TransferWise Ltd., the London-based international money transfer service that is considered one of Europe’s more promising financial technology startups, is lowering the fees it charges to send money from the U.K., the company said Monday.

The move comes at a time when TransferWise is facing growing competition from a number of copycat international payments platforms as well as banks and traditional money transfer businesses like The Western Union Co., some of which have lowered their prices to become more competitive with TransferWise.

Kristo Kaarmann, TransferWise’s co-founder and chief executive, said in an interview that competitive pressures were not behind the price drop. Instead, he said, TransferWise was trying to fulfill its founding vision of moving toward a system where international bank transfers were free. “There is no reason that sending money from a bank account in London to one in Aberdeen should be so much cheaper than sending money from London to Paris,” Kaarmann said. He said that from a technical standpoint, sending an email was more difficult than transferring money between bank accounts, so why should international payments cost so much.

Kristo Kaarmann, CEO of TransferWise
Kristo Kaarmann, CEO of TransferWise

Kaarmann, who took over as CEO from co-founder Taavet Hinrikus in July, acknowledged that charging zero fees was not a sustainable business model. But he said that the company wanted to move as far in that direction as it could.

Founded in 2010, TransferWise announced in May 2017 that it became profitable for the first time "during the previous calendar year." It said it would continue to operate in the black despite the lower fees. The company has raised more than $117 million in venture backing so far, with its last funding round, in May 2016, valuing the company at $1.1 billion.

TransferWise has not yet filed its financial statements for the tax year ended March 2017. The company lost 17.3 million pounds on revenue of 27.9 million pounds during tax year 2016 according to the latest account available at U.K. business registry Companies House.

The company said in a blog post Monday that it was dropping fees between 7 percent and 50 percent, depending on which country the money was being sent to. The fee for sending money from the U.K. to either the Euro currency zone or Switzerland is being cut to 35 basis points from 50 basis points. The fee for sending money from the U.K. to the U.S. will be 40 basis points, down from 50 basis points. And the fee for sending money from the U.K. to Australia is falling from 70 basis points to 45 basis points.

The company also said it was dropping the minimum fee it charges to send money from the U.K. to 50 pence from two pounds. It said the old minimum charge made it too expensive to send small amounts of money.

But the company said it was raising prices on transfers from the U.K. to Japan, Poland, Hong Kong, Bulgaria and Colombia. It said these price increases were necessary to make these currency routes profitable enough to keep open.

Competing online foreign exchange businesses have been critical of TransferWise’s marketing claims and low fee structure, saying that the company is not transparent about whether it acts as a principal agent in foreign currency transactions or about how it mitigates its own foreign exchange risk.

TransferWise also said Monday it was lobbying the British government to create a flat cap on the interchange fees credit and debit card providers charge, something which some other European countries, such as Spain, have done. Last year, most U.K. card providers increased the amount they charge from a flat 50 pence per transaction to a percentage of the total transaction value. Kaarmann said the company has been encouraging customers to do bank-to-bank transfers, which it can process for less, rather than using their credit or debit cards.

Bloomberg News