Wise: The Holy Grail Investment?
How Wise is weaponizing the exact same playbook as Amazon, Costco, and GEICO to dominate in global finance.
Company: Wise Group (Nasdaq: WSE / London: WISE)
Market Cap: $12.4 bn
EV: $10.6 bn
Float: 69.8%
Net Cash: $1.7 bn
Return on Equity: >30%
Organic Growth: >35%
Addressable market to target: ~99%
Normalized earnings multiple: ~16x
PEG: ~0.5x
DISCLAIMER & DISCLOSURE: The author is invested in Wise Group at the date of publication but that may change. The views expressed are those of the author and may without notice. The author has no duty or obligation to update this information. Some content is sourced from third parties believed to be reliable, but accuracy is not guaranteed. Forward-looking statements involve assumptions, risks, and uncertainties, meaning actual outcomes may differ from those envisaged in this analysis. Past performance is not indicative of future results. All investments carry risk, including financial loss. This analysis is for educational purposes only and does not constitute investment advice or recommendations of any kind. Conduct your own research and seek professional advice before investing.
Executive Summary
“This is one of the cleanest, most compelling investment set ups I’ve seen in a while”, James Emanuel
Wise is not a traditional business.
It doesn’t need branches, inventories, manufacturing plants, or large lending portfolios to grow. That matters.
We find ourselves in a world where nationalism trumps globalization. Tariffs, supply chain disruption, geo-political turmoil, inflation and rising capital costs dominate the news. Yet Wise is largely insulated from the current economic environment.
Higher interest rates become a tailwind through increased net interest income.
Plus, this is not a business that can be disrupted by AI.
In fact, this is one of the most defensive counter-cyclical plays out there.
As the business scales, every new customer, transaction, and partner strengthens the platform.
The result is a rare combination of characteristics that investors rarely find in a single company: rapid growth, high margins, strong free cash flow generation, and a fortress balance sheet.
The business has counter-positioned itself in an industry that was ripe for disruption. It attacked one of the most profitable and customer-unfriendly corners of banking: international money transfers.
Competitors are unable to compete without cannibalizing their own business.
Many have chosen a different route. Rather than compete directly, they partner with Wise and use its infrastructure because its transfer rails are faster, cheaper, and more efficient than their own.
The best part is that the business has a founder CEO who is a missionary, not a mercenary.
He is unusually well aligned with shareholders. He draws a very modest salary, receives no stock options, and remains heavily invested through his own ownership stake.
His approach to running the company echoes that of Jeff Bezos, Warren Buffett, Mark Leonard, Jim Sinegal and Sam Walton.
The customer always comes first.
Profits are the outcome of delivering greater value, not the primary focus.
The network continues to deepen, creating a growing moat around the platform.
This business has all the characteristics that Nick Sleep would look for in a company.
Recent share price weakness has created an opportunity.
Sentiment deteriorated following reports that Belgian prosecutors were investigating money laundering activity involving third parties and that Wise was assisting with enquiries. No allegations have been made against the company to date, yet the share price is off about 20%.
At the same time, the familiar abhorrent practice of US lawyers trying to encourage shareholders to bring a class action law suit against any public company which experiences a drop in its share price has added noise and further soured market sentiment.
Yet the underlying business remains exceptionally strong. Revenue continues to grow at more than 35% annually, and its all organic. When a business grows at this rate, it doubles its top line every two years. Layer in opertaing leverage, and earnings grow even faster.
Gross margins exceed 80%. Pre-tax margins are deliberately capped in the mid-to-high teens (more on this shortly). Cash conversion consistently exceeds 100%, supported by favourable working capital dynamics. The balance sheet holds substantial net cash, while the capital-light nature of the business means very little incremental investment is required to support future growth.
The quality of the business is equally impressive. Revenue is highly diversified across millions of customers. Retention rates are strong. Customer concentration risk is negligible.
Most importantly, Wise remains in the early stages of its journey. Despite its success to date, the company still serves only a tiny fraction of the estimated $43 trillion global cross-border payments market.
With approximately 1% market share, the runway for growth remains enormous.
High-quality businesses rarely become available at attractive prices. When they do, it is often because short-term concerns obscure long-term fundamentals. Wise appears to fit that description remarkably well.
As Buffett once said, "When it rains gold, reach for a bucket, not a thimble".
Contents
The Company
The Business Model
The People
Competition & the Moat
The Numbers
Mr Market
The Money Laundering Issue
The Bear Case
The Bull Case
What to Watch For
Conclusion: Is Wise a Good Investment?
The Company
Very few companies are as misunderstood as Wise Group (Nasdaq: WSE).
Ask someone in the investment community about Wise. The response will be to question whether Wise can scale its volume fast enough to maintain profit margins while continuing to reduce its cross-border take rate.
No! That’s upside-down, back-to-front thinking.
This is a fundamental misunderstanding of how the business operates. It puts the cart before the horse. It’s all wrong.
As a company grows it becomes more efficient at producing goods or services. Scale delivers economic cost benefits.
Rather than capturing that value by allowing margins to expand, a few exceptional businesses return that value to customers in the form of lower pricing. Think Costco, Amazon or Walmart.
These companies have something else in common. They grow rapidly to become market leaders and they enjoy outsized success. The same golden threads running through all of these businesses is no coincidence. They are the product of management with outstanding business acumen.
Spotting these golden threads early in the journey of a company is the holy grail for any investor.
They were evident in the inaugural shareholder letter of Jeff Bezos at Amazon back in 1997. Anyone that spotted them at the beginning of the journey and invested would have turned $10,000 into almost $30 million today.
I look for these golden threads constantly, but they are exceptionally rare.
Wise Group is one of those rare exceptions.
Wise diligently focuses on maintaining PBT margins in the 15-20% range. If they start to creep above that range it reduces its take rate, thereby passing the economic benefits of scale to its customers in the form of lower pricing (take-rates).
This structural reduction acts as a customer acquisition engine. Cheaper costs drive higher transaction volumes. Higher volumes at the same margins result in ever increasing cash returns. Lower prices result in higher profits.
The exact same model has been very successfully deployed by GEICO, the Berkshire Hathaway owned insurance business. Rather than optimize combined ratios (an insurance proxy for margins) the company strives to reduce pricing to drive customer acquisition.
This is why the question being asked by most investors in the market is, as Charlie Munger used to say, ‘upside-down, back-to-front thinking’. Margins dictate pricing, not the other way around; they are never under threat.
Wise has grown it’s success running exactly the same playbook as Amazon, Costco and Walmart. The only difference is that Wise is only at the start of its journey.
“Fifteen years ago, we set out with a simple but ambitious goal: to make moving and managing money around the world as fast, simple and cost-effective as sending an email. We’ve come a long way since then. In the last financial year, we helped… move over $243 billion across borders instantly and at a fraction of the cost of traditional providers, saving our customers more than $3.3 billion in fees. Still, with $43 trillion moved across borders each year globally, we’re only getting started.”
Kristo Käärmann, co-founder and CEO at Wise
The other thing Wise has in common with these other uber-successful businesses is that it is not a single thing that makes it exceptional, but lots of small things in combination that are difficult, if not impossible, to replicate.
To the casual observer, Wise appears to be a sleek, consumer-facing payments application. However, Wise is more accurately defined as a financial infrastructure business operating under a consumer “wrapper”.
Wise began life as a transactional peer-to-peer “hack” (more on this shortly) and has transformed into a foundational settlement layer for the global financial system.
By relentlessly pursuing its differentiated model, Wise has created a widening operational moat that traditional incumbents are both technologically and economically unable to cross.
The business demonstrates exceptional unit economics, high returns on equity owing to having a capital light business model and a flywheel that fuels strong double digit growth rates. Even more remarkable is that 70% of customers are acquired via word-of-mouth recommendtions keeping marketing spend at a remarkably low 4% of income.
The company is domiciled in Jersey, one of the British Channel Islands. It recently transitioned its primary stock market listing to the Nasdaq (Ticker: WSE), retaining London as a secondary listing (WISE.L).
The Business Model
The ‘Hack’ That Spawned A Global Empire
Kristo Käärmann was a young Estonian living in London, working for Deloitte. He was paid in British pounds but serviced a mortgage in Euros on a property back home in Estonia.
Every month he would watch in horror as 5% or more of his hard earned income disappeared in opaque exchange rate markups and administrative fees imposed by his bank when exchanging the currencies. To Käärmann, it felt like an unavoidable tax imposed by the financial system which was entirely disproportionate to the service being provided.
