‘Domestic bank accounts don’t cross borders very well’: Wise’s Jenny Miller on how the platform simplifies international payments for consumers

International payments have always been fraught with pain points primarily due to their perceived complexity and the lack of transparency, leading to unforeseen costs for consumers.

Jenny Miller, group product manager at Wise, at Tearsheet’s The Power of Payments Conference, held June 1, 2023, in New York

“Domestic bank accounts don't work for international folks, they don't cross borders very well,” said Jenny Miller, group product manager at Wise, at Tearsheet’s The Power of Payments Conference, held recently in New York.

In today's day and age, consumers want to send money across borders from the comfort of their homes. Since consumers are accustomed to smooth local transactions, they expect a similar experience when it comes to sending or receiving payments the world over. However, when processing international payments through banks and traditional money transfer providers, they start running into issues due to the lack of understanding of the intricacies of international payments.

While domestic banking has apparently made significant headway in the past couple of years in the form of direct deposits, mobile banking, and bank transfers, the narrative is totally inverse when it comes to cross-border banking. Typically, cross-border payments fall behind domestic ones in terms of cost, speed, access, and transparency. Transparency — or lack thereof — is deeply woven into the impediments facing cross-border payments, including high fees and a disappointing user experience. But the historically ‘slower’ cross-border space is now catching up in different ways, according to Miller. 

“We found that there's really no such thing as an international bank account. And the domestic ones just don't work country to country as well as we'd like, as the existing infrastructure is slower to adopt and slower to meet customer needs,” she said. 

What happens with a lot of steps along the way in sending international payments through correspondent banking networks is that the fees sometimes change from point A to point B. What customers expect to pay at the outset is not what they see at the end of the transaction chain. This raises more questions and concerns for consumers asking for a better understanding of where their money is going. 

A large part of this confusion is the continued ambiguity around remittance fee structures that consist of several factors – fixed and variable – including the service fee and the foreign exchange rate. This opaqueness of process and lack of communication with customers can further make it hard for them to trust and rely on promises made by institutions at the starting point of the transaction journey.

Wise is on the move to overcome some of these pain points. The platform works with different types of consumers and businesses, including freelancers and entrepreneurs in the SMB space to large-scale enterprises. To send money overseas, consumers pay a fee and a percentage of the amount that's converted. Wise does the math and the total cost upfront is shown before processing the transaction, based on the exchange rate at that time. 

Low fees and partnerships are at the center of everything 

Wise works differently from banks and traditional exchange services. By setting up its own payment network of numerous multi-currency bank accounts around the world, Wise has built an infrastructure by stitching together local payment systems that have been able to drive down the costs of international transfers by eliminating intermediary fees unlike in the SWIFT network. The platform passes those savings on to customers in the form of lower fees and a better exchange rate, according to Miller.

Recently, the platform has also added a new interest feature to the Wise Account, which provides a chance for US-based businesses and individual customers to currently receive 4.13% APY on their existing USD balances.

“But how can a company that is trying to expand globally lower costs and get access to these different networks? How do you find a way of building a global network from the very get-go?” asked Miller.

It’s not easier for customers to send money to themselves within a single bank with international locations. Historically, each country’s operations have been built up on different systems or different underlying networks. This means fulfilling new requirements and starting a new application process or onboarding journey from scratch, like in the case of opening a new account each time.

Folley Ogundele, VP of Wise Platform at Wise, told Tearsheet earlier this year that partnerships are important to deepen Wise’s footprint across different countries to facilitate international transactions for consumers as well as businesses. “In the US, we’re continuing to grow our partnerships across the financial services sector, integrating with organizations and powering cross-border payments for both SMBs and consumers,” he said.

The way Miller sees it, the international payments experience should be no different from the domestic payments experience for consumers driven by key partnerships along the way that can help build better experiences. 

“The key message is listening to your customers and figuring out specifically the things that are of importance to them, which make them use the product and recommend it. That's what should drive your roadmap directly,” she concluded.