UK fintechs GoCardless, TransferWise launch cross-border recurring payment network

Dive Brief:

U.K. fintechs GoCardless and TransferWise are partnering to create a global network designed for cross-border recurring payments, the companies said in a press release Wednesday.
The network collects recurring payments such as subscriptions, invoices and installments using bank debit rather than cards, which reduces the transaction failure rate from 13% to less than 3%, according to the subscription commerce platform Recurly.
About 73% of decision-makers said their business would be more successful if it had greater access to international markets, but 39% said the complexity of international payments is holding their business back from expanding internationally, according to a YouGov and GoCardless survey cited by GoCardless CEO Hiroki Takeuchi in a blog post.

Dive Insight:

The GoCardless and TransferWise partnership allows businesses to collect payments in one currency and settle in another without leaving their account. This eliminates the need to open a bank account in every country where the business collects payments.

Nearly half of business decision-makers surveyed by YouGov and GoCardless said they feel frustrated by the extra administrative work required in cross-border payments, such as opening multiple bank accounts and reconciling different currencies. A similar proportion called out the lack of transparency, such as hidden fees and complex pricing.

“There’s a ton of pain in cross-border payments, and no one was really tackling that. Businesses feel inhibited by fragmented rules and regulations” in various countries, Pranav Sood, GoCardless’s vice president of international expansion, told Banking Dive at last week’s Money20/20 conference in Las Vegas. Bank debit boosts the success rate of transactions to 97.5%, Sood added.

The network, rolling out in mid-November, allows businesses to “collect from markets where you don’t have a footprint,” Sood said.

GoCardless serves more than 50,000 businesses in 30 countries and processes more than $13 billion in payments, according to TechCrunch. During the initial rollout, businesses will be able to receive payments at the real exchange rate in pounds; euros; U.S., Canadian, Australian and New Zealand dollars; Swedish krona and Danish kroner.

Sood said earlier this year that he sees GoCardless's greatest potential for growth in a business-to-business market where 42% of payments are still done using paper checks. GoCardless opened its first U.S. office last month in San Francisco.

TransferWise, which has maintained an office in New York since 2015, broached the U.S. banking market last month when Stanford Federal Credit Union and small-business neobank Novo began integrating the company's application programming interface.

European challenger banks Monzo, N26 and Bunq have already integrated TransferWise's platform. Estonia's LHV and France's Groupe BPCE have also partnered with the company.