TransferWise

TransferWise Inc.
19 West 24th Street, 9th Floor
New York, NY 10011
www.transferwise.com
nick.catino@transferwise.com

November 7, 2019

Via Email
Attn: Ann Misback, Secretary
Board of Governors of the Federal Reserve System
20th Street and Constitution Avenue NW
Washington, D.C. 20551
Email: regs. comments@federalreserve.gov

Re: Docket No. OP-1670, Federal Reserve Actions to Support Interbank Settlement of
Faster Payments

Dear Board of Governors:

TransferWise Inc. appreciates the opportunity to submit comments to the Board of Governors of
the Federal Reserve System ("Board") in response to the notice and determination that the
Federal Reserve Banks should develop a new interbank 24x7x365 real-time gross settlement
service.

TransferWise previously submitted a comment letter in December 2018 expressing support for
the Board developing a ubiquitous, safe, and efficient faster payments system and shared its
experiences as the first non-bank payments company to gain direct access to the United
Kingdom's Faster Payments Scheme and to maintain a central bank account for settlement at the
Bank of England.

Backt,:round

TransferWise 1s a global technology company that is building the best way to move money
around the world. Whether sending money to another country, spending money abroad, or
making and receiving international business payments, TransferWise is on a mission to make life
easier and save customers money.
Co founded by Taavet Hinrikus and Kristo Kaarmann, TransferWise launched in 2011. It is one of
the world's fastest growing tech firms having raised $692m in primary and secondary funding
from investors such as Andreessen Horowitz, Sir Richard Branson, Valar Ventures and Max
Levchin of PayPal.

TransferWise Inc., our U.S. entity, is licensed in 47 states, and otherwise authorized to provide
money transmission services to customers in the remaining states and territories. 1 TransferWise
has more than six million active customers moving $5 billion dollars worldwide every month,
saving themselves $1 billion every year. TransferWise has over 1800 employees in 13 offices,
including New York, New York and Tampa, Florida.

General Comments

Faster Payments

TransferWise commends the Board on its proposal to create a real-time payments system
(FedNow). We strongly agree that the Reserve Banks should develop a 24x7x365 real-time gross
settlement (RTGS) system based on ISO 20022 standards and support a liquidity tool (such as
extended FedWire hours). There is a clear public interest in the Federal Reserve building a fair
and ubiquitous network accessible to every financial institution and payments provider that
operates at low margins over time, and the Federal Reserve is uniquely positioned to guarantee
ubiquity for financial institutions and inclusiveness for consumers. It can play a very important
role in hastening the progress of real-time payments because the Federal Reserve is already
connected to over 10,000 financial institutions through their current offerings.

A single system run by a single provider may not always have the correct incentives to pass along
the benefits of speed and cost. Having multiple RTGS operators will promote market competition
on price and service level agreements and deliver better value and choice to customers. Thus, in
order to ensure that the public benefits from a faster payments system, TransferWise strongly
supports the Federal Reserve playing a key leadership role, as central banks have done
successfully in other jurisdictions. As we've seen around the world, consumers will benefit from
improved speed, cost, and convenience, and transparency.

Non-Bank Access

TransferWise believes that the Federal Reserve should consider the accessibility and inclusion of
non-banks in a faster payment system. In the U.S., to access the domestic payments
infrastructure, non-bank financial institutions like TransferWise must partner with a bank to settle
payment transactions on behalf of our customers. It results in added costs, complexity, and
dependence upon competitors.

1
TransferWise Inc. only offers its services in the states in which it is licensed or in the states that do not currently require it to be
licensed, which includes all states except for Hawaii and Nevada. In those two states, a partner financial institution offers a
TransferWise-branded money transmission service, and TransferWise Ltd., TransferWise's UK parent, which is regulated by the
FCA, acts as a service provider to that financial institution.
Payment systems in many jurisdictions, including our neighbors Mexico and Canada, are in the
process of modernizing and evolving their membership. TransferWise has been part of several
important initiatives in this regard. In fact, in 2017, TransferWise became the first non-bank
payments company to join the United Kingdom's Faster Payments Scheme and the first non-bank
to maintain a central bank account for settlement at the Bank of England. The UK regulator (the
Financial Conduct Authority) actively engaged on this initiative with TransferWise and took a
risk-based approach to opening up the scheme to non-bank members.

These changes abroad reflect the fact that as trends in society and commerce evolve as a result of
technological advances, many consumers now rely on new entrants and less traditional financial
institutions to service their needs. Opening direct participation in the payments system to
non-banks will help ensure competition flourishes, fosters innovation, and that financial
institutions are incentivized to pass along the benefits of speed and lower costs to consumers.

Additionally, diversification will reduce systemic risks that arise from a handful of banks hosting
most of the indirect non-bank participants. With the current set up, a small number of banks can
build a business function being the bank and access provider to payment systems for non-banks.
This concentration of new businesses across a handful of banks creates potentially higher risk
than if non-banks were accessing the faster payments system directly.

We support risk-based, open and fair access to the domestic payments infrastructure and believe
the Federal Reserve should prioritize this as it develops a faster payments system.

* * *

We appreciate the opportunity to provide our comments and support the efforts of the Board to
promote faster payments and real-time settlement in the U.S. Please do not hesitate to contact us
if you have any questions regarding these comments or if we can be of any assistance.

Best,

Nick Catino, Head of Public Policy (Americas), TransferWise

Cc: Andrew Boyajian, Head of Banking (Americas), TransferWise