Wirex: when the blockchain meets with personal banking

In the process of using Wirex financial service, I had a desire to “dig deeper” and learn more about the development history of this project, expand my understanding of the functionality and capabilities of Wirex, and also ask about the opinion of its founders. I bring to your attention a review based on materials from the media and personal interviews with service managers.

Of all the representatives of the Fintech sector, Wirex is probably the closest to the provision of mobile banking services, most of which are based on the efficient use of blockchain.

If you follow the development of financial technologies, you probably know that Bitcoin is very well suited for the provision of certain types of services, such as micropayments or a quick transfer of a small amount abroad without having to pay a decent commission. The demand for these and similar services is very high among private clients of banks. Nevertheless, the idea of ​​using the blockchain for such payments still seems too good to be true. In theory, everything sounds great, but in the real world we have not yet seen such decisions before. But if using the application it is impossible to buy even a cup of coffee with milk, then it will hardly be possible to change the sphere of retail payments.

Wirex intends to change this, its founders, who initially devoted themselves to working on the E-coin service, which provided services for working with debit Bitcoin cards and disappointed in the slow speed of their distribution, describe Wirex as a hybrid personal banking platform. Its target audience is frequent travelers, international students, people whose professional activities imply frequent changes of their place of stay (for example, intellectual workers), users of international money transfer services and even all those who, for whatever reason, cannot access traditional banking services.
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Probably the most serious threat to traditional banking systems from Wirex is not even that bitcoin is at the center of all its activities, but that operations carried out in it are difficult to control.

Wirex offers a single mobile account that provides for the use of fiat currencies such as US dollars, euros and pounds sterling, and Bitcoin. By creating a link between fiat currencies and digital currencies, the service provides the ability to make fast and cheap cross-border transfers when currency exchange takes place using the Bitcoin system, without requiring any additional effort or control from the sender or recipient.

If you want to send 100 pounds to a friend in Europe and convert them into euros, Wirex will first convert pounds to bitcoins, and then convert the received bitcoins to euros at a more favorable rate for you and with lower interim costs than in the case of direct conversion to traditional foreign exchange market ...

All conversions from fiat currency to digital and vice versa are performed using the internal automated exchange Wirex. For example, if one user needs to exchange $ 500 for 1 btc, and another needs to change 1 bts for $ 500, a bunch of applications of these two users occurs, allowing you to get the most favorable exchange rate. In the absence of the possibility of selecting the necessary applications, the Bitpay payment Bitcoin processor is used as a backup method.

Wirex also binds Bitcoin wallets to Visa and MasterCard debit cards, allowing you to make instant money transfers to friends and family members. The service also provides the ability to make contactless NFC payments from a mobile phone and withdraw fiat money from ATMs using a virtual electronic card, which is also stored on a mobile phone. Such an opportunity is also available to those customers who have not ordered a quite traditional-looking plastic Wirex card.

The Wirex founders strive to remove the barrier between the world of traditional currencies and cryptocurrencies, making all the advantages of the blockchain technology available to users of traditional banking services. Currently, Wirex has a client base of more than 20 thousand customers who have ordered and received cards in 130 countries of the world.

The company's offer is aimed at those markets where families need to send money to their children studying abroad. For example, Chinese students in Europe who sometimes find it difficult to open bank accounts. Often families try to reduce the high costs of transferring funds by sending large amounts once every few months, which carries certain risks. Instant replenishment of money on a virtual card eliminates these problems and reduces costs.

According to Wirex representatives, the fee for transferring funds between Fiat accounts is less than that of Visa or MasterCard. International transfers also cost clients of the service cheaper than users of Western Union, which does not carry cash across borders and therefore needs to maintain a pool of bills in each country of its presence.

At Wirex, we discovered that new Fintech startups do not adequately satisfy user demand for some of the major international remittance transfers. These include the Canada-Philippines corridor, as well as expensive corridors for sending funds to Japan and beyond. Also, thanks to the delivery of virtual cards to mobile phones using applications, Wirex services are becoming very popular among users who do not have access to traditional banking services. The company has especially large growth potential in Latin America, particularly in Colombia, Brazil and Argentina.

Wirex raised funds through crowdfunding in September last year and is now in the process of negotiating with venture capital firms. The purpose of these negotiations is to organize Round A, in which the company plans to raise additional funds in the amount of 1 million British pounds.

Despite the profitability and low monthly costs, the company decided to raise an additional £ 1 million for development. In addition, Wirex is looking for local distribution partners for its services in promising local markets.

Blockchain and everything connected with it is now a novelty, therefore the project team is trying to determine in advance exactly where the regulators will try to “wedge in” in the process of its work. For example, the firm Elliptic (specializing in collecting and processing blockchain data) discusses how to conduct legal expertise with blockchain addresses and get a clear picture of where the money comes from and where it goes. Work is also underway to build a standard for the financial sector infrastructure to combat money laundering and test customers for reliability. These technologies are already used to analyze data on ordinary bank accounts and debit cards.

The activities associated with the blockchain have not yet been regulated in the UK, but Wirex will certainly apply for a license. To provide banking services, the company has entered into a partnership agreement with WaveCrest, a financial institution licensed by the Gibraltar Financial Services Commission to issue electronic money. This license is valid throughout Europe. WaveCrest is also a full member of Visa in Gibraltar and MasterCard in Gibraltar and the United Kingdom.