Transferring money overseas? These money transfer platforms are taking on the big banks
Money transfer platforms are no longer just a cheaper way to make overseas payments: they’re introducing services that make them a viable alternative to traditional banks.
Quick take
- Money transfer platforms such as OFX emerged as a cheaper alternative for overseas payments.
- Many now offer virtual corporate cards, which are easier, more flexible and cheaper to manage and reconcile than regular bank cards.
- While transfer platforms cannot offer interest-bearing accounts, some have introduced yield-bearing accounts that invest in low-risk assets, to encourage users to keep funds in the platform.
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Heather Smith FCA travels extensively to the US and Europe for work and pleasure. Long ago she switched to international transfer platform Airwallex – and not just because the rates were “significantly better” than her traditional bank. The platform gives Smith a deeply engaging level of transparency.
“When you go to click on the transfer button, you can watch the rate change every 60 seconds. It’s almost like you’re watching yourself make money on the transaction,” says Smith, founder of ANISE Consulting and an Acuity columnist.
Wise, Airwallex and OFX have all made names for themselves as smart ways to transfer money to suppliers overseas at a fraction of the cost of the major banks.
They make it extremely easy to make payments; they communicate the cost of the transfer clearly and tell you as soon as the money has arrived in the receiver’s bank account.
Now, having amassed sizeable customer bases and brand recognition, these platforms are looking to do more than transfers. They are adding more useful features for businesses, competing with mainstream banks – and even adopting workflows found in accounting software.
What are the local and international money transfer platforms?
For decades, international transfers meant Western Union or the major banks. The service was often slow and expensive, burdened by hidden fees and exchange rates. In the past 25 years, a number of local and international players have emerged to challenge the incumbents.
OFX was founded in 1998 in Sydney and was originally named OzForex. OFX serves both individuals and businesses, particularly those dealing with high-value international transfers such as property settlements, import/export payments and corporate payroll.While it doesn’t reveal customer numbers, OFX facilitates transactions across 190 countries, managing billions in transfers annually. Its strategy for growth focuses on partnerships with large banks and e-commerce platforms, allowing it to offer competitive rates and personalised service, particularly for corporate clients and high-net-worth individuals.
Eighteen months ago OFX acquired Paytron, a virtual corporate card and expense management platform, which it now uses to provide virtual credit cards in multiple currencies.
Founded in London in 2011, Wise (formerly TransferWise) was born out of a frustration with the hidden fees and high exchange rate mark-ups. Wise has since grown into a global player, serving more than 16 million customers worldwide by 2024, including a strong presence in Australia and New Zealand.
Wise’s strategy focuses on transparency and low fees, using the mid-market exchange rate for transfers, which provides a cost-effective method for both individuals and small businesses.
Its product offerings have expanded beyond just money transfers to include multi-currency accounts and virtual debit cards, and it operates in more than 40 currencies.
Airwallex, founded in 2015 in Melbourne, was established to help businesses make low-cost cross-border payments. As of 2023, Airwallex has grown to serve more than 100,000 business customers, processing approximately A$80 billion in annual transactions. It offers multi-currency accounts, virtual corporate cards and payment APIs to help businesses manage global financial operations more efficiently.
Airwallex has expanded its reach beyond Australia, launching into major markets like the US and Europe, and continues to develop embedded finance products to further diversify its services.
Meryl Johnston CA, founder of accounting firm Bean Ninjas and recruitment company TeamUp, is a heavy user of international payments platforms. She uses Wise to pay overseas contractors instead of a wire transfer through CommBank, which was “expensive and difficult.”
Johnston uses PayPal as a last resort for contractors in countries such as Serbia, which aren’t well covered for international transfers. “I prefer Wise over PayPal. It’s easier to use, the rates are better and PayPal has a reputation of locking up your money for no reason.”
Despite their slightly different niches, the platforms are converging on a core set of features that make them much more interesting than currency exchanges.
The benefits of using a virtual corporate card
Wise, Airwallex and OFX all now offer virtual corporate cards. This service is typically provided by a separate software company – Weel is a popular example in Australasia. However, the transfer platforms can offer virtual corporate cards in multiple currencies.
A virtual corporate card is different to a standard credit card in three important ways. Virtual corporate cards are issued in the company’s name which means the business is legally responsible for the card’s usage, rather than the individual employees using them. This eliminates the need for extensive background checks each time you issue a card.
