, it went with an aggressive marketing strategy. Among other strategies, PayPal offered its customers $5 to $10 to create an account on its platform — something that has turned into standard practice inside the fintech industry. Wise, meanwhile, has supported the idea of paying customers referral bonuses as a new standard for the industry. The company sure does look like an early PayPal.
Author: Blake Ambrose