TransferWise, one of the fintechs that have challenged old-school banking models for international transactions, is entering a new phase that adds geographies and different markets for its account alternative.

Central to that is a "borderless" account, which enables small businesses to handle transactions in multiple currencies in different countries. TransferWise predicts that by adding its borderless account, plus a payment card, for consumers, it can attract a new group of users through its discount fees that are part of a strategy to eventually charge nothing for transfers.

"We say it's super cheap and super fast ... it will help anyone that's across borders basically for an extensive amount of time," said Matt Briers, CFO of the London-based TransferWise. "It's easy to get a job overseas and anybody can travel overseas, but it's hard to get money into a bank account without first sending it to an account back home and then sending it to a new account overseas, and paying fees on currency charges."

Matt Briers, CFO of TransferWise.
Matt Briers, CFO of TransferWise.

The company will introduce its consumer-direct borderless account in early 2018.

TransferWise is competing in a hot market for technology companies that can take costs out of cross-border payments by using technology to support quicker execution and avoid currency and correspondent banking fees. The next phase of this wave is a diversification arms race as the early advantages of simply offering a digital solution begin to wane.

"Gig economy" player Tipalti, for example, is pursuing larger businesses with a mix of digital payments and integrations with merchant services and ERP systems. Flywire is expanding its tuition payments business to new markets and new types of payments. And software companies such as Currency Cloud are targeting banks with an API to facilitate the deployment of cross-border payments technology.

In addition to Mastercard Send and Visa Direct also being options to deliver cross-border payments, there's a crowded market for both general remittances and gig-economy mass payment distributions, according to Sarah Grotta, director of debit and alternative products advisory service at Mercator. "TransferWise would be joining the ranks of Payoneer, HyperWallet, PayPal and Tipalti, among others," Grotta said.

The market's attracting lots of investment, such as JPMorgan Chase's acquisition of WePay and Stripe's huge valuation of more than $10 billion.

In addition to developing a card and an consumer direct account, TransferWise plans to expand its borderless business account to Asia, Australia and deeper into Latin America—TransferWise brought its service to Brazil in 2017 and plans to add more countries on the continent in 2018. The strategies will take "tons" of engineers, Briers said.

The money for these engineers and added geographic reach will come from a $280 million infusion TransferWise got early this month, a relatively large investment for a fintech in the cross-border space and a nod to TransferWise's becoming profitable early in 2017. "We don't have to use that investment to pay down losses," Briers said.

Instead, the money will go into APIs for new consumer-direct products and easier integration for larger businesses as TransferWise seeks to go up market. "These larger businesses also are making more frequent smaller payments across borders," Briers said.

The company will also double the size of its Singapore hub to reach new Asian markets, though it remains committed to London as its headquarters — there have been rumors in the past that the Brexit vote and U.K.'s departure from the European Union would prompt the company to move offices outside of London.

"The vast majority of our businesses and employees are actually outside of London," Briers said, adding that any fallout from Brexit would not impact its business.

Cross-border payments are a "huge" market, according to Gareth Lodge, a senior analyst for Celent.

"The growth in competition will drive lower costs but also innovation, which, while there will be winners and losers, will ultimately be a better market," Lodge said. "It's one of the reasons the World Bank has highlighted it as one of its key areas of focus."

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