It was pure exploitation and profiteering. It didn’t feel nice.
Then Käärmann met Taavet Hinrikus, another Estonian living in London who had the same problem. However, Hinrikus was employed at Skype and remunerated in Euros, although his living expenses were in British pounds.
Immediately it became aparent that there was an elegant solution to their problem.
Each month Käärmann could transfer his British pounds to Hinrikus, who would then reciprocate by transfering Euros back to Käärmann.
A transfer between personal accounts attracted no banking fees. They had achieved foreign exchange without any frictional costs.
It was a pure peer-to-peer swap that removed the necessity for international wire transfers entirely, providing the foundational logic for what would eventually become the foundations of the settlement network we are discussing today.
Because their methodology involved transfers, and it was a smarter way to operate, they decided to call the sytem ‘TransferWise’.
They raised a seed round of $1.3 million in 2012, and in its inaugural year, the company processed £8 million in transactions. Since then they haven’t looked back and by FY2025, that figure reached an astounding £145 billion.
This evolution from a simple P2P matching engine to a sophisticated global infrastructure business was punctuated by the 2021 rebranding from ‘TransferWise’ to ‘Wise’.
The renaming signaled the transition from a single-product remittance tool to a multi-product financial ecosystem and settlement layer for the global economy.
Today, Wise serves 16 million customers and manages over £20 billion in customer deposits.
The People
Insiders own roughly 30% of Wise, which is reassuring for external shareholders. When management has meaningful skin in the game, incentives tend to be better aligned and capital allocation decisions tend to improve.
That alignment starts with founder and CEO Kristo Käärmann. His compensation structure is unusually shareholder friendly. He receives a modest salary of around £200,000, with no bonus and no stock-based compensation.
His economic interest comes almost entirely from his ownership stake, consisting of approximately 18% of the Class A shares and 47% of the Class B shares, currently worth around £3.3 billion. If shareholders do well, he does well. If they do poorly, he feels the pain alongside them. It’s a structure that resembles the approach taken by Warren Buffett at Berkshire Hathaway and Mark Leonard at Constellation Software.
In a world where many executives are paid handsomely regardless of outcomes, Käärmann sits in a very small group of genuinely aligned founder CEOs.
His influence extends far beyond ownership. Käärmann has shaped Wise's product strategy, culture, and long-term direction from the beginning. What stands out is his willingness to prioritise customer outcomes over short-term profitability. While much of the financial industry focuses on extracting maximum value from customers, Käärmann’s strategy involves deliberately and continuously lowering the company’s take rate to power growth and delight customers.
That philosophy is deeply embedded within the organisation. The company's internal values repeatedly emphasise transparency, humility, customer obsession, and long-term thinking. It is a mindset more commonly associated with founders such as Jeff Bezos, Sam Walton, or Jim Sinegal than with financial services executives.
Actions reinforce the rhetoric. Since Wise's IPO, Käärmann has not sold a single share. For a founder whose stake is worth billions, that is a notable signal. It suggests his focus remains on building long-term value rather than monetising success at the first opportunity.
The other co-founder, Taavet Hinrikus, is no longer involved in day-to-day operations but continues to hold a substantial Class B stake and remains an important shareholder.
The broader management team also appears strong. CFO Emmanuel Thomassin joined Wise after a decade as CFO of Delivery Hero, where he helped oversee a period of rapid growth and served on the Management Board. Before that he was CFO of MetaDesign. His background in scaling fast-growing businesses makes him a logical fit for Wise's current stage of development.
Chief Technology Officer Harsh Sinha has been with the company since 2015, having previously held senior roles at PayPal and eBay, while Chief Product Officer Nilan Peiris has been with Wise since 2014 and now oversees product, design, analytics, and sales across the business. Together they provide continuity across the key functions that underpin Wise's competitive position.
The non-executive board has been equally impressive. Chairman David Wells previously served as CFO of Netflix. Other directors bring experience from organisations such as Euronext, Intercontinental Exchange, Morgan Stanley, Grab (the UBER of Asia), and Andreessen Horowitz. One particularly interesting appointment is Ingo Uytdehaage, CEO of Adyen, a dominant player in another corner of the payments ecosystem. Could there perhaps be a marriage of these two businesses at some point in the future?
What stands out is that the board does not appear to have been assembled simply to satisfy governance requirements. Many UK listed companies treat independent directors as a compliance exercise. Wise appears to have approached the process more strategically, bringing together individuals with relevant operating, financial, technology, and payments experience.
While Käärmann has no incentive package beyond his equity ownership, other members of the executive team participate in a Long-Term Incentive Plan (LTIP). The structure is thoughtfully designed. Awards are linked to a combination of total shareholder returns, transaction volume growth above 13%, and customer Net Promoter Scores (NPS).
The baseline threshold NPS is 63 and that qualifies for a 25% payout; the full 100% payout is only triggered by an NPS above 70. This reduces the risk of management pursuing volume growth or short-term profits at the expense of the customer experience. The message is clear: growth matters, but not at the expense of customer satisfaction.
The scale of these incentives is not insignificant. Under the LTIP, Thomassin, the CFO, who has a base salary of 2.5x the CEO, is able to achieve a maximum LTIP payout of 4x his base salary, which would take his total remuneration to 10x that of the CEO founder. That may appear unusual, but it demonstrates that Käärmann is not egocentric and that his decisions are all driven by what is best for the business. As a major shareholder he will benefit, alongside external investors, if his management team performs. Once again, there are directly parallels between Käärmann’s approach and that of Buffett, Leonard and Bezos.
The only governance issue worth flagging relates to Wise's dual-class share structure. Class B shares carry nine votes each, giving Käärmann approximately 48% of the company's voting power. At the time of the 2021 IPO, investors were told these enhanced voting rights would expire after five years, eventually returning the company to a one-share, one-vote structure. However, when Wise moved its primary listing from London to Nasdaq, shareholders were asked to prolong the arrangement for another decade.
This proved controversial. The co-founder, Taavet Hinrikus, publicly opposed the proposal through an open letter, arguing that "Wise should adhere to the foundational corporate governance principle of one share, one vote to protect its long-term business value and the interests of all owners equally." Despite the criticism, the resolution passed comfortably, but it did reveal a degree of tension that exists between major shareholders.
The dual-class structure gives Wise the stability and long-term orientation that often accompanies founder control, but it also reduces the ability of minority shareholders to influence governance. Whether that is a feature or a flaw will depend largely on one's view of founder-led businesses.
Competition and the Moat
Wise occupies a unique position within financial services. Unlike many of its competitors, it is essentially a pure-play cross-border payments business. The competitive landscape spans several categories, including incumbent banks, traditional money transfer operators, fintechs, and digital-first neobanks, but few companies are as singularly focused on reducing the cost and friction of international money movement.
What makes Wise particularly interesting is that it has counter-positioned itself against the industry. Traditional banks and money transfer providers have historically earned attractive economics from opaque foreign exchange spreads, hidden fees, and inefficient processes. Wise built its entire value proposition around eliminating those frictions. As a result, many incumbents face a dilemma. To compete effectively with Wise would require them to lower prices, increase transparency, and potentially cannibalise profitable revenue streams within their existing businesses. In many cases, they are either unable or unwilling to do so.
HSBC’s experience with Zing illustrates the challenge. Zing was specifically designed to compete with Wise and Revolut. Rather than relying on HSBC’s legacy infrastructure, it was built on a separate technology stack using the XYB cloud banking platform and operated under its own independent e-money licence. HSBC effectively recognised that its existing systems and business model were poorly suited to competing with digital-first challengers and attempted to build a dedicated competitor from scratch.
Despite the resources, brand recognition, and distribution advantages available to HSBC, the initiative failed. Zing was discontinued shortly after launch and ultimately shut down altogether. The episode highlights a recurring theme in financial services. Building a product that looks like Wise is relatively easy. Building an organisation whose economics, incentives, culture, and operating model are designed around permanently lowering prices for customers is considerably harder. That distinction helps explain why Wise continues to occupy a category of its own within the payments ecosystem.
To better understand Wise, one must first understand the “broken” system it disrupts.
The Society for Worldwide Interbank Financial Telecommunication (SWIFT) has governed cross-border movement for decades, but it remains an archaic messaging network rather than a true settlement layer.
If a sender’s bank lacks a direct relationship with the recipient’s bank, the funds must pass through a chain of “correspondent” or “intermediary” banks based entirely on trust. To mitigate risk of money being lost as it passes down the chain, the SWIFT system requires banks to maintain “nostro” (our money in your account) and “vostro” (your money in our account) balances across this chain to create pre-funded liquidity. Capital being tied up in this way justifies some of the fees involved. It’s a fragmented journey through a labyrinth of bureaucratic tollgates.
