(LSE:WISE) Wise: Disrupting Cross-Border Payments, But Not Remitly

Thesis

This Initiation Report will read differently than most — as a contrast piece against one of our core positions: Remitly. Remitly consistently generates the most investor questions among our holdings, nearly all of which revolve around Wise — specifically, how Remitly can compete with a company that appears to offer significantly lower fees (Wise’s blended take rate is ~64bps vs. Remitly’s ~2.3%), and whether Wise’s infrastructure is superior.

This confusion stems from a misunderstanding of the differences in addressable markets and infrastructure strategy between the two companies. In our view, Wise and Remitly are structurally focused on distinct customer segments, and competitive overlap — both today and in the future — will remain limited.

We remain bullish on Remitly. Its focused strategy, product simplicity, and alignment with migrant payment behavior create a predictable growth runway and a category-leading product. We also view Wise as a strong business, addressing a broader and more complex opportunity set across consumer, SME (Small & Medium-sized Enterprise), and platform payments. However, while the opportunity is large, the complexity of the business makes revenue growth at Wise less predictable. With the stock trading at nearly 5x EV/Revenue, we believe it is closer to fair value and will wait for a more attractive entry point before considering a position.

We strongly encourage readers who need a refresher on correspondent banking to review the appendix first.

Wise Company Background

Wise (formerly TransferWise) was founded in 2011 by two Estonians, Taavet Hinrikus and Kristo Käärmann, who were both living in the UK but earning and spending in different currencies. Taavet earned euros, Kristo earned pounds—but they each had expenses in the other’s currency. To avoid paying high bank fees and bad exchange rates, they simply transferred money to each other locally, netting out the exchange without actually converting currency across borders. That concept—matching two-way currency needs peer-to-peer—became the foundation of TransferWise.

The original product was built around this P2P netting model, and it worked incredibly well in high-volume, bidirectional corridors like GBP/EUR and GBP/AUD. By avoiding traditional FX altogether, TransferWise could offer rates up to 8-10x cheaper than banks and deliver faster, simpler money movement. This helped it win trust among expats, students, and professionals sending money across borders.

But as the company expanded to more countries and currencies, the limitations of the P2P model became clear. Many global corridors are one-sided—significantly more money flows from the UK to Nigeria than vice versa, or from the US to India than from India to the US. Without sufficient volume in both directions, TransferWise had to begin managing liquidity and holding balances in local bank accounts, buying currencies as needed. This marked a major shift toward a treasury-based model, where the company essentially began operating like a global settlement layer.

In parallel, the company’s product scope began to expand. It launched the Borderless Account in 2017, allowing users to hold and convert between 30+ currencies, receive local account details in multiple regions, and spend via a Wise debit card. Increasingly, users were not just transferring money—they were earning, storing, and spending across currencies. The customer base broadened to include SMEs, freelancers, remote workers, and frequent travelers, and the product began to look more like a neobank than a remittance app.

That shift culminated in 2021, when the company officially dropped “Transfer” from its name, rebranding as simply Wise. The reasoning was strategic and symbolic: the company had grown well beyond money transfers. It was now offering multi-currency accounts, business payments, debit cards, and embedded API services for financial institutions. The new name reflected Wise’s ambition to be the infrastructure layer for global money movement, not just a consumer-facing transfer service.

“Our name catches up with who we’re already building for — a community of people and businesses with multi-currency lives.” – Kristo Käärmann, CEO, 2021

Today, Wise supports transfers to over 160 countries and moves more than £9.9 billion per month. It is one of the few profitable fintechs in the space, with millions of users and dozens of challenger bank partners using its Wise Platform API.

What began as a clever peer-to-peer workaround to high bank fees has evolved into a global financial infrastructure company, with product lines spanning consumer finance, business payments, and embedded B2B services.

Remitly Company Background

Remitly was founded in 2011 with a singular focus: to improve the experience of sending and receiving cross-border remittances, particularly for migrants sending money from developed to developing countries. Unlike Wise, which started by solving FX inefficiencies for globally mobile professionals, Remitly began by optimizing for a very different customer: the migrant worker sending smaller-value transfers home on a regular basis. The product experience, pricing model, and disbursement infrastructure were all designed around this use case.

While Remitly’s transfers are initiated digitally through its mobile app or website, a significant portion—estimated at nearly 20-35%—are still received in cash. That’s because in many recipient markets, banking infrastructure and account penetration remain low. To address this, Remitly built a broad cash distribution network across 140+ countries.

Where Wise has broadened its scope into banking services and APIs, Remitly has remained highly focused: digital remittances for migrants are not a feature of the business—they are the business. That focus has allowed Remitly to out-execute legacy providers like Western Union and MoneyGram in digital, and to gain share in a complex, highly regulated market that few others have successfully scaled. Read our initiation report on Remitly here.

