Neobanks: the promise of international payments

While neobanks have diversified their activities and now offer a wide range of products and services, their initial promise was to enable international payments free of charge, whether to pay with a credit card or transfer money abroad. It's a positioning that has won them many customers.

Many customers attracted by free international payments

Ten years ago, neobanks such as N26, Wise and Revolut succeeded in establishing themselves alongside industry players thanks to a promise: to enable their customers touse their blue card abroad, to pay for purchases or withdraw cash, without additional charges.

International payments, which also included free bank transfers abroad, were the neobanks' main selling point, the product that set them apart from the competition from traditional banks.

According to neobank Wise, the latter lack transparency when it comes to fees associated with international payments, hidden charges that it claims amount to $187 billion. Wise claims to have saved its customers $1 billion in fees by 2021.

Neobanks: ever-higher valuations

Today, the success of these neobanks has made traditional banks covetous. While Deutsche Bank is currently valued at €18 billion, and Société Générale at €20 billion, Revolut's valuation reached $33 billion a year ago, following an $800 million fund-raising.

The valuation of neobank N26 was raised to $9 billion after a fundraising round of $777 million in October 2021, and Wise is now worth £5.3 billion on the London Stock Exchange.

Attracted by this success, online banks like Boursorama, BforBank and Fortuneo have also been taking a close interest in international payments since 2016. While they don't offer free payments outside the euro zone, the fees they charge for payments in foreign currencies are among the lowest on the market.

As for traditional banks, while some have set up subscription systems to benefit from free international payments for a limited period of time, none have taken this approach as far as neobanks.