The process is also characterized by extreme opacity.
The traditional cross-border payments system is surprisingly inefficient. When a customer instructs a transfer, a choice must often be made as to who bears the fees. This means that if you send $100, either your account will be debited ~$105, or else the recipient will only receive ~$95. This is far from ideal.
To make matters worse, the final cost is often unclear at the outset because it depends on how many intermediary banks sit between the sender and the recipient.
Every intermediary bank in the chain extracts a fee for its role in the process. The SWIFT network does not move money itself, it is a messaging system used to update incongruent ledgers across different time zones, which creates delays of between 1 and 5 business days.
Importantly, banks using the SWIFT system don’t process customer FX trade individually. Instead, they net customer positions internally and only settle the residual obligations through the correspondent banking system, significantly reducing costs. Banks generally treat netting as an internal efficiency gain and so use this process to improve their margins.
Cross-border payments remain one of the industry's most profitable products, helping explain why incumbents have shown little enthusiasm for disrupting the status quo. Changing to the Wise model would require a total overhaul of their backend architecture and the cannibalization of their existing model which would be catastrophic to their margins.
Hamilton Helmer, in his book ‘7 Powers’, described this phenomenon as ‘counter-positioning’, and Wise is the perfect case study.
A leaked 2017 Santander memo revealed that if the bank were to match Wise’s pricing, it would destroy 84% of their money transfer profits. In this way, ‘counter-positioning’ becomes an incumbent’s dilemma, and it provides Wise with an almost impenetratable moat.
Global banks collect an estimated £200 billion annually in hidden retail cross-border fees, which ironically is good news for Wise. As Bezos used to say, ‘your margin is my opportunity’.
Wise approaches the problem from an entirely different angle. Rather than relying on correspondent banking networks, it maintains local liquidity pools in the countries in which it operates. By removing the chain of intermediary banks, the company eliminates much of the friction, delay, and cost embedded within the traditional system.
The impact is dramatic. Transfers that previously required several days can often be completed in seconds, and in many cases instantly.
Wise is also available around the clock, seven days a week. Many traditional financial institutions continue to operate within the constraints of banking hours and are closed on weekends and public holidays. In an increasingly digital world, customers expect money to move as easily as information. Wise was built for that.
Yet speed and convenience is not the only advantage Wise has. It’s most compelling advantage is cost.
According to the World Bank, the average digital remittance still costs approximately 6.5% of the amount transferred. By contrast, Wise reported an average cross-border take rate of just 0.52% as of March 2025. In other words, Wise operates with roughly a twelvefold cost advantage relative to the traditional system. Few businesses enjoy such a large and measurable pricing gap versus incumbent competitors.
Its huge competitive advantage is not an arbitrary marketing choice but a structural consequence of fourteen years of meticulous direct rail integration and regulatory licensing.
The regulatory environment is also moving in Wise’s favour. Policymakers increasingly expect transparency around fees and exchange rates, particularly for retail consumers. Hidden charges have come under greater scrutiny, and European regulators have already introduced measures designed to improve fee transparency. The more the industry moves toward clear pricing and customer disclosure, the quicker Wise will grow its market share.
In fact, the speed of growth at Wise is testament to this investment thesis.
However, the low-cost transfer service is only part of the story. Over time, Wise has evolved from a simple cross-border money transfer company into a much broader financial infrastructure provider. That evolution has improved unit economics, increased switching costs, and steadily widened the company’s competitive moat.
Three Phases of Evolution
The development of the business can be understood in three distinct phases.
Phase one was the original peer-to-peer model. Wise matched customers moving money in opposite directions and avoided the need for costly international transfers. The concept was elegant and highly disruptive, but it had limitations. Currency flows are rarely balanced. Large volumes of dollars move to Mexico, for example, but comparatively few pesos flow in the opposite direction. As Wise scaled, these directional imbalances became increasingly difficult to solve through customer matching alone.
This led to phase two. Recognising the limits of the peer-to-peer model, Wise began building a global regulatory and liquidity infrastructure. It secured local licences, established domestic banking relationships, and increasingly used its own balance sheet to provide liquidity. Rather than waiting for matching flows, Wise could complete transactions immediately while managing liquidity and foreign exchange exposure itself. The business evolved from a simple matching platform into an institutional-grade treasury operation capable of supporting significantly larger volumes.
The transition was not without challenges. The Nigerian currency crisis in 2016 exposed the risks associated with operating in emerging market corridors and highlighted the importance of maintaining deep local liquidity pools. Regulatory scrutiny during this period also forced Wise to invest heavily in compliance systems, controls, and risk management capabilities. While costly at the time, these investments have since become an important barrier to entry. Many smaller fintechs can replicate a user interface. Very few can replicate a global compliance infrastructure spanning dozens of jurisdictions.
The third and most important phase was the decision to bypass commercial banks altogether. In 2018, Wise became the first non-bank to gain direct access to the Bank of England’s Real-Time Gross Settlement system. This marked a significant milestone. Rather than relying on intermediary institutions, Wise began connecting directly to national payment rails.
Over the last decade the company has accumulated more than 80 licences and built direct connections across many of the world’s most important domestic payment systems.
Today it has direct participation in networks such as Faster Payments in the UK, SEPA in Europe, Pix in Brazil, Zengin in Japan, and payment systems across Australia, Singapore, Hungary, and the Philippines.
This infrastructure has required enormous investment. Wise now employs more than 1,000 engineers, a five-fold increase over the past six years. Their focus extends well beyond maintaining existing systems. They are continuously expanding direct payment connectivity, improving settlement speed, and reducing transaction costs.
The benefits are substantial. Direct integrations eliminate local intermediaries and significantly reduce variable costs. When Wise connected directly to the UK’s Faster Payments system, partner bank fees reportedly fell by a factor of nine. In the Philippines, direct access reduced costs by approximately 90%. As of 2025, nearly half of all Wise volume flows through these direct connections.
This creates a competitive advantage that is much harder to replicate than software. A competitor would need years of regulatory approvals, technical integration work, compliance investment, and relationship building to recreate what Wise has assembled. The moat is increasingly operational rather than technological.
WISE Platform
Perhaps the most interesting aspect of this evolution is how Wise has turned potential competitors into customers.
Incumbent banks and fintechs struggle to match Wise’s cost structure because doing so would often require dismantling parts of their existing operating model. Rather than competing directly, many have chosen to partner with Wise instead. Through Wise Platform, the company effectively offers its cross-border payment infrastructure as a service.
Banks, neobanks, accounting software providers, and enterprise platforms have integrated Wise's payment rails directly into their own products while maintaining their existing customer relationships.
For partners, the proposition is straightforward. They gain access to a faster, cheaper, and more reliable international payments solution without having to build the infrastructure themselves. In many cases, the fees charged to end customers remain unchanged, meaning the economic benefit is captured through improved margins and operating efficiency.
For Wise, the economics are even more attractive. Instead of acquiring every customer individually, the company embeds itself within the transaction flows of large financial institutions and software platforms. These relationships generate recurring volumes, larger average transaction sizes, and significantly lower customer acquisition costs. Partners effectively become a distribution channel.
This creates a powerful flywheel. Higher transaction volumes improve network efficiency and support further reductions in take rates. Lower prices attract additional customers and partners, which in turn generate more volume. Scale lowers costs, lower costs attract volume, and additional volume further strengthens scale.
The list of partners is increasingly impressive. It includes global banks such as Morgan Stanley, Standard Chartered, Itaú, UniCredit, and Raiffeisen Bank, alongside digital banks such as Monzo and Nubank, as well as software platforms including Xero and a growing number of enterprise resource planning providers.
Although Wise Platform currently accounts for only around 5% of total volume, up from 4% a year earlier, management expects that figure to reach 10% over the medium term. Given the size of the institutions now adopting the platform, that target appears achievable.
What began as a niche consumer-facing transfer service has evolved into a global payments infrastructure business serving both consumers and institutions. The moat is no longer simply lower prices or better technology. It is a dense network of licences, regulatory approvals, payment rail connections, liquidity infrastructure, compliance capabilities, and distribution partnerships that has taken more than a decade to build.
The largest opportunities still lie ahead. Markets such as the United States and India remain underpenetrated relative to their size, providing significant scope for transaction volumes to grow and for Wise’s operational advantages to become even more entrenched.
