Currency exchange fintech expands into credit

By Ryan Weeks on Wednesday 27 September 2017

Alternative LendingDigital Banking

WeSwap will begin offering overdrafts to travellers and is considering a P2P solution.

Fintechs, it would seem, cannot sit still. Currency exchange app WeSwap has become the latest fintech to branch out into pastures new.

The firm has launched an overdraft-like solution for its users. The product is powered and funded by FlyNowPayLater, a specialist travel lender, and is interest-free if repaid within 30 days. Beyond that point, it will cost travellers in the region of 18-19 per cent per annum.

Asked whether the launch signals a move towards becoming a bank, WeSwap CEO Jared Jesner said that he was more focused on “offering value to the traveller”. He said that an e-money licence might be a more logical next step, or perhaps a credit licence.

Another area of potential expansion for the firm is to allow its own users to lend to each other – effectively a peer-to-peer lending solution. This is only a concept at present, but Jesner says that it would likely include some kind of “guarantee”.

In the short-term, WeSwap will be working on building more budgeting and analytics functionality into its product, with a view to identifying gaps that its new credit solution could help to plug.

The company has also provided an update on its recently launched cash product, which delivers cold hard cash directly to its customers’ doors. Since June, over £5m in cash has been ordered via the app.

WeSwap’s core business is to allow users to swap currencies online ahead of travelling. When users upload money to the app, it sits with issuing banks. When somebody needs to exchange from, say, pounds to euros, WeSwap’s technology identifies a user who is in need of the reverse trade, and simply swaps around the ownership of the funds in each underlying bank account. WeSwap itself holds and hedges cash in order to fill demand when its user-base cannot.

For swapping currency instantly, users will be charged 2 per cent over the interbank rate. If they can wait a week, it’s 1 per cent over the interbank rate.

WeSwap is partnered with CityForex on the cash-to-door product. For amounts of £700 or more, delivery is free. Under that, it costs £6. Jesner told AltFi that users value the safety of having cash in their pocket, even if they could take it out for free while abroad (using the WeSwap card). The cash delivery product also allows WeSwap to access customers who may not have felt comfortable with its online service.

“Following the huge success of the WeSwap Cash launch we’re now working on integrating cash into our core app – allowing travellers to “cash out” part of their WeSwap card balance, so they can carry some of their spending money in notes, or on the WeSwap card,” he said.

Revolut, one of the best-known currency exchange apps, has been expanding its own product set at a feverish pace since the start of the year. Only this morning, it announced a new mobile phone insurance product, after having already branched out into consumer credit and wealth management. 

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