Consequently, as the cards are generated by the software, you can make as many cards as you like. (Providers add their own constraints on the number of cards they can generate.) Since it is just a new set of numbers and an expiry date registered in a software program, you can make them instantly, at zero cost. The third benefit is that, due to the cards existing within a software program, you can add rules to the cards as easily as adding rules in your email inbox. You can ban a user from spending with the card at certain suppliers (for example, liquor stores or gambling sites); you can set a spending limit for each card on a time-limited basis (a daily per diem, a weekly stipend or monthly budget); and you can freeze or cancel a card instantly, with the click of a button.
A company can issue cards for specific activities, as well as specific individuals. This also helps with controlling for fraud or overspending. A company can create a card for one-time use or with a very low budget and cancel it once it has been used.
Johnston set up Airwallex for the ability to use virtual cards, as Wise didn’t have them at the time. “I really like the ability to have a different card for each software subscription, or to allocate a team with a certain amount,” she says. “Some software companies are notoriously difficult to cancel, so instead of having to go through that process, you can just cancel that card.”
Each platform offers approval workflow but with differing levels of complexity. Weel is easiest to use, but doesn’t have the sophistication of Airwallex, says Tyler Caskey CA, a partner at system consultancy TheBeanCounters. Both Weel and Airwallex have the ability to photograph the receipt and file the expense for approval.
| Expense management | Corporate virtual cards | No international credit card fees | Hold foreign currency | Pays invoices | Yield account/ earns money on deposits | Syncs with accounting software | |
| Airwallex | Advanced | ✔ | ✔ | ✔ | ✔ | ✔ | NetSuite, Xero, Quckbooks |
| Paypal | ✔ | ✔ | ✔ | Xero, Quckbooks | |||
| OFX/Paytron | Advanced | ✔ | ✔ | ✔ | NetSuite, Xero, MYOB | ||
| Weel | Standard | ✔ | ✔ | Xero, MYOB, Quckbooks | |||
| Wise | ✔ | ✔ | ✔ | ✔ | ✔ | NetSuite, Xero, Quckbooks |
How virtual cards make transaction reconciliation easier
Giving businesses the ability to manage their own cards not only makes it much easier to control costs, it also makes it easier to reconcile transactions.
Virtual cards simplify the process of transaction reconciliation by providing real-time data, automated categorisation and detailed reporting. Platforms like Airwallex, Weel and OFX (via Paytron) offer features designed to streamline this process, making it easier to track, manage and reconcile expenses, compared with traditional methods in accounting software like Xero.
All three platforms provide real-time updates on transactions, ensuring that businesses can instantly track expenses as they occur. This eliminates the delays associated with traditional credit card reconciliation, which can take days to update in accounting software.
These platforms also feature automated categorisation, allowing businesses to set rules for transactions that automatically categorise them based on the vendor or category. Finance teams can then automate much of the reconciliation process and sync transaction data with their accounting software.
All three platforms enable users to upload receipts directly through their mobile apps, automatically matching receipts to the corresponding transactions.
Why wouldn't I use a money transfer platform?
With all these financial features, it’s easy to forget that Airwallex, OFX and Wise aren’t actually banks. They are software companies with financial services licences that allow them to handle transactions and offer financial products. This distinction is crucial in two key areas: financial protection and interest-bearing accounts.
Banks in Australia and New Zealand are backed by government deposit guarantee schemes. In Australia, this protection comes from the Financial Claims Scheme (FCS), which guarantees deposits up to A$250,000 per account holder if a bank collapses. In New Zealand, a Depositor Compensation Scheme is set to launch mid-2025, covering up to NZ$100,000 per depositor in case of a bank failure. However, because Airwallex, OFX and Wise are not banks, deposits with them are not covered by these government-backed schemes.
They do take other precautions. All three companies hold customer funds in segregated accounts at independent financial institutions, separate from their own operating funds. In the event of insolvency, customer funds are protected and would be prioritised for return, although the specific mechanisms differ slightly between the companies. Airwallex, in particular, has a formal trustee arrangement with authorised deposit-taking institutions, providing an extra layer of security.
Second, only banks can pay interest on deposits. Fintechs operate under e-money licences or money transfer licences which prevent them from offering direct interest on deposits. However, in the past year, Airwallex and Wise have introduced yield-bearing accounts as a workaround.