Beyond Money Transfers
Although Wise is best known for international money transfers, the business has evolved into something much broader. Today it generates revenue from three distinct sources, each reinforcing the others and strengthening the overall economics of the platform.
The first is the core transfer business discussed throughout this report. Customers pay a transparent fee, typically expressed as a percentage of the amount transferred, with pricing varying by currency corridor and payment method.
The second is Wise Platform, the infrastructure business that enables banks, fintechs, and enterprises to offer cross-border payments using Wise’s underlying network.
The third is the accounts business. Through personal and business accounts, customers can hold, receive, spend, and manage money across multiple currencies. These accounts generate revenue through card transactions, account-related services, and income earned on customer balances.
This distinction is important because the long-term value of a Wise customer extends far beyond a single transfer. Customers who adopt a full Wise account tend to remain with the platform longer, use a wider range of services, and generate multiple streams of revenue. Rather than earning solely from foreign exchange transactions, Wise participates in card spending, account activity, balance income, and recurring payment flows. Customer lifetime value increases significantly once an account becomes part of a user’s financial routine.
As a result, management increasingly views account adoption as one of the most important drivers of future growth.
This evolution has naturally raised questions about whether Wise is becoming a bank. The answer, at least for now, is no.
Wise has gradually moved closer to bank-like infrastructure in certain markets, but it remains primarily a payments and e-money institution. In 2025 the company applied for a U.S. national trust bank charter, a move that appears designed primarily to improve access to payment infrastructure and reduce reliance on intermediaries rather than to become a traditional deposit-taking bank. Direct connectivity to Federal Reserve payment rails would further reduce transaction costs and strengthen its competitive position.
The situation in the UK is similar. Wise continues to operate as an authorised e-money institution and has not formally applied for a UK banking licence, although reports suggest management has explored the possibility. This contrasts with competitors such as Revolut, which secured a full UK banking licence and is pursuing a strategy that includes lending, mortgages, and broader retail banking services.
Wise’s priorities appear different. The company does not need a banking licence to hold customer funds because regulators permit licensed payment institutions to safeguard customer money separately from their own balance sheets. This framework allows Wise to offer account functionality without taking on many of the risks associated with traditional banking.
The personal account has become particularly attractive for internationally mobile consumers. Users can hold balances in more than 40 currencies, receive local account details in multiple jurisdictions, and spend globally through a debit card. By FY2026, Wise had grown its active customer base to approximately 19 million people.
An increasingly important feature is the ability for customers to earn returns on idle balances. Traditional current/checking accounts often pay little or no interest, whereas Wise allows customers in eligible markets to access returns through money market funds and other investment products. This provides an additional incentive to retain larger balances within the ecosystem.
The business account proposition may be even more compelling. Small and medium-sized businesses use Wise to manage international payroll, supplier payments, invoicing, treasury functions, and multi-currency cash management. Customers can receive payments locally in multiple jurisdictions, issue invoices in numerous languages, automate batch payments, and integrate directly with accounting software platforms.
For many smaller businesses, international payment costs are not merely an inconvenience but a genuine barrier to trade. If moving money across borders costs hundreds of basis points, profit margins can quickly disappear. Wise materially lowers that friction, making international commerce more accessible for smaller firms and expanding the company's addressable market in the process.
Business customers are also highly attractive economically. They tend to move significantly larger volumes than consumers and often become deeply integrated into operational workflows. Once payroll systems, accounting software, supplier relationships, and treasury processes are connected to Wise, switching becomes increasingly difficult.
Management appears well aware of this opportunity and has indicated that Wise Business will remain a major area of investment going forward.
The market opportunity is enormous. According to industry estimates cited by J.P. Morgan and the IMF, global cross-border payment volumes totalled approximately $195 trillion in 2024 and could exceed $320 trillion by 2032. The portion most relevant to Wise today, including consumer transfers, e-commerce payments, and SMB transactions, is estimated at roughly $43 trillion annually.
Wise's share of this market remains remarkably small. The company has captured approximately 5% of personal transfer volumes, less than 1% of SMB payment volumes, and has barely begun penetrating the large enterprise segment.
This leaves a substantial runway for future growth.
The retention dynamics are equally attractive. Customers who adopt Wise accounts tend to remain active for many years, producing low churn and steadily increasing cohort value over time. As new customers are added each year, the existing customer base continues to compound, creating a growing foundation of recurring activity.
The financial impact is already visible. Revenue generated from account holders has been growing at roughly 66% annually, compared with only 7% growth from transfer-only customers. In many respects, the investment case increasingly revolves around this transition from transactional users to fully engaged account customers.
Business adoption is growing particularly quickly. Business volumes have compounded at approximately 36% annually, comfortably ahead of the 25% growth rate achieved by personal customers. Given that the SMB market alone represents an estimated £19 trillion opportunity and Wise’s penetration remains below 1%, this growth appears far from exhausted.
Today, account holders generate roughly two-thirds of total group income. If current trends continue, that proportion is likely to increase further over time.
One final piece of the ecosystem is Wise Assets, an investment subsidiary that allows account holders to invest part of their balances into global equity index funds or government money market funds. Participation is entirely optional, but it represents another step in Wise’s gradual expansion from a payments company into a broader financial platform. We will examine this business in more detail in the numbers section.
The Numbers
From a capital allocation perspective, Wise displays many of the characteristics associated with high-quality compounders. The business is asset-light, requires relatively little incremental capital to grow, and converts more than 100% of pre-tax profits into free cash flow.
Importantly, growth is not being purchased through aggressive customer acquisition spending. Marketing expenditure remains disciplined at approximately 4% of underlying income, reflecting the strength of the brand, word-of-mouth referrals, and the increasingly important contribution of distribution partners through Wise Platform. The company benefits from a business model where scale drives lower costs, lower costs attract more customers, and additional customers further improve scale.
Reported returns are already impressive. Wise generates a Return on Equity of roughly 30%, a figure that would be considered exceptional for most financial institutions. However, this arguably understates the true economics of the business. Regulatory requirements necessitate the maintenance of substantial cash balances and liquidity reserves, leaving the company with approximately £1.3 billion of net cash on what can fairly be described as a fortress balance sheet. While prudent, this excess liquidity depresses reported returns by inflating the equity base.
Viewed through the lens of invested capital rather than accounting equity, the underlying economics appear considerably stronger. Adjusting for excess cash, Wise’s Return on Invested Capital may be closer to 60%, highlighting the attractive economics of its infrastructure-led model.
Unlike traditional banks, which require significant balance sheet capital to support lending activities, Wise does not make loans. It generates growth primarily through software, payment infrastructure, regulatory licences, and network scale. The result is a business capable of earning exceptional returns without consuming large amounts of incremental capital.
These economics provide considerable strategic flexibility.
Strong free cash flow generation allows Wise to fund product development, expand into new geographies, secure additional regulatory licences, and deepen direct payment rail connectivity without relying on external capital.
It can continue investing heavily in technology and compliance while maintaining a debt-free balance sheet and avoiding the leverage-related constraints that often limit traditional financial institutions.
This combination of high returns, strong cash generation, limited capital requirements, and substantial reinvestment opportunities is rare. It is one of the reasons the investment case increasingly resembles that of a software or infrastructure business rather than a conventional financial institution.
Before diving into the numbers, a brief word of caution is warranted.
Historically, Wise reported its financial results under UK-adopted IFRS. However, following the transfer of its primary listing to the United States in Q2 2026, the company is transitioning to reporting under US GAAP. While the underlying economics of the business have not changed, accounting treatment differs in several areas, creating challenges when making like-for-like comparisons across reporting periods.
To ease this transition, management has restated FY2024, FY2025, H1 2025, and H1 2026 financial information under US GAAP, providing investors with a reasonable degree of continuity. However, the restatement does not extend back to the company’s IPO, meaning longer-term trend analysis still requires care. Historical comparisons spanning multiple years may reflect accounting changes as much as operational performance.
For consistency, this analysis primarily relies on the IFRS figures that management reported dating back to the IPO.
The key takeaway is straightforward: focus on the underlying economics rather than becoming distracted by accounting noise. The reporting framework may be changing, but the business itself remains the same.
REVENUES
One metric remains largely unaffected by accounting changes: revenue. On that front, Wise's performance has been exceptional. Between FY2021 and FY2025, revenue compounded at more than 40% annually, reflecting a combination of strong customer growth, increasing transaction volumes, and the successful expansion of the product ecosystem.
