Marcus Richards
One of the biggest markets in the Fintech startup space consists of brokerages for offering sending and receiving international payments. This makes sense, considering the direction the business and tech worlds are going in. A lot of tech advancements in the past few years have involved improved ways to pay both vendors and friends. Taking the state of globalisation into account, international payment services are understandably in demand.
If you look for international payment companies in the UK, you’ll find many. You may even get the impression that there are too many, especially if you are considering starting your own. Is it possible that all of these companies are making money?
The question is sound. After all, international payment companies are successful because they offer a cheaper solution than banks. Rather than charging large fees, they take tiny margins or commissions. In order to actually profit, they need to succeed on a massive scale.
What you may not yet know is that the scale is there. This is largely because of the huge migrant worker population and the amount of companies doing business internationally. However, it only serves international money payment companies because of the nature of their customers.
How do customers use international payment solutions?
Looking at who the customers of international payment services are shows only half the story. Depending on the startup, you might find customers from all along the economic spectrum. Migrant workers will be sending small sums of money home every month. Big global corporations, on the other hand, send and receive huge sums of money. Individual investors or international homeowners fall somewhere in between.
But these customers tend to have something in common: they use the service on a regular basis. For many, this means payments every single month. When this is the case, even one individual’s transfers turn a significant profit for the payment company.
Without getting into the sticky details, we can look at an example of how this works. John is a British citizen whose parents hail from and now live in Thailand. His company sends him to work in the US, where they do not have a branch. When they pay him, they send him pounds from a British bank account.
John gets paid £8,000 every month. An international payment company transfers it from the company’s British bank account into John’s American account. John always sends $5,000 from his salary to his parents in Thailand.
These are not huge numbers in the grander scheme of things, and John will only pay about $50 of fees each month to the average international payment company. But because he makes these transfers every month, the profits for the company grow. By the time ten years have passed, the payment company has made $6,000 from that customer alone.
Of course, John falls somewhere in the middle in terms of payment size. Migrant workers are generally sending and receiving much smaller sums of money, but companies who target that market have access to millions of potential customers.
On the other end of the spectrum, companies serving big corporations need far fewer clients in order to make a major profit each year.
The longevity of customer loyalty is not the only reason the best international payment startups are so successful. There is also the ubiquitous opportunity for huge growth.
In what ways do international payment startups grow?
International payment startups are ripe for growth precisely because they are in the Fintech space. Financial services will always be necessary on a massive scale, but in order to benefit from them, companies need to provide a real service. With the potential for new tech innovations as time goes on, Fintech companies are in exactly the right place at the right time.
This is true for global money transfer startups. In addition to the scale at which people and companies send international payments, there is always the opportunity to improve your service. Companies that are able to harness their tech expertise to find new ways to make cheap international payments get a leg up on everyone else.
The more time a company spends working with their client base, the more they understand their customers’ specific needs. The best international payment startups are able to innovate in order to meet those needs, thereby finding new features to add to their service. These additions serve their customers better than ever while providing new sources of income.
In 2022, it is also very beneficial to run this kind of tech company because of the low cost of overheads. For companies like money payment services, the overheads do not necessarily need to be too high. Many big companies only have one physical location where their core team works. Big call centres are no longer necessary, as AI bots can provide better customer service.
Finally, the potential for innovations that will change the world is ever present. Startups which have provided solutions to the 169 million migrant workers across the world have made life easier for so many people. They have impacted the economies of entire countries. Startups in this space are perfectly placed to make the kind of difference that shifts global banking (while making a ton of money).
Companies that find great international payment solutions are therefore in the perfect position to enjoy a lucrative future. There is still so much space for innovation and growth, even with all the startups that already exist in this field.
Let’s take a look at the 5 best international payment startups in the UK.
Top 5 International Payment Startups in the UK
There are some excellent international payment startups already operating in the UK. These include startups which disrupted the banking industry for good.
1. Wise
Wise has the benefit of being an early mover-and-shaker in the international payment industry. While they did not reinvent the wheel – as money transfer companies existed long before Wise (then TransferWise) came along – they did subvert it. They recognized that international payment services did not have the best interests of their customers at heart.
Part of the reason for this was that those companies were not created by their customers. Wise, on the other hand, was founded by people who used international payment services and had become disillusioned with them.
By creating an online platform that was easy to use and extremely cheap, while keeping their pricing very transparent, Wise attracted customers very quickly. They cornered the market early on and have barely slowed down since. They currently have over 10 million customers.
It is debatable as to whether Wise is the best international payment company in the UK. However, they are consistent in their commitment to evolving while not neglecting their core features. They now offer multi-currency accounts, among a variety of other functions that improve the lives of modern international workers.
2. Revolut
Revolut came about a few years after Wise, benefiting from riding on their coattails. However, Revolut is a very different kind of company. More closely resembling a neobank, Revolut targets customers who want to use their money to make money. They offer investment functionality, including the ability to buy and sell commodities and cryptocurrency.
If we were discussing the best international payment companies for customers, Revolut would not make the list. They still have a number of kinks to iron out, including the very real problems that they are not fully regulated and have been involved in AML scandals. However, as a startup they are extremely successful and worth watching.
Revolut has 15 million customers, which is huge for a company only founded seven years ago. The excitement around Revolut goes beyond their quick success. Revolut is not just offering excellent international payment solutions. They are providing a fuller banking experience, innovating so as to offer functionality that most other startups do not.
Revolut is doing exactly what a Fintech startup should do: taking advantage of the huge financial services market while evolving through tech, never resting on their laurels.
3. WorldRemit
WorldRemit is a good example of a startup which managed to stay relevant even when everything changed. Founded in 2009, WorldRemit came onto the scene before TransferWise was even thought of. The market open to WorldRemit was huge and, to a large extent, untapped by modern companies.
WorldRemit’s success came long before they started offering the kind of services they do today. They were up against the big banks at the start of their journey and simply provided a better, more affordable payment experience. Wise came along and started doing essentially the same thing but better and more innovatively.
The fact that WorldRemit is still one of the most successful money transfer companies shows that they knew when to make the shift. Longevity is not often a good thing in today’s startup world – look at how Zoom overtook Skype, simply because Skype was… old. WorldRemit is still not old, but the company could easily have been lost behind the sheen of the many new innovative startups.
4. Currencycloud
Another company that managed to evolve and stay relevant long after others fell by the wayside is Currencycloud. Founded in 2007, the Currencycloud of today is extremely different from the Currencycloud fifteen years ago. They succeeded by becoming B2B-focused, offering Fintech startups technology to disrupt in this space.
Currencycloud is still supporting Fintech companies in the international payment space from behind the scenes, innovating excellent technology that improves the entire experience. Recently, they became the first non-bank to introduce payments-tracking technology. This allows clients to track international payments as they would an Amazon package.
5. Starling Bank
Starling Bank is a relative newcomer that has become a major challenger in the digital banking scene. They mostly offer products related to current and business accounts. In terms of international payments, this is not their niche. However, they do offer exchange rates that are actually better than those offered by Wise!
Starling Bank is worth mentioning because of how successful and effective its innovative and disruptive approach to banking has been. They are doing Fintech right, providing services that everyone needs in a way that actually excites customers. The best tech is exciting, and companies like Starling Bank are able to bring that into a field which, to most people, is somewhat boring.
There is still a ton of space in international payment services for new startups. This is a huge industry with incredible scale, and it is only growing. While there are already many excellent companies in the UK, a new startup run by a team with innovative ideas and brilliant execution can be hugely successful.
