Bloomberg Línea — Wise said it is increasing its remittance fees starting in October on routes to send dollars from the US to markets such as Mexico and other countries due to volatile markets. The fintech (formerly TransferWise), also told Bloomberg Línea that it is awaiting resolution for the legal action it brought in a British court against former partner MS Bank in Brazil.
The company, a player in the growing global remittance market says the macroeconomic conditions make it more expensive to buy and sell currencies, so it needs to raise its transaction fees to cover those costs. Wise also said it continues to invest in its infrastructure and, therefore, it is reflecting it in the price today, “to help us bring down the cost of moving money in the future.”
The company said its fees are increasing to send money from the United States, Swiss, Canada, Japan, Hungary, Malaysia, Turkey, India, Sweden, Poland, Czech Republic, Denmark, Norway, and Romania in any currency. It is also raising the fee to send money to the US, India, Thailand, Philippines, Indonesia, Malaysia, Mexico, Poland, Pakistan, South Korea, Vietnam, Morocco, and Hungary from any currency.
“We know that this isn’t great news, and we’re sorry about that. We’ll try to bring our fees back down as soon as we can,” said Wise, in a statement.
Also on Monday (August 2), JP Morgan Chase & Co sold 2,660,669 shares in the UK-listed company. Now, JP Morgan owns 0.93% of Wise, dismantling its position to 9,566,255 shares, according to data from the Bloomberg terminal.
The main shareholders are still co-founders Kristo Käärmann and Taavet Hinrikus, both from Estonia, with 18.16% and 10.1% of the outstanding shares, respectively, according to the Bloomberg terminal. Another relevant shareholder is VC fund Andreessen Horowitz, with 8.99% of the stock.
The case Vs MS Bank
In 2021, Wise got into friction with Brazilian foreign exchange correspondent MS Bank, which at the time went to the press saying that the fintech had alleged remittance malpractice.
However, in a message sent by e-mail, Wise told Bloomberg Línea that there is a legal action going on in the High Court of Justice, Business and Property Courts of England and Wales “for the return of approximately £6.7 million ($8.15 million) belonging to Wise and being wrongly withheld by MS Bank S.A. Exchange Bank.”
According to Wise, “these funds correspond to transactions initiated by customers who used the service to send money from Brazil before the termination of the contract by MS Bank on February 18, 2021. Wise honored these payments to beneficiaries, but MS Bank improperly kept these funds until the present moment.”
MS Bank has ended its partnership with Wise. Late last year, the Supreme Court notified the Curitiba-based company of a lawsuit filed by Wise in the UK. “This is a letter rogatory through which the Justice of the United Kingdom requests that MS Bank be notified to answer the lawsuit in progress in the High Court of Justice and Crown Court of England and Wales,” Bloomberg Línea found out.
Increasing headcount in Brazil
Nevertheless, against the tide, Wise said it aims to increase its current headcount in Brazil by four times by the third quarter of 2023.
For this, Wise moved its São Paulo office to an entire floor in a WeWork building in the Avenida Paulista region. The company said it will hire for a variety of functions, including compliance, fincrime (an area that takes care of fighting crimes and financial fraud), customer service, and operations.
“Expanding Wise’s portfolio in Brazil was essential to expand our business in the country, one of the priority markets for the company. With the increase in the team, we want to better meet the specific demands of our growing Brazilian client base”, said Pedro Barreiro, Banking and Expansion leader at Wise in Brazil, in a press statement.
Present in Brazil since 2016, Wise has been expanding its product offering to Brazilian customers.
In December of last year, Wise launched the possibility of maintaining a balance in reais for its customers and an international debit card, available in physical and digital versions. Wise says on March 2022, more than 130,000 cards had already been delivered to Brazilian customers.
--This article was corrected to reflect the right exchange of British pounds to US dollars of the amount Wise is requesting from MS Bank, both in the headline and in the 8th paragraph.