Customer Segments and TAMs

Wise is a far more complex and diversified business than Remitly. As shown below, Remitly’s target customers sit almost entirely within the first bullet under “Cross-Border Remittances – Migrant vs. Affluent,” whereas Wise touches every segment listed — each tied to distinct product offerings and infrastructure demands.

1. Cross-Border Remittances – Migrant vs. Affluent | TAM £2.0 trillion

• [Remitly & Wise] Migrant workers sending money home (e.g., from the US to India or Mexico).
• [Wise] Affluent expats managing property, tuition, or retirement across borders (e.g., a Brit in Dubai paying a UK mortgage).
• [Wise] International students paying for tuition or living expenses abroad (e.g., parents in China sending money to a student in the US).

2. SMBs Needing International Payment Solutions | TAM £12.0 trillion

• [Wise] Freelancers and sole proprietors paying international contractors or receiving overseas income (e.g., a Canadian designer paying a developer in Poland).
• [Wise] Agencies or small consultancies with international clients and vendors (e.g., a UK agency billing clients in Singapore).
• [Wise] Some need API access, batch payments, or built-in invoicing (e.g., a SaaS startup sending 100 vendor payouts monthly).

3. International Travelers – Account Without Borders | £260 billion

• [Wise] Frequent travelers looking to avoid high FX fees when spending abroad (e.g., a French exec traveling weekly to Switzerland).
• [Wise] Digital nomads living and working remotely across multiple countries (e.g., an American working from Bali and Spain).
• [Wise] Short-term tourists using Wise’s debit card for better rates (e.g., an Australian vacationing in Japan).

4. Banks and Financial Institutions Using Wise Infrastructure | TAM £13.0 trillion

• [Wise Platform] Neobanks and digital banks embedding Wise for cross-border payments (e.g., N26 offering transfers via Wise).
• [Wise Platform] Traditional banks avoiding correspondent banking by using Wise’s FX infrastructure (e.g., a regional bank in Canada plugging into Wise Platform).
• [Wise Platform] Fintech platforms offering financial services and needing back-end FX or international payout rails (e.g., a payroll app using Wise for global disbursements).

Infrastructure

Wise

Wise is building a global money movement platform that functions more like an international ACH network than a traditional remittance service. Its goal is to connect directly into domestic payment systems (e.g., UPI in India, SPEI in Mexico, FPS in the UK), country by country. To achieve this, Wise takes on the heavy lift of securing local licenses, opening local bank accounts, and integrating directly with national rails.

Once connected to a local rail, Wise can prefund its account in that market and process transactions as if they were domestic bank-to-bank transfers — enabling near-instant delivery at near-zero marginal cost.

A key feature of Wise’s model is its willingness to front the payout before the sender’s funds have cleared, particularly for lower-value transfers. In these cases, Wise takes on settlement risk, delivering funds to the recipient while the sender’s ACH or bank transfer is still in process to Wise’s account in the sender’s country. This tradeoff allows Wise to deliver instantly, even when using slower, low-cost funding methods.

Wise’s model is structurally disruptive: if broadly adopted, it would disintermediate both banks and card networks from cross-border payment economics, transferring much of that value to the end user. However, scaling this model is constrained by regulatory barriers, the difficulty of establishing local access, and the capital intensity of managing global liquidity.

As of today, Wise has direct access to eight domestic payment systems, primarily in developed markets:

1. European Union / Eurozone: SEPA
2. United Kingdom: Faster Payments System (FPS)
3. Hungary: Settlement Account with Central Bank
4. Philippines: InstaPay
5. Singapore: FAST
6. Australia: RITS
7. Japan: Zengin System
8. Brazil: Pix

In markets where Wise cannot plug directly into domestic rails, it must rely on partner institutions — effectively renting access — which can reduce both margin and speed. In many emerging markets, where government and banking sectors are closely aligned, the likelihood of Wise securing direct rail access remains unlikely.

Remitly

Remitly, by contrast, is optimized specifically for remittances rather than general cross-border money movement. It supports ACH funding but only initiates payout in the recipient’s country once the sender’s funds have fully settled into Remitly’s bank account in the sending country. This makes ACH-funded transfers slower (vs. Wise), as Remitly waits to confirm receipt before disbursing. Unlike Wise, Remitly is generally not pursuing direct rail-level access.

Remitly does use prefunding, but differently than Wise. In many corridors, it prefunds settlement accounts with disbursement partners—such as banks or cash networks—so that funds are ready for quick payout once the sender’s payment clears. With card-funded transfers, this clearing happens instantly; with ACH, it does not.

Remitly’s infrastructure is designed to mirror recipient behavior. Disbursement options are tailored by corridor—including bank deposit, mobile wallet, and cash pickup—and delivery is often supported by local aggregators to reach long-tail endpoints. In corridors where Remitly has direct partnerships with major banks, it may rely on APIs or other direct technical integrations for disbursement.

