Madrid-based Santander, the world’s 16th-largest bank, is set to roll out PagoFX, a new FinTech spinout intended to compete with cross-border money transfer service provider TransferWise.
“It’s strange to launch in these circumstances, but our mission is even more important today if you think about expat workers who need to send money to their families and need to be sure that money is delivered quickly,” Cedric Menager, chief executive of PagoFX told the Financial Times in a Thursday (April 16) report.
PagoFX was launched in the U.K. on Thursday and will be introduced to other European countries later in 2020. Featuring market exchange rates, fees will be 0.7 percent to 0.8 percent of the transaction total. Fees will be waived through the middle of June on transactions up to £3,000.
Victoria Yasinetskaya, chief marketing officer for PagoFX, said the new FinTech addresses the needs of people who are “sensitive to price” but are more comfortable using a service that is connected to a known major bank.
Ana Botín, executive chairman of Santander, previously told the FT that she became interested in launching a new money transfer platform when she saw that her son used a competitor’s service and was able to move money faster.
Santander had been considering a FinTech payments platform but intended to launch using a blockchain technology developed by Ripple, creator of the U.S. XRP cryptocurrency. Instead, it introduced One Pay FX in 2018, a blockchain service for existing Santander customers.
Menager said PagoFX was “inspired by” One Pay, which the bank ultimately decided against using for its open-market business.
PagoFX’s fee structure is similar to Transferwise’s “fast and easy” rates, but more costly than its less expansive, slower products. Launched in 2011, Transferwise is Europe’s most valuable FinTech and is known for charging much lower rates than mainstream banks or specialty money transfer services.
Last month Santander expanded its One Pay FX international payments system to include Mexico. One Pay FX is based on Ripple’s RippleNet tech, but it’s independent from XRP, and it doesn’t need the coin to function.