Banco Santander has launched a cross-border payments app PagoFX in the UK, taking on the might of rival fintech unicorn TransferWise.
PagoFx has been in the works for some time and will allow UK residents with a debit card issued by any UK bank or financial institution to send money aboard using just their smartphone.
The product will be launched into other European countries this year, with the expectation that it will be available in 20 markets within the next four years.
The payments can currently be made in selected currencies from the UK to the US, the eurozone, Poland, Switzerland, Norway, Denmark, Sweden, and the Czech Republic.
The plan is to introduce further currencies and payment options in the short term, providing a direct threat to TransferWise as mentioned.
Ana Botín, Group executive chairman of Banco Santander made a statement: “PagoFX makes it possible to transfer money internationally easily, at low cost, and with the security and peace of mind that comes from a regulated entity backed by an international bank.”
“This is a unique proposition and we hope it will help many people and businesses. It draws on our world-class technology and talent to deliver a new and highly relevant service for everyone in the open market”.
It was rumored that the idea of PagoFX came from Botín’s son showing the abilities of TrasnsferWise to his mother.
PagoFX is operating as an autonomous fintech start-up with more than 50 people in Madrid, London, and Brussels. It has even attracted talents from several big tech companies, such as Amazon, PayPal, and Intuit.
Kristo Kaarmann, CEO and co-founder of TransferWise, says: “Banks and brokers have been misleading customers about the true cost of making international payments for decades, advertising transfers as ‘free’ or ‘0% commission’ then adding a high mark-up on the exchange rate.”
But Kaarmann also has some doubts about the emerging competitor services. “If it’s necessary to download PagoFX separately to achieve transparency, customers using Santander’s standard service will continue to be short-changed”
“It’s great to see a large legacy financial institution moving to give customers a better deal as they play catch-up with the fintech sector,” Azimo co-founder and Chairman Michael Kent told to TechCrunch.