On the funding side, Remitly encourages debit card usage, which is fast, familiar, and preferred by many migrants. This reduces onboarding friction, especially for underbanked users or those reluctant to enter bank credentials. Because card funding is instant, Remitly can offer “Express” transfers (as opposed to waiting for an ACH pull to clear). This approach introduces a reliance on card networks and interchange fees, which are higher than ACH but support a better user experience.

Remitly’s model is simpler to scale corridor by corridor. As volume increases, it can negotiate better commercial terms with its disbursement partners. Rather than owning the rails, Remitly focuses on user experience, corridor specialization, and leveraging transaction volume to improve unit economics over time. It currently supports transfers to over 100 currencies, compared to only 40 for Wise.

Fee Comparison

A common question we receive about Remitly is why its pricing appears higher than Wise. Many point to Wise’s published blended take rate of approximately 0.64% and compare it to Remitly’s take rate of around 2.3%. However, this comparison misses important context. Wise’s 0.64% figure reflects its entire transaction base — including not just personal remittances, but also SME payments, platform API partnerships, and business FX transfers, which typically carry lower pricing due to much higher average transaction sizes and lower complexity.

Remitly, by contrast, focuses exclusively on consumer-to-consumer remittances, often to underbanked recipients and in corridors where delivery involves mobile wallets or cash pickup — which increases operational cost. Additionally, average send amounts are significantly smaller on Remitly, meaning the effective take rate needs to be higher to support the unit economics of each transaction. Comparing these two rates directly, without adjusting for product mix or transaction profile, is not an apples-to-apples comparison. Below, we present an apples-to-apples comparison across several major U.S.-to-EM corridors, using a $300 send amount — roughly the median transaction size for a Remitly transfer in the U.S.

Note: The below fee panel assumes a fixed $300 total send amount. All fees are included within the $300 — the sender is charged no more than $300. The recipient receives the net amount directly into their bank account. The fee is calculated as the percentage difference between the amount received using the provider and the amount that would have been received if exchanged at the mid-market rate with no fees. All data is directly sourced from providers.

This data makes the competitive positioning between Remitly and Wise clear. Wise is the low-cost, fast option for bank-to-bank transfers in large, digital-first corridors. When funded via ACH, Wise delivers lower fees and faster delivery than Remitly in markets like India, Mexico, and China. For example, in the U.S.–India corridor, Wise delivers instantly with a 1.0% fee, while Remitly charges 1.8% and takes up to six days. Across most major corridors where Wise has local infrastructure, it consistently outperforms on price and speed. The catch is that for Wise to utilize this advantage the funding of the remittance must be done via bank account.

Remitly, by contrast, dominates in cash-heavy and migrant-centric corridors. It supports markets that Wise doesn’t — including Guatemala, El Salvador, and Honduras — and offers fast delivery through card-funded transfers. In these markets, Remitly provides disbursement through cash pickup and mobile wallets, often within minutes. Its reach and payout options are far better aligned with migrant behavior.

Unlike Remitely, Wise is optimized for ACH funded transfers, where it takes on settlement risk and delivers instantly from its prefunded accounts. But Wise loses ground when the sender uses a debit card. In card-funded flows, Wise becomes more expensive and slower — or doesn’t support the corridor at all. Remitly is built for debit card funding, delivering money within minutes across nearly all major remittance routes. This aligns with how migrants actually behave: migrants overwhelmingly prefer using debit cards to fund transfers, as it’s faster, more familiar, and doesn’t require entering sensitive bank credentials.

Marketing & Branding

Wise and Remitly market to very different audiences, and their branding strategies reflect that divergence. Wise positions itself as a provider of borderless banking, multi-currency accounts, and an international financial lifestyle. Its product is built for expats, remote workers, freelancers, students, small businesses, and frequent travelers — not migrants. You won’t see Wise using phrases like “Send money to your family” or running culturally specific campaigns. Instead, its branding is modern, minimalist, and global, appealing to a more financially literate user base that understands FX spreads and values mid-market rates.

Remitly, by contrast, focuses entirely on the migrant use case. It outspends Wise on marketing by nearly 5 to 1, and every part of its brand is optimized to build trust and emotional resonance with migrant communities. Remitly:

• Runs ads in Spanish, Tagalog, Hindi, and other corridor-specific languages
• Uses imagery centered around family, support, and cultural connection
• Partners with cash pickup networks familiar to local recipients

Where Wise emphasizes pricing transparency and global usability, Remitly emphasizes emotional connection, reliability, and corridor-level familiarity. The result is two entirely different brand identities — one optimized for the globally mobile professional, and the other for the migrant worker sending money home.