Today, Wise generates revenue from three mutually reinforcing streams, all of which are growing strongly:
SEND: core cross-border transfer business,
SPEND: card-related revenue, including debit card interchange, currency conversion activity, and account usage, and
HOLD & EARN: income generated on customer balances that are safeguarded within the Wise ecosystem.
The importance of this revenue mix is becoming increasingly apparent. What began as a transfer business is steadily evolving into a broader financial platform. As customers adopt accounts, cards, and balance products, revenue becomes more diversified and less dependent on transfer fees alone.
SEND
The SEND segment currently remains the largest of the three, and continues to be driven by customer growth, volume per customer, and take rate.
Active customers reached 13.4 million in H1 FY2026, up 18% year-on-year. Cross-border volume increased 24% to £85 billion, with business volumes growing particularly quickly at 35%. Notably, cross-border revenue increased by only 5% . The slower growth in revenue relative to volume reflects Wise’s deliberate strategy of reducing its take rate.
Importantly, volume per customer continues to rise, suggesting that existing users are entrusting a greater proportion of their financial activity to the platform.
SPEND, HOLD & EARN
The more interesting story lies outside the transfer business.
As of H1 FY2026, non-cross-border revenue, comprising SPEND and HOLD & EARN, represented 41% of total underlying income, up from 37% the previous year. This shift demonstrates that management’s diversification strategy is working.
Card revenue has been a major contributor. Growing account adoption has driven substantial increases in spending activity. Card and other revenue grew 54% in FY2024 and a further 45% in FY2025. During H1 FY2026 alone, customers spent more than £15 billion through Wise cards, generating £132 million of revenue, an increase of 28% year-on-year.
This growth reflects a broader behavioural shift. Customers are no longer using Wise simply to move money internationally. Increasingly, they are using it to hold, spend, receive, and manage money on an ongoing basis.
That behaviour has translated into substantial balance growth. Customer funds held within the platform have increased from approximately £3.9 billion in 2021 to almost £30 billion by FY2026.
Unlike a traditional bank, Wise does not lend these balances. There is no credit book, no mortgage portfolio, and no fractional reserve banking model. Instead, customer funds are safeguarded in a combination of highly rated bank deposits, government securities, and money market funds managed by institutions such as BlackRock and State Street. The objective is safety, liquidity, and regulatory compliance rather than credit creation.
These balances nevertheless generate income.
Wise earns a return on safeguarded funds and shares a significant portion of that return with customers. Management’s stated policy is to retain the first 1% of yield to cover operating costs and then return 80% of any additional yield generated. This approach is consistent with the company’s customer-first philosophy and stands in sharp contrast to many traditional financial institutions.
However, there is an important nuance that investors must understand.
Because Wise is not a licensed deposit-taking bank, customers must actively opt into yield-bearing products. Many choose not to. When this happens, Wise retains the full yield generated on those balances. As a result, reported earnings are often higher than the earnings that would be generated if every eligible customer elected to receive the returns available to them.
Management recognises this distortion and has provided underlying figures alongside reported results since FY2023. Investors should pay close attention to these adjustments when assessing valuation and profitability.
This creates two important sensitivities within the model.
The first is interest rates. Higher rates increase income earned on customer balances, while lower rates reduce it. The second is customer behaviour. If a greater proportion of customers opt into yield-sharing products, Wise will retain less of the interest income generated.
Interestingly, management appears comfortable with both outcomes. The company’s objective is not to maximise short-term profitability but to maximise customer value. Returning more yield to customers strengthens the proposition, deepens engagement, and increases the likelihood that larger balances remain within the ecosystem.
The strategy appears to be working. Customer balances increased 37% year-on-year to £29.4 billion by FY2026. Even as interest rates normalise from recent highs, these balances provide a valuable source of high-margin revenue and an additional layer of economic resilience.
It is useful to think of SEND and SPEND as ‘transaction revenue’ streams. HOLD & EARN is different. It is effectively an additional earnings layer generated from customer balances and will naturally fluctuate with interest rate cycles.
Taken together, Wise expects to generate approximately $2.5 billion of revenue during FY2026.
The composition of that revenue is becoming increasingly attractive. A growing proportion originates from accounts, cards, balances, and platform services rather than solely from transfer fees. This diversification strengthens customer relationships and reduces reliance on any single product line.
Geographically, Europe remains the largest contributor to revenue, reflecting Wise's origins and strongest market position. However, growth outside Europe is occurring at a faster pace. As more banks, fintechs, and enterprises adopt Wise Platform, international expansion is likely to become an increasingly important contributor to future growth. European volumes should continue to increase, but the larger opportunity lies in replicating that success across the rest of the world.
COSTS
Wise’s cost structure is relatively straightforward and can be divided into two broad categories.
The first is cost of sales, which includes transaction processing costs, banking fees, foreign exchange costs, payment network charges, and credit losses.
The second is operating expenses, which encompass employee compensation, technology development, compliance, marketing, and administrative costs. This represents the largest cost category.
The encouraging trend is that cost of sales has been declining as a percentage of revenue. As more transaction volume flows through direct payment rail connections and as higher-margin account and balance products become a larger part of the mix, gross margins continue to improve.
Operating expenses have increased meaningfully, but this should largely be viewed as investment rather than cost inflation.
During H1 FY2026, operating expenses increased 27% year-on-year, or 24% excluding listing-related costs. More than 1,000 employees joined the company during the period, technology spending increased 18%, and management announced plans to substantially increase marketing investment over the medium term.
These expenditures are directed toward expanding the platform, building capacity, strengthening compliance infrastructure, and accelerating customer acquisition. The benefits will likely be realised over many years, making traditional accounting treatment somewhat misleading. Under accrual accounting, these investments are expensed immediately despite creating value that may endure for a decade or more.
Viewed through that lens, the spending appears less like margin pressure and more like a management team aggressively pursuing a very large opportunity.
PROFITABILITY
Wise’s profitability has steadily improved as scale has increased.
Gross margins expanded from 62.6% in 2019 to 72.9% by FY2025. This ten percentage point improvement reflects the growing proportion of volume flowing through direct payment rail connections and the increasing contribution from higher-margin account-related revenue streams.
Yet management does not optimise for margin expansion in the conventional sense.
Like Costco, Wise uses scale efficiencies to reduce prices rather than maximise profitability. The goal is to maintain attractive returns while continuously improving the customer proposition.
Historically, management has targeted pre-tax margins of 15% to 20%. During FY2024 and FY2025 margins exceeded 20%, helped by elevated interest income generated on customer balances.
Part of this profitability boost reflects unclaimed customer yield. Until more customers opt into yield-bearing products and claim the returns available to them, Wise expects reported margins to remain somewhat elevated relative to underlying economics.
For FY2026 management lowered its guidance range to 13% to 16%, primarily to accommodate costs associated with the Nasdaq listing, infrastructure investments, and expansion initiatives. Despite these investments, underlying pre-tax margins remained approximately 16.3%, demonstrating the resilience of the business model.
CASH FLOWS & BALANCE SHEET
At first glance, Wise's cash flow statement can appear extraordinary as operating cash flow is many times larger than top line revenue (that would be impressive!)
In truth the vast majority of cash flowing through the business is customer money which shows up in working capital. It is not cash belonging to Wise and should not be included in Free Cash Flow calculations.
Management defines free cash flow as operating cash flow excluding working capital movements related to customer balances, less capital expenditure and lease payments. On this basis, free cash flow was £487 million in FY2024 and £615 million in FY2025.
After adjusting for the portion of interest income that management would like to return to customers, underlying free cash flow was approximately £247 million and £333 million respectively.
Even on this more conservative basis, Wise remains a highly cash-generative business.
Similar adjustments need to be made on the balance sheet. The actual Return on Assets, on Equity and on Capital are far higher when third party money is stripped out. Wise has very low capital intensity and so returns are very strong.
It should be noted that the customer cash sitting on the balance sheet introduces excellent negative working capital dynamics to the Wise business. Much of the company's growth is funded this way significantly reducing financing costs.
Similarly, regulatory capital requirements are funded through retained earnings rather than external financing. The result is a balance sheet carrying approximately £1.3 billion of corporate cash, negligible debt, and significant strategic flexibility.
This is ultimately the beauty of the model.
Mr Market
Wise went public in July 2021 at a price of 800 pence (approximately $10.80 USD). The timing was unfortunate.
The listing occurred just months before the peak of the post-pandemic market euphoria that culminated in November 2021. Investors initially valued the company at an eye-watering 266x trailing earnings, pricing in years of future success before that success had materialised (beware overpriced IPOs).
