If you’ve been following Fintech news, you’ve probably heard of Currencies Direct. The digital payments firm recently completed a Â£ 165million dividend recapitalization, at a time when many similar companies were in the background. This news made big waves in the world of international money transfers. Here’s what you need to know.
Who is Currencies Direct?
Currencies Direct is a money transfer company established in the United Kingdom. Unlike the last batch of money transfer companies, Currencies Direct started in 1996. While longevity can be a downside in the fintech space, the company has managed to adapt along the way, becoming as much of a disruptor. than any startup of the 2010s.
The growth of Currencies Direct has not always been an upward curve. They made their first transfer in 1996 and opened their first European branch three years later, but it wasn’t until 2008 that they launched their online service. Until then, they had gradually spread across the world, becoming a big name but without the benefits of modern access to scale.
It is their online service that has strengthened their presence, attracting customers from all over who want to make small transfers as well as large transfers.
The impact of large-scale online access is not unique to Currencies Direct. Rather, it is indicative of the entire money transfer industry.
How the money transfer industry exploded
With international money transfers, there was always the possibility of some massive transactions. Investors would buy expensive properties overseas, while others would invest money in promising startups around the world. There was specific demographics that money transfer companies were targeting knowing they were the most likely to send and receive huge sums.
However, the modern success of the money transfer industry is not due to investments by big companies or wealthy entrepreneurs. Rather, it is millions of small transactions made by individuals every day.
There’s a reason these deals have mushroomed as so many different companies could capitalize on the scale. The Internet has paved the way for international electronic commerce as well as remote working.
Small businesses around the world need to receive money from overseas when they make sales they couldn’t have predicted before. This is even true for very local businesses that offer niche services that may not be available elsewhere.
But it is in the independent economy that the number of transactions has increased exponentially. There is now millions of freelancers in the UK alone. These freelancers are not limited to jobs in their own area, but can work for clients anywhere in the world. For this reason, they regularly transfer money from other countries.
This is especially true in poorer countries, where residents of the United States, United Kingdom, and other first-world countries find remote workers willing to work for wages well below the local minimum wage. A pound in the UK does not go as far as a pound in the Philippines.
That said, it’s not just in developing countries that freelancers find work across the world. Many successful freelancers earn six figures by finding high paying clients among the millions of people constantly looking for skilled workers.
Wise (formerly TransferWise) was one of the first companies to really realize the growing potential of the money transfer industry. Wise was started by two friends who had personally struggled to receive payments for work they had done overseas. They conceptualized Wise as an alternative to the big banks – a bank that didn’t charge exorbitant fees and offered superior exchange rates.
Wise has been so successful that they have now launched an IPO. They are currently worth around Â£ 8 billion.
The impact on direct currencies
Currencies Direct was founded fifteen years before Wise. When TransferWise arrived, they were the disruptors of the industry in which Currencies Direct had operated for ages. While Currencies Direct had already launched its online service, they were able to recognize what was happening in the industry and adapt to keep pace. Palamon and Corsair acquired Currencies Direct in 2015, pushing them further into the world of modern fintech.
Wise countries and the like had the edge in the early years, but now many experts consider Currencies Direct to be the best in the business. Currencies Direct is ranked # 1 on MTC.com, having succeeded the once flashier startups.
All of this led to the recapitalization of the Â£ 165million dividend. Since the takeover of Palamon and Corsair six years ago, Currencies Direct has more than doubled its revenue and almost tripled its EBITDA.
It’s not just by taking advantage of the booming concert economy that Currencies Direct has become one of the best and most important. The company has kept a hand in every pie, recently signing an exclusive white label deal with wealth management Hargreaves Lansdown company. The company has 1.5 million active clients and keeps Currencies Direct in the sight of investors at all levels.
Ultimately, Currencies Direct has done a great job of not only staying relevant, but expanding its offerings. Nonetheless, without the success of companies like Wise, Currencies Direct probably would not have reached this scale of growth.
What’s next for Currencies Direct?
Currencies Direct should stay at the top of the money transfer game. The digital payment company has been providing various services for twenty-five years, and has not let its maturity put it at a disadvantage against the startups of the 2010s.
Currencies Direct is now the first choice for many individuals and businesses. Since experts call it the best available choice in 2021, we can expect more success for the company in the future.