Conclusion

Wise has built an impressive global network, and its CEO regularly reminds investors that the company still commands only a few percentage points of share in markets where cross-border volume is measured in the trillions. The product is clearly loved by consumers, and adoption among both individuals and businesses continues to rise.

That said, growth in Wise Platform remains difficult to underwrite. Banks generate revenue from FX spreads, and larger institutions typically negotiate favorable rates internally. It’s unclear how much of this volume will realistically shift to Wise, given the economic and strategic barriers to replacing existing treasury flows. While SMEs and consumers may continue to fuel growth, the company already trades at nearly 5x EV/revenue — suggesting the market is pricing in continued penetration from these segments.

In emerging markets, Wise faces structural limits. The inefficiency of EM banking systems and the tight relationship between local banks and regulators offer a layer of protection for players like Remitly. Wise simply cannot enter some corridors at the infrastructure level because it is unlikely to be granted the licenses it needs. Unlike Remitly, Wise is not built or branded for migrants, and until it begins corridor-specific marketing or expands payout options like cash pickup, it’s unlikely to displace a trusted, focused provider in this use case. Migrants are unlikely to switch to save a few basis points — particularly when fee comparisons are opaque due to varying FX spreads and funding methods — and when the trade-off is going from a simple remittance app to a multifunctional finance platform like Wise.

Ultimately, Wise is a well-executed, well-loved product with strong consumer and SME traction. While infrastructure and regulatory constraints remain real, Wise is likely to continue gaining share across its core user base. But the platform opportunity — selling infrastructure to banks and large financial institutions — remains unproven. For now, we view the stock as fairly valued, with execution needed to unlock the next leg of growth.

APPENDIX

Primer on Correspondent Banking

Banks were originally designed to serve local markets—offering services like deposits, lending, and domestic payments. Cross-border money movement was never a core feature of banking infrastructure. Each national banking system operates independently under local regulations, which makes moving money from one country to another inherently difficult. Since banks in different countries can’t interact directly, the global financial system developed a workaround: correspondent banking.

Correspondent banking is a system where banks form bilateral relationships with foreign banks to enable cross-border transfers. These relationships often involve nostro/vostro accounts—where one bank holds deposits at another bank in a foreign currency. When you initiate an international wire transfer, your bank doesn’t typically have a direct line to the recipient’s bank. Instead, the transfer is routed through a chain of correspondent banks, each facilitating part of the transaction until it reaches the final destination.

Here’s how it works:

You ask your bank in the U.S. to send $300 to a recipient in India.

1. Your bank doesn’t have a direct relationship with the recipient’s bank in India.
2. So it routes the payment through one or more intermediary correspondent banks (e.g. JPMorgan, HSBC) that maintain accounts with each other.
3. These intermediaries pass the funds down the chain, via SWIFT messaging, until the funds land at the recipient’s local bank. (You can think of it as a series of ledger transactions, with each banking participant updating its own records and following agreed-upon processes to ensure all ledgers align.)

This process is slow, opaque, and expensive. Each intermediary in the chain may:

• Charge a fee
• Apply unfavorable FX rates (adding hidden spread)
• Delay processing due to regulatory checks or reconciliation windows

As a result, the customer often pays more (5-7% fee) and waits longer—with little visibility into where the money is during the process.

How Remittance Providers Are Replacing It

Fintech remittance providers (like Remitly and Wise) are building infrastructure that bypasses this correspondent banking chain on a transaction-by-transaction basis. Instead of relying on a long daisy chain of intermediaries, these companies:

• Hold local bank accounts in destination countries
• Partner directly with payout networks (banks, wallets, cash agents)
• Prefund local accounts to allow for instant or near-instant delivery

For the customer, it feels like a single-step process: send money and it lands in the recipient’s bank or wallet, often in seconds.

If every remittance globally were routed through platforms like Wise or Remitly, individual correspondent banking transactions would disappear entirely from the user experience. These providers effectively aggregate global settlement into their own systems and make cross-border payments feel like domestic ones.

However, it’s important to note that Wise and Remitly still rely on correspondent banking at the wholesale level. To keep their global liquidity pools balanced, they must:

• Replenish local currency accounts
• Acquire foreign currency in bulk
• Settle net positions across countries

This means they still use correspondent banking and SWIFT rails—but not on a per-user basis. Instead, they do it periodically and strategically, at far lower cost per transaction. The complexity and spread of correspondent banking is abstracted away from the end user, while Remitly and Wise manage it behind the scenes.

INVESTMENT DISCLAIMERS & INVESTMENT RISKS
Past performance is not necessarily indicative of future results. All investments carry significant risk, and it’s important to note that we are not in the business of providing investment advice. All investment decisions of an individual remain the specific responsibility of that individual. There is no guarantee that our research, analysis, and forward-looking price targets will result in profits or that they will not result in a full loss or losses. All investors are advised to fully understand all risks associated with any kind of investing they choose to do.