Wise Plc – The “Costco of Currency transfers” ?
Investment Disclaimer: This is not investment advice. PLEASE DO YOUR OWN RESEARCH !!!!
AI Disclaimer: This post has been written entirely “by hand”. I do use LLMs as a research assistant but not for generating any parts of this post.
Introduction:
Wise Plc has been on my to do list for some time. A long time ago, part of my professional duty was to monitor and execute (large) international payments and I was always perplexed how slow and cumbersome the process was even for large Financial Institutions. Back then we made the joke that it would be much faster to travel by plane with the cash in a suitcase instead of wiring it through the SWIFT system.
The final push to look deeper into it came when Wise moved into the “Top 10” of my newly created watchlist.
Initially I planned to write a shorter post as a couple of really good write-ups already exist (see appendix), but I had so much fun looking into Wise that I decided to give it the “full treatment” however with a stronger focus on business model, competition and uniqueness.
Here is “the full monty” in PDF form.
And as a special service, the “Song for the write-up”: I need a Dollar – Aloe Blacc
Have fun & please leave your feedback in the comments !!!!
value and opportunity 
Nice write-up – Thank you!
I think you are wrong on p.19. IBKR has by far the highest margins of the companies mentioned (incl. Wise). You may have looked at “wrong” numbers due to their ownership structure (minorities).
Thank you for the good and comprehensive analysis! I also invested in Wise during the last month or so. At the same time I also bought some Interactive Broker shares and I was wondering, why you mention them as an example of cost leadership, but are not invested in the company (at least as far as your public portfolio is concerned). Ok, they maybe are still a bit more expensive than Wise, but they seem to have achieved a cost leadership, that is extremely hard to match or to compete with. Do you assume, IB will not grow as strong as Wise or what is the reasoning? Thank you for your continuous effort…
Thank you for the good and comprehensive analysis! I also invested in Wise during the last month or so. At the same time I also bought some Interactive Broker shares and I was wondering, why you mention them as an example of cost leadership, but are not invested in the company (at least as far as your public portfolio is concerned). Ok, they maybe are still a bit more expensive than Wise, but they seem to have achieved a cost leadership, that is extremely hard to match or to compete with. Do you assume, IB will not grow as strong as Wise or what is the reasoning? Thank you for your continuous effort…
What is the point of Wise if you are from Europe? Any transfer I simulate is extremely costly compared to both my local bank and to Revolut. And I am from a country with a somewhat exotic currency.
The exchange rate is sometimes good but the transfer fee kills any benefit.
As someone else said, Revolut Premium for example is much more competitive. Local banks also have exchange rate happy hours where you can exchange 1500-1500 EUR daily at the interbank live rate.
OK, if they compete with cash remittances, maybe it’s cheaper/better and I am not the target customer.
Wise seems to assume we all pay extremely high fees and are not capable of navigating the banking and neobank systems for maximum personal benefit.
In Germany, local banks do not have rate happy hours. They will “steal” 2-3% in FX conversion of every payment if for instance you pay during a vacation trip in a non-EUR country. Having a Wise Debit card is a great way to save here without paying any monthly fee.
Interesting, thanks and I appreciate your blog.
Well yes, here they also do that for some type of cards. For example, I upgraded my CC from Standard to Gold to get lounge acces and I only noticed after several months that my FX fees were hiked from marginal to 2-3%. So I had to move all my FX moves from my CC to my Revolut Premium debit.
At some point the banks in most countries will catch up and the window of opportunity will close. I feel Revolut is already entrenched but not sure about Wise. That might be anecdotal though.
The interesting aspect is that some of the big banks like Unicredit, Morgan Stanley or Standard Chartered are actually outsourcing FX to Wise. This is also their main growth driver going forward.
Exactly. And if you think about StanChar they have a somewhat exocit customer population (with above avg cross border activity I would guess!)
Hi, nice writeup! Can you please estimate the size of TAM and what market share actually Wise owns ? Thank you
Hi, thank you for the nice writeup. Can you please estimate size of TAM (+how much it is raising) and what market share WISE already own ? Thank you
They show some numbers in their investorpresentation. Total TAM is 30 trn, maybe 1/3 is potentially accessible. Their current run rate is made 170 bn. So there is still a lot of potential to grow.
Thank you. Maybe this deep dive from Hayden Capital (fellow investor of Rob Vinall) is of interest as well:
WISE_Final.pdf
I forgot:
Remittance is typically also “one way”, so a pure Remittance company is not able to set-offpayments against each other and is less a platform and more a “one way financial service”.
I don’t belief that. I went to a Western Union shop last week to learn how that works. I am pretty convinced that they also use a local liquidity pool in the other currrency – otherwise it simply would not work imho
Everyone needs to access liquidity on the other side of the exchange. The big question is if the liquidity comes from outside or your own customers.
As said, I don’t think Wise invented something new. I guess they were one of (or the) first who did it purely online (without local agents). What I meant is “netting” and all the remittance service companies do that.
Check out:
Here’s how a typical international remittance service manages and reconciles funds:
I agree- all the remit co’s use liquidity pools.
Wise having a very large and deep digital float over their corridors allows for better netting than you can do with physical currency. Wise also has direct access to real time networks allowing for faster and cheaper distribution.
So yes other people do it. The nuance here is like many other networks, its not that the concept of a network is hard its building the scale for it to be useful is.
Interesting.
Actually I had a look at the company in the last couple of days as well.
However, I am not sure about your conclusions about stablecoin, check out eg. https://techcrunch.com/2025/01/31/stablecoins-are-finding-product-market-fit-in-emerging-markets/
Stripe also bought a stablecoin infrastructure provider https://stripe.com/newsroom/news/stripe-completes-bridge-acquisition
So in particular for economies with inflationary pressure stablecoins (eg. pegged to USD, EUR) could provide a shadow US or EUR based currency for payment in the country and then maybe one does not need a service like wise imho but a crypto exchange platform instead.
As additional competitor you could also mention card payment service providers (Visa direct, https://corporate.visa.com/en/products/visa-direct.html etc.) – but I did not research their „take rate“
Forgot to mention:
3. I use Revolut probably 2-3 times per day, every day. I use Wise maybe once every 2-3 months.
Great write-up! And thank you for writing that AI disclaimer. So valuable these days.
As a customer of Wise I can say the following:
1. Great service, used them for years also for business account. When I had trouble getting an account, with Wise it was a breeze.
2. Contrary to their claims, they are slightly more expensive than Revolut on currency exchange. I did a live comparison once.
To get cheap currency exchange on revolut, you need to be in a plan with a monthly fee.
Correct, forgot about that. But when you consider what you get for this plan, it’s basically free:
It costs 10 EUR per month and you get a free Perplexity Pro subscription which costs $20 per month (just for that alone it was worth it). Plus you get lots of other perks (Wolt+, Tinder, NordVPN) and free or extremely cheap international wires. It just beats Wise any way you look at it. So no wonder Revolut is exploding while Wise is treading water.
I got a free Perplexity Pro subscription as well. Everyone got that without a Revolut account. Just saying… . I Don’t think that Wise is competing directly with Revolut. And as I mentioned, Revolut doesn’t do the transfers themselves. They have outsourced it to a Wise competitor, I forgot which one.