Santander has launched a standalone fintech designed to take on money transfer businesses such as TransferWise, offering the service free for two months to attract customers, including those affected by the coronavirus.
Cedric Menager, chief executive of the new business — named PagoFX — said: “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.”
PagoFX opened to customers in the UK on Thursday, and will be rolled out to other European countries later this year. It will offer market exchange rates and waive fees on up to £3,000 of transactions per user until mid-June. From then onwards it will charge a fee of between 0.7 per cent and 0.8 per cent of the value of each transaction.
Ana Botín, executive chairman of the Spanish bank, previously told the FT that she wanted it to develop a new money transfer business after seeing her son use a rival service to more quickly transfer money into Spain.
PagoFX’s pricing structure is similar to Transferwise’s most popular “fast and easy” rates, though it is more expensive than Transferwise’s cheapest — but slower — products. The UK start-up has become one of Europe’s most valuable fintechs since its launch in 2011 by charging much lower rates than those historically charged by banks or specialists such as Western Union.
Despite the growth of TransferWise and other start-ups like Azimo and WorldRemit, PagoFX chief marketing officer Victoria Yasinetskaya said the company saw a gap in the market for customers — especially older people — who are “sensitive to price” but feel more confident using a service that is backed by a major bank.
Santander previously intended to roll out a payments system that used blockchain technology developed by Ripple, the US company that created the XRP cryptocurrency. It launched a blockchain-based service for existing Santander customers called One Pay FX two years ago.
However, although Mr Menager — who also worked on One Pay — said PagoFX was “inspired by” the previous effort, it decided against using the much-hyped tech for its open-market business.
Mr Menager declined to comment on how much the bank had spent developing PagoFX. The Spanish bank last year pledged to invest €20bn in new technology between 2019 and 2022, and the latest launch follows other recent initiatives like the purchase of a majority stake in UK fintech Ebury last November.
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