Money Transfer

Neon Customers Tap Cross-Border Payments Thanks to Wise Platform Integration

The partnership between Swiss neobank Neon and cross-border payment specialist Wise is providing the neobank’s customers with faster, lower cost and more transparent international payments, allowing them to send move in more than 40 currencies around the world right from within the Neon app.

Since launching in 2020, the capability has been used by over 20,000 Neon customers, or about 15% of the neobank’s clientele, and usage is growing exponentially, Wise said in a case study.

Neon co-founder Julius Kirscheneder said the company chose Wise because of the company’s low-cost and high efficiency solution which allows for fast settlement times and a simply integration process.

Currently, more than 60% of cross-border transactions going through the Wise Platform on the Neon app are near instant and get settled into the recipient’s account in less than 10 minutes, Wise said. That’s a considerable improvement given that remittances typically take several days to reach the intended recipients because funds need to pass through multiple banks and financial institutions, causing delays at each stage.

Remittances are not just slow, they can also be incredibly expensive, going as high as 15-20% of the principal, according to the International Monetary Fund (IMF).

Kristalina Georgieva, IMF managing director, estimates that the average cost of a remittance transfer currently stands at 6.3%, implying that some US$45 billion per year are diverted into the hands of intermediaries and away from ultimate beneficiaries, including millions of lower-income households.

Wise, formerly known as TransferWise, has developed a system that streamlines international transactions and minimizes the cost and complexity of sending money abroad.

Instead of converting a sender’s money at the time of transfer, Wise’s technology matches the transfer with someone else who wants to send money in the opposite direction, avoiding thus intermediary banks and markups, allowing customers to save up to six times compared to traditional banks, the company claims.

Wise, which was launched in 2011, started out catering to the consumer market before developing its business-to-business (B2B) offering. With its Wise Platform product, the company is licensing its technology to other businesses, allowing them to offer Wise-supported transfers and exchanges.

The company says the Wise Platform has witnessed notable traction, launching 15 new partnerships in 2022 and entering 2023 with a total of 60 partners globally. Nearly 10 million new customers gained access to Wise’s cross-border payment infrastructure via the platform in 2022 alone.

Companies that currently rely on the Wise Platform include digital banks and neobanking startups Yapeal, N26, Bunq, Monzo, ZA Bank and Sable, expense management platform Emburse, as well as trading platform Tiger Brokers.

Like these young fintech companies, Swiss neobank Neon is tapping into Wise’s cross-border payment capabilities and relying on a partnership strategy to provide customers with a richer digital banking experience and more value. Kirscheneder said in an interview that partnerships also allow the Neon to differentiate from its competitors and offer a unique proposition that’s not provided by anyone else in the Swiss market.

Julius Kirscheneder

“Our partnership with Wise is a unique feature in the Swiss market, and brings additional value to customers that other providers can’t offer, and we already see several attractive opportunities to expand our partnership,”

he said.

“Many of our customers are requesting to see some more of the features and products that are available on the Wise app directly through Neon, and delivering them is on our roadmap in 2023.”

Launched in 2017, Neon strives to develop a secure, user-friendly and comprehensive mobile banking proposition. The company’s platform allows customers to onboard digitally in less than ten minutes, manage their finances, make payments and more, all through a mobile app. Neon doesn’t have a banking license of its own but instead is partnered with Hypothekarbank Lenzburg.

Currently, more than 140’000 customers use a Neon account, which, according to the company, makes it the fastest growing Swiss solution for a mobile banking account.

Neon generated CHF 3.5 million in revenue in the first eight months of 2022, surpassing 2021’s turnover. The startup has been voted one of Top 100 Swiss Startups since 2020.

Neon closed in November 2022 a CHF 11 million financing round from existing investors and some 5,000 investors through its crowdfunding campaign. The company said it would use the proceeds on product improvement and development and new products launches, as well as towards building a path to profitability.

Featured image credit: Edited from freepik