When market sentiment inevitably reversed, Wise was caught in the downdraft. By June 2022 the shares had fallen over 60% to approximately 308 pence despite the business itself continuing to execute well. The earnings multiple had contracted, but was still far from cheap at 102x.
Despite continued mutliple compression, those that bought the July 2022 dip have enjoyed a total return of 28% CAGR over the last four years.
However, the most interesting point is what has happened to valuation multiples.
Today, the shares trade around 829 pence, only marginally above the IPO price, but on much improved unit economics.
Meanwhile, the business has become larger, stronger, and more strategically important. Diluted earnings per share have exploded thirteenfold from 3 pence five years ago to 40 pence today.
In relation to the earnings multiple, the numerator may be the same as the IPO price, but the denominator has expanded significantly. This has caused multiple compression to levels that make Wise look incredibly cheap today.
Said differently, the excess valuation premium has now been fully flushed out and Wise sits at a critical inflection point for investors.
Let’s break it down into numbers and decompose shareholder returns into their underlying drivers.
In terms of share price, an investor at the over valued IPO is now back to where he started 5 years earlier, with a meagre 0.73% CAGR return. But how did he get there?
Over the period, revenue growth contributed approximately 13.7% annually to shareholder returns. Margin expansion added a further 9.5%. Share dilution was largely immaterial. The overwhelming drag came from multiple contraction. Investors who initially paid an excessive valuation experienced a roughly 21.7% annual headwind as the market gradually recalibrated expectations. That cancelled out all the heavy lifting that the underlying business had been doing.
In other words, shareholders did not suffer because the business disappointed. They suffered because they paid too much.
That distinction matters.
The valuation headwind that dominated the first five years of Wise’s public life appears largely exhausted. The company now trades on a debt and cash free basis at roughly 20x earnings that have been depressed by unusually high investment spending, including costs associated with the Nasdaq listing, accelerated hiring, infrastructure expansion, and growth initiatives. On a more normalised earnings base, the valuation falls closer to 16x.
That is a very different proposition from the triple-digit multiple investors paid at IPO.
Over the past twelve months alone, the market has been willing to value Wise at levels approximately 50% higher than today’s share price.
More recently, sentiment has weakened following reports relating to a money laundering investigation being conducted by Belgian authorities.
The allegations concern criminal activity that may have utilised Wise transfers as part of a broader scheme. Based on currently available information, the investigation appears directed at the underlying criminal conduct rather than the fundamental economics of Wise’s business.
The company is cooperating with authorities and the long-term investment thesis appears largely unchanged. We discuss the matter in more detail in the risk section.
In truth, financial crime counter measures are implemented in response to the evolution of the innovative methods deployed by criminals. It is a classic case of cause and effect, and reminds me of a quote by Andy Grove, “Bad companies are destroyed by crisis, good companies survive them, great companies are improved by them.”
Whether the recent decline proves to be an opportunity remains to be seen. What is clear is that the valuation backdrop has changed materially.
For the first five years as a public company, multiple contraction acted as a powerful headwind. Going forward, it is more likely to be neutral and may even become a modest tailwind.
A simple thought experiment illustrates the potential.
Assume the share count remains broadly unchanged. Assume margins remain around current levels and do not expand further. Assume revenue growth slows modestly from recent rates. Finally, assume the market eventually values Wise at around 25 times earnings, hardly an aggressive multiple for a fast-growing, highly cash-generative platform business.
Under those assumptions, the shares could plausibly trade around 4,300 pence by 2031, equivalent to approximately $58.50 USD per share. That would imply annualised returns approaching 38%.
Importantly, this scenario does not require heroic assumptions. It does not require margin expansion, transformational acquisitions, or radical changes to the business model. It simply requires continued execution and a valuation that better reflects the quality of the underlying economics.
There are also several ways reality could prove more favourable than this base case.
Today’s compressed valuation multiples coincide with the period during which Wise has been deliberately reducing its cross-border take rates while scaling its infrastructure investments and moving to a Nasdaq listing. A compressed multiple on depressed earnings paves the way for an acceleration of shareholder returns as margins widen and multiples expand.
Wise Platform remains in its early stages and could accelerate transaction volume growth as additional banks and enterprises join the network. The accounts business continues to grow substantially faster than the transfer business and generates increasingly attractive economics. Direct payment rail connections continue to reduce costs and strengthen the moat. And as free cash flow accumulates, share repurchases become a realistic possibility.
Any combination of stronger revenue growth, modest margin expansion, or stock repurchases could materially improve shareholder outcomes.
Twenty sell-side analysts cover the stock with a mean consensus of ‘Outperform’, an average price target of 1167 pence ($15.75 USD) verses 818 pence ($11.04 USD) at the time of writing, and the highest price target is 1425 pence ($19.24 USD).
These analyst forecasts are not outlandish. The share price has traded up at those levels as recently as 2025.
Naturally, forecasting future returns with precision is impossible. The purpose of the exercise is not to predict a specific share price but to understand the relationship between business performance and valuation.
At today’s valuation, investors are no longer paying for perfection. They are buying a business with a long runway for growth, exceptional unit economics, a widening competitive moat, and a management team that has consistently executed. If those characteristics persist, the next five years could look very different from the first five.
The Money Laundering Issue
On 1 June 2026, Wise disclosed that it was responding to enquiries from the Brussels prosecutor relating to its business. The company stated:
“We are currently working with the Brussels prosecutor to respond to queries about our business, as we routinely do with regulators and law-enforcement authorities. His office’s enquiries are still incomplete and no specific findings have been shared with us to date... We will continue to engage with the Brussels prosecutor’s office if and when any specific findings are made available to us.”
The market reacted swiftly. The shares fell by as much as 18% before recovering a significant portion of the decline.
The question for investors is whether this represents a temporary regulatory setback or evidence of a deeper problem within the business.
To answer that question, it is important to understand the tension at the heart of Wise’s operating model.
Wise’s competitive advantage is built on removing friction from international payments. Customers choose the platform because it is faster, cheaper, and simpler than traditional alternatives. Anti-money laundering compliance requires the exact opposite. Every additional review, escalation, investigation, and verification step introduces friction, increases costs, and slows transactions. There is an inherent tension between delivering a seamless customer experience and maintaining robust financial crime controls.
It is also worth recognising the complexity of the task. The more efficient, low-cost, and widely adopted a payments network becomes, the more attractive it inevitably becomes to criminals. Financial crime follows liquidity. Success itself creates part of the problem.
This risk is therefore unavoidable. Any institution serving millions of customers and processing hundreds of billions of pounds in transaction volume will occasionally find itself under scrutiny.
Large financial institutions routinely face investigations relating to anti-money laundering controls, sanctions screening, know-your-customer procedures, and financial crime monitoring. HSBC, ING, and ABN AMRO have all resolved major compliance matters through negotiated settlements and remediation programmes. Others have successfully defended themselves when challenged.
The broader point is that regulatory scrutiny is not unusual within financial services. It is part of the operating environment.
Cross-border anti-money laundering compliance is arguably one of the most difficult challenges in financial services because criminal organisations continuously adapt their methods. Prevention systems are always reacting to emerging threats rather than anticipating every possible variation in advance.
Regulators understand this reality. Their focus is typically not whether financial crime occurred, but whether the institution took reasonable steps to prevent, detect, and report it. The legal and regulatory distinction is important. Negligence, recklessness, wilful blindness, and systemic control failures are punished. The mere existence of criminal activity passing through a financial network is not, by itself, evidence of wrongdoing by the intermediary.
At present, no public allegations of wrongdoing have been made against Wise.
If anything, the current situation appears more likely to be a controls review than a fraud allegation directed at the company itself.
Wise has spent years building governance and compliance infrastructure designed to manage precisely these risks. Oversight is provided through dedicated risk and audit committees, while management continues to invest heavily in compliance capabilities.
During the company’s May 2026 Investor Day, CFO Emmanuel Thomassin noted that approximately one-third of Wise’s workforce is engaged in compliance-related functions. CTO Harsh Sinha also highlighted the increasing use of artificial intelligence across customer onboarding and financial crime monitoring processes.
That level of investment is significant and it is in direct response to Wise having previously faced regulatory actions relating to anti-money laundering controls, sanctions compliance, and customer due diligence in the past. These included a fine in Abu Dhabi, enforcement action linked to UK sanctions controls, and penalties from US regulators. None of these events materially altered the long-term trajectory of the business.
Criminals only need to succeed occasionally. Financial institutions are expected to succeed all of the time. It’s unrealistic. The asymmetry makes occasional failures inevitable. Mitigation is the best defense, explaining why compliance is not treated as a secondary function, but is increasingly becoming a core competency for Wise.
