Access to Australia’s real-time payments system will enable TransferWise to reduce foreign exchange fees and wholesale banking costs.
APRA (Australian Prudential Regulation Authority) has granted TransferWise Australia a licence to PPF (provide purchased payment) facilities, as a limited ADI under the Banking Act.
The only other company to hold a PPF licence is PayPal.
The new licence will enable TransferWise to connect into Australia’s NPP (New Payments Platform), thereby reducing foreign exchange fees and wholesale banking costs. It will also be able to offer a smoother customer experience and more control over its technical integrations.
“By becoming independent and cutting out the middle man, we’ll be able to save our customers even more money and time in the process,” said TransferWise Australia country manager Tim Cameron in an AFR report.
Australian regulators have long been pushing for the big four banks to lower the costs associated with foreign remittances, threatening to impose ‘least cost routing’ by regulatory mandate. TransferWise effectively provides a low-cost alternative to the payment rails major banks use.
Under the new licence, TransferWise will have to hold Tier 1 capital worth AUD 3 million, or 5 percent of total outstanding stored value liabilities, whichever is greater.
Earlier this month, the CFR (Council of Financial Regulators) proposed to replace the PPF product class with a new SVF (stored value facilities) regime, in a bid to simplify the regulatory framework in a way that is conducive to innovation, while providing appropriate consumer protections.
TransferWise also plans to apply for a settlement account with the RBA (Reserve Bank of Australia).
An updated list of all APRA-authorised ADIs can be found here.