These accounts allow customers to earn returns by investing funds in low-risk assets, such as money market funds or government bonds, rather than offering traditional interest. Airwallex launched a product in November 2023 that provides interest-like returns by buying into safe, low-risk investments. Wise followed suit in September last year with its Assets feature.
While these accounts can yield a return, there is no guarantee that the balance won’t fluctuate because it depends on the performance of the underlying assets. This is different from a bank account, where interest is fixed and guaranteed by the bank, and has the indemnity of a government-backed safety net.
To most business and consumer customers, however, the yield accounts will appear to be a functional equivalent. The fintechs may be deliberately blurring the distinction to encourage take-up.
“There might be accountants like me that want all of that extra backing and compliance that comes from a bank. But I don’t think most business owners will care about that. And in fact, you have to read the fine print to understand that it’s not a bank account. At first glance, I didn’t make that connection,” Johnston says.
Is it time to ditch your bank?
It’s clear that fintech companies want to motivate users to store their funds with them, rather than just make international payments.
For example, in October last year Airwallex introduced a A$29 a month fee for its entry-level Explore plan. The fee is waived if you deposit a minimum A$5000 a month or maintain a balance of A$10,000 (or equivalent in any currencies) across your combined wallet and accounts.
“They are encouraging you to get rid of your normal banking relationship,” Caskey says, “and they’re going to win. It’s one tenth the time to set up an Airwallex or a Wise account than it is to set up an ANZ account. They’ve got their onboarding right.
“I don’t like the big banks. Their technology is too slow. They’re just average to work with. Their rules are silly.”
Caskey has contemplated cancelling his bank account and only using his Airwallex account for all his business banking. Last year he spent three months in Europe working on a payroll rollout in Belgium and the UK, and then a month working from Bali before coming home for Christmas.
“The Commonwealth Bank means nothing in Belgium. Why would I pay a transaction fee on everything when I can just transfer money to an Airwallex Belgium account?”
How PayPal blew it
PayPal, the original online payments platform – founded in the US in 1998 by Peter Thiel and Max Levchin – had an unparalleled opportunity to take over the international transfer market. Its partnership with eBay in 2002 helped it amass a customer base of more than 400 million accounts in nearly every country in the world.
Despite its early lead in digital payments, PayPal failed to convert its dominance in international transfers due to several key factors.
High fees, bad rates
PayPal often adds a significant mark-up to foreign exchange rates which, combined with transaction fees, makes international transfers expensive. Competitors like Wise and Airwallex capitalised on this by offering transparent, lower-cost options with real-time exchange rates and minimal hidden fees.
Focus on domestic payments
PayPal’s business strategy historically focused on domestic payments and e-commerce. As a result, it invested heavily in integrations with platforms like eBay and online retailers. The volume of domestic transactions in any country may be higher, but international transfers have a higher average value due to international trade and the massive remittances market.
Slow adaptation to market needs
While PayPal was initially a leader in innovation, it was slower to adapt to new technology and market demands, compared with more specialised competitors. Airwallex, for example, targeted high-growth businesses with multi-currency accounts, virtual cards and cost-effective global payments.
These missteps created an opportunity for international payments platforms to emerge as better alternatives for businesses and individuals.
What is a virtual corporate card?
A virtual corporate card is different to a standard credit card in three important ways. Virtual corporate cards are issued in the company’s name which means the business is legally responsible for the card’s usage, rather than the individual employees using them. This eliminates the need for extensive background checks each time you issue a card.
As the cards are generated by the software, you can make as many cards as you like. And because it is just a new set of numbers and an expiry date registered in a software program, you can make them instantly, at zero cost.
How to create a virtual card in Australia?
To create a virtual card you can choose from one of the many platforms, including Airwallex, Weel and OFX. Simply head to the platforms website to see set up requirements.
What is the point of a virtual card?
Due to the cards existing within a software program, you can add rules to the cards as easily as adding rules in your email inbox. You can ban a user from spending with the card at certain suppliers (for example, liquor stores or gambling sites); you can set a spending limit for each card on a time-limited basis (a daily per diem, a weekly stipend or monthly budget); and you can freeze or cancel a card instantly, with the click of a button.
Are virtual business cards worth it?
Virtual cards simplify the process of transaction reconciliation by providing real-time data, automated categorisation and detailed reporting. Platforms like Airwallex, Weel and OFX (previously Paytron) offer features designed to streamline this process, making it easier to track, manage and reconcile expenses, compared with traditional methods in accounting software like Xero.