That does not mean investors should dismiss the current investigation. Compliance failures matter. Regulatory credibility matters. Reputation matters. However, context matters as well.
It should be noted that Wise experienced a number of senior departures within risk, audit, and compliance functions during October and November of 2025. These included executives responsible for internal audit, due diligence, risk management, KYC operations, and financial controls.
Without access to internal information, it would be speculative to draw firm conclusions. However, this is a business not a political body; senior people tend not to resign enmasse. A more reasonable interpretation is that accountability was imposed following identified weaknesses. If true, this would be consistent with management’s long-standing emphasis on compliance and governance rather than evidence of indifference toward regulatory obligations.
Ultimately, the investment question is straightforward.
If the Belgian matter evolves into evidence of widespread negligence or systemic disregard for compliance obligations, the investment case would need to be reassessed.
If, however, this proves to be a more conventional controls review followed by remediation, enhanced monitoring, and potentially a small financial settlement, then investors are likely to refocus on the factors that really matter.
Based on the information currently available, the latter outcome appears more likely than the former.
The Bear Case for Wise Group
The central bear case against Wise concerns take-rate compression. Critics argue that Wise is participating in a race to zero. More particularly, bears worry that if transaction volume declines, management could eventually face a difficult choice between accepting lower margins or having to increase prices.
While management frames its take-rate reduction policy as a deliberate strategy, bears argue that cross-border payments are becoming increasingly commoditised and that Wise has little choice but to keep lowering prices to remain competitive.
Under this view, today’s volume growth is simply masking tomorrow’s margin pressure.
Bears also challenge the durability of Wise’s competitive advantage.
They acknowledge that the company has built an impressive global payments network, but argue that much of its edge stems from inefficiencies that may not exist forever. Governments and central banks increasingly recognise the shortcomings of cross-border payments and are investing heavily in modernisation initiatives.
Projects linking domestic payment systems such as India’s UPI and Singapore’s PayNow demonstrate that policymakers are actively working to reduce friction within the global payments ecosystem.
If national payment systems become increasingly interconnected, bears argue that the value captured by intermediaries like Wise could gradually decline.
Taking the argument further, some investors believe that future payment infrastructure may eliminate the need for companies like Wise altogether.
Under this scenario, central bank digital currencies, real-time settlement networks, or other government-backed payment systems eventually provide consumers and businesses with direct access to low-cost international transfers.
In such a world, Wise’s infrastructure advantage could steadily erode.
Stablecoins represent another frequently cited threat.
Transaction volumes continue to grow rapidly, regulatory frameworks are becoming more established, and settlement can occur almost instantly at extremely low cost.
Bears argue that stablecoins solve many of the same problems Wise was originally created to address.
If businesses and consumers increasingly transact through blockchain-based payment rails, Wise could find itself competing against a fundamentally cheaper technology stack.
Governance is another concern.
Founder Kristo Käärmann retains effective control through the company’s dual-class share structure. While supporters view founder control positively, critics argue that minority shareholders have limited ability to influence corporate decisions.
The concern is not necessarily today’s governance but future governance.
Public shareholders are effectively betting that management’s judgement remains sound indefinitely.
Critics also point to Käärmann’s historical tax issue. In 2022 he failed to pay a personal tax liability on time, later attributing the matter to an oversight due to a super busy work schedule. The liability was settled, a fine was paid, and regulators ultimately took no further action. Bears argue that such incidents raise questions about judgement and oversight at the highest levels of the organisation.
Regulation presents an additional risk.
Wise operates across dozens of jurisdictions and processes enormous volumes of customer funds every day. Compliance requirements continue to grow more complex as governments tighten anti-money laundering, sanctions, and financial crime controls.
A significant compliance failure could result in fines, licence restrictions, reputational damage, or even the loss of key operating permissions.
Finally, bears question whether the market opportunity is as attractive as it appears.
Wise already dominates much of the independent cross-border transfer market. As the company becomes larger, maintaining current growth rates becomes increasingly difficult.
The law of large numbers eventually catches up with every company.
Under this view, investors are extrapolating current growth rates far into the future while underestimating the combined effects of competition, regulation, technological disruption, and market maturation.
The Bull Case for Wise Group
The bull case begins with a simple observation. Moving money is not discretionary.
Consumers need to send money internationally. Businesses need to pay suppliers. Employees need to receive salaries. Companies need to manage cash across borders regardless of economic conditions.
Operating at the centre of essential financial activity, bulls argue that this creates a business with considerably more resilience than the market appreciates.
But they would also argue there is something even more attractive about the business model.
Wise is not a traditional company. It doesn’t require branches, inventories, manufacturing facilities, or large lending portfolios to grow. In a world increasingly impacted by tariffs, supply chain disruptions, geopolitical tensions, inflation, and rising capital costs, Wise escapes unscathed. Many businesses are fighting headwinds they cannot control, while Wise is largely insulated from them.
In fact, some of the very conditions creating pressure elsewhere can benefit Wise. Higher interest rates increase net interest income on customer balances, providing a tailwind at a time when many companies are facing higher financing costs and weaker demand.
Bulls would also argue that Wise occupies a position that is unusually resistant to artificial intelligence technological disruption. Over decades it has built infrastructure based on licenses and trust with a huge international customer base that no amount of vibe coding can replicate.
The result is a business that combines recurring demand, structural growth, and a degree of counter-cyclicality that is rare within the technology sector. In a difficult economic environment, Wise may prove to be one of the more defensive growth businesses available to investors.
In relation to take-rate reductions, the bulls say that the market misunderstands how the business actually operates.
Wise is not reducing prices because it is losing competitiveness. It is reducing prices because increasing scale continuously lowers the underlying cost of moving money through its network.
Volume growth is not coming at the expense of profitability. It is the mechanism through which profitability improves.
The company’s infrastructure has taken more than a decade to build and consists of regulatory licences, banking relationships, payment rail integrations, liquidity management systems, and local market expertise across dozens of jurisdictions.
Replicating that network would require substantial time, capital, and regulatory effort.
Bulls argue that this is far more difficult than critics assume.
The moat also extends beyond cost.
Network effects are becoming increasingly visible. Higher transaction volumes improve efficiency, lower costs, and allow Wise to offer even better pricing. Better pricing attracts more customers, which generates more volume.
The flywheel continues to strengthen.
Importantly, the business is no longer primarily a consumer remittance platform.
Wise Business and Wise Platform are becoming increasingly important contributors to growth. This shift matters because corporate payment flows are substantially larger than consumer transfers and considerably stickier.
Once payment infrastructure becomes embedded within treasury systems, payroll processes, invoicing workflows, and financial operations, switching providers becomes both disruptive and expensive.
Bulls believe this transition significantly improves the durability of future earnings.
The stablecoin threat is also frequently overstated.
Moving a stablecoin across a blockchain may be inexpensive, but customers ultimately live in a fiat currency world.
Money typically still needs to be converted into a stablecoin, transferred, converted back into local currency, and withdrawn into a bank account. Each step introduces costs, operational complexity, and counterparty risk.
Bulls would also point to the strength of the Wise card ecosystem.
For most customers, international payments are not just about moving money between bank accounts. They are about spending money while travelling, shopping online, or operating across multiple countries.
Wise allows customers to hold balances in different currencies and spend locally using a card wherever standard card payments are accepted. Foreign exchange is handled automatically at near-interbank rates with minimal fees.
Bulls argue this convenience is often overlooked when comparing Wise to emerging payment technologies such as stablecoins.
A traveller landing in Tokyo, Paris, or New York does not want to manage wallets, exchanges, and blockchain transactions. They want to tap a card and pay. For most customers, the winning solution is the one that makes international spending feel no different from spending at home.
Traditional banks offer a similar experience, but typically at unattractive foreign exchange spreads with exorbitant fees layered on top.
Bulls therefore argue that Wise is competing on more than just transaction costs. It is competing on simplicity, convenience, and user experience. It wins on all three.
Bulls say regulation is another tailwind.
Under Europe’s MiCA (Markets in Crypto-Assets) framework, anyone receiving stablecoins will need to complete KYC identity verification before converting those assets into a bank deposit. Similar regulatory regimes are emerging around the world as governments seek to prevent digital assets from being used for unlawful activities.
As different rules are introduced across different jurisdictions, managing cross-border payments through multiple wallets, exchanges, and compliance frameworks becomes increasingly cumbersome and time consuming for the average consumer or business.
This is where companies like Wise become relevant. Most customers have little interest in becoming experts in payment rules and regulations. They simply want their money to arrive quickly, safely, and at the lowest possible cost. A few clicks on a smartphone app and it’s done.
Bulls also argue that Wise is technology agnostic and so not tied to any specific payment rail. The company is fundamentally a settlement and ledger business, focused on moving money through whichever infrastructure offers the best combination of speed, cost, and reliability. Whether transactions ultimately settle through SWIFT, Faster Payments, SEPA, or a blockchain-based network is largely irrelevant.
This explains the company’s increasing focus on digital asset capabilities. Wise has no reason to resist technologies that improve efficiency. If stablecoins can reduce liquidity requirements, accelerate settlement times, or lower transaction costs, the company has every incentive to incorporate them into its network. The mission remains exactly the same as it has always been: move money across borders as quickly, cheaply, and seamlessly as possible.
The company benefits from improvements in payment infrastructure rather than being threatened by them.
On the topic of technology, bulls point to autonomous software agents executing complex payment workflows without human intervention and AI systems making payments directly to one another.
Wise is investing heavily in this future. Technology spending exceeded $250 million in 2025 and management has repeatedly highlighted artificial intelligence as a strategic priority.
Bulls also point to the strength of the recurring revenue model.
Revenue is spread across millions of customers globally with virtually no customer concentration risk. Customers who adopt Wise Accounts frequently increase their engagement over time through transfers, card spending, business payments, and account activity.
Customer balances continue to grow, card revenue is expanding rapidly, and account adoption remains strong. These trends suggest that customers increasingly view Wise as a financial operating system rather than simply a money transfer service.
The growth runway also remains enormous. The total addressable market is measured in tens of trillions of dollars annually while Wise’s share remains relatively small across most categories. Despite serving millions of customers globally, the company has only penetrated a fraction of the available opportunity.
Perhaps most importantly, growth remains overwhelmingly organic. Wise is not relying on acquisitions to drive expansion. Growth continues to come from product development, geographic expansion, infrastructure partnerships, and increasing customer adoption.
Businesses capable of sustaining strong double-digit growth without acquisition-driven rollups are relatively rare.
The US listing adds another potential catalyst. Greater visibility within the world’s largest capital market could attract additional institutional investors, increase liquidity, and potentially pave the way for inclusion in major equity indices over time.
Bulls believe the market continues to underestimate both the size of the opportunity and the durability of Wise’s competitive position.
If they are correct, today’s debate is not about whether Wise can continue growing.
It is about how much of the global payments ecosystem it ultimately captures.
Finally, Bulls say that Wise is a unique asset with no direct competition. It is becoming an increasingly important part of the global financial system. At approximately $10 billion of enterprise value it is large enough to be strategically important yet small enough to become an acquisition target. Rumour has it that JP Morgan has expressed an interest, but it may be a better fit for the likes of Adyen, Visa or Mastercard and be reminded that Adyen’s CEO formerly sat on the board of Wise for 6 years (2019-2025) and so knows the company and Kristo very well.
What to Watch For
US Active Customer and Volume Run-Rate Post-Listing: Management stated the US listing will ‘help us accelerate our mission, helping to bring more of Wise to everyone in the US, as customers and as owners.’ Monitor whether North American volume accelerates significantly. The US represents the largest cross-border pool globally; market share capture here is key to accelerating Wise’s volume growth vector.
The Balance of Take Rate vs. Operating Leverage: Track whether further fee reductions successfully trigger proportional volume growth. If the take rate contracts while volume growth flattens, it signals that price elasticity is weakening and scale-equity benefits are hitting a point of diminishing returns.
Business Diversification: Watch the mix shift between personal and business volumes. A higher proportion of corporate volume expands cross-border income stability, but changes the average take-rate dynamics due to potential bulk transaction discounting.
Regulatory and Compliance Costs: Dual listings carry material ongoing costs (regulatory compliance, dual reporting, investor relations). Accounting will move from IFRS to GAAP. The redomiciliation to Jersey introduces a new jurisdictional layer. The market is weighing the potential benefits of US investor access and brand visibility against the costs and complexity of the restructuring.
Regulation: The European Union’s PSD3 framework extends open-banking principles further into cross-border payments. On one hand, this could benefit Wise by accelerating adoption of lower-cost account-to-account payment methods. On the other hand, easier access to banking infrastructure may lower barriers to entry for competitors. The regulatory environment is likely to remain a moving target for years to come. Wise's ability to adapt faster than rivals may prove an important source of competitive advantage.
Margins: Management has historically targeted pre-tax margins in the 15% to 20% range. Recent guidance has been lower as the company absorbs the costs of the Nasdaq listing, infrastructure investments, technology spending, and accelerated hiring. The key question is whether these lower margins represent a temporary investment phase or a structural shift in management’s priorities. Investors should pay close attention to FY2027 guidance. A return to the traditional margin framework would suggest that recent pressures were largely transitory.
Rates: Interest income is sensitive to central bank rate decisions; any material rate-cutting cycle would compress this revenue stream, while elevated rates will boost profitability. Investors should therefore distinguish between operational growth and interest-rate-driven earnings fluctuations when evaluating performance.
Currency Exposure: Wise generates revenue across dozens of currencies and jurisdictions. This provides a degree of natural diversification, but it also introduces foreign exchange risk. Revenue and costs are not perfectly matched geographically, creating the potential for currency movements to affect margins and reported earnings. While currency fluctuations are unlikely to alter the long-term investment thesis, they can create meaningful volatility in reported financial results.
Conclusion: Is Wise A Good Investment?
Wise is one of the most interesting businesses operating in global financial services today.
Cross-border volume, customer acquisition, share of wallet and account balances continue to expand rapidly. Meanwhile, business customers are becoming a larger proportion of the mix and platform partners are aiding in the acceleration of growth.
At virtually every operational level, the company continues to execute superbly.
The opportunity remains vast. Wise has captured only a small fraction of the total addressable market, which itself is continuing to expand. The broader cross-border payments market continues to benefit from structural growth drivers including e-commerce, global trade, remote work, migration, and increasing international mobility.
What began as a fintech challenger has evolved into something more significant.
Wise increasingly resembles a piece of financial infrastructure.
Its competitive advantage is not based on branding alone. It is rooted in regulatory licences, payment rail connectivity, liquidity management, technology infrastructure, compliance capabilities, network scale, and cost leadership. These advantages reinforce one another over time and become increasingly difficult for competitors to replicate.
The economics are equally attractive. The business generates high returns on equity, substantial free cash flow, and requires relatively little incremental capital to grow. It continues to reinvest aggressively while maintaining a fortress balance sheet.
Management quality is another differentiator. Kristo Käärmann has consistently prioritised long-term value creation over short-term profitability. The company’s culture remains intensely customer-focused, and management incentives are generally aligned with shareholders.
The Nasdaq listing introduces a potentially powerful additional catalyst. Increased visibility, deeper liquidity, broader institutional ownership, and eventual index inclusion could all help narrow the gap between market value and intrinsic value over time.
That gap is difficult to ignore.
Sell-side analysts generally maintain price targets materially above the current share price. Either analysts are collectively too optimistic, or the market remains overly sceptical. Given the complexity of the business model and the tendency of markets to focus on near-term headlines, the latter explanation appears plausible.
Wise is not without risks. Regulatory scrutiny will remain constant. Interest-rate cycles will affect reported earnings. Competition may intensify. The dual-class share structure will continue to divide opinion.
Yet none of these concerns appear sufficient to undermine the fundamental strengths of the business.
The incumbents remain constrained by legacy systems and conflicting incentives. Wise continues to widen its infrastructure advantage. The platform becomes more valuable as volume increases. And the opportunity ahead remains substantially larger than the business today.
For investors willing to tolerate regulatory noise, founder control, and periodic market volatility, Wise appears to offer something increasingly rare in public markets: a long-duration organic compounder with a substantial runway for growth and a management team that understands exactly how to extend its competitive advantage.
That combination is difficult to find and even harder to replicate.
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Hi James, solid pitch here! Time to do some DD on Wise. Just curious, if you have an opinion which is the better business in the long run…Adyen or Wise? And which is the more attractive stock if you can only buy one of them? Thanks.
Thanks, great write-up. I personally think there is a good chance they announce a decent SBB next week at the results. Previously hinted at it, and unless they intend to just grow the cash balance further, then given they pretty much expense everything, then a SBB is really the only option left. Money laundering can't imagine they are complicit, but it is the tail risk, balance of probabilities should be fine.....