Hi Alon, welcome to our series “Behind the Startup.” Please tell us about yourself and the story behind ? Ishan Pandey: MoneyTransferComparison Hi Ishan and it’s great to be here. Alon Rajic: My professional background is in online marketing. Prior to starting up Finofin, the company that runs and operates Money Transfer Comparison, I was the head of SEO for publicly traded XLMedia (XLM.L), which was then Europe’s largest gambling affiliate. I wanted to transition what I learned about content creation and online marketing outside of iGaming, and envisioned the next market to explode is Fintech, but there were too many sub-niches available within this massive space. I methodologically inspected a multitude of sub-niches within Fintech across a number of locales, and my ultimate conclusion was that within international money transfers there’s a substantial knowledge gap; back then, there were no other sites reviewing and comparing the various services available for individuals and businesses to transfer money abroad, highlighting the difference between them, or even giving the prospective customer an understanding how many such services exist, what do they offer, or what’s the difference between an online service and a broker (one of the most basic considerations to make when choosing a provider). In other areas within Fintech, such as mortgages, credit cards, banking or financing, there were plenty of informational sites providing that sort of information.  Sites like bankrates.com (USA) and MoneySavingExpert (UK) were comparing the variety of options available for customers in a sensible way, but their international money transfer section, specifically, was lacklustre. The decision was relatively easy because I knew Money Transfer Comparison could have a real added value for its readers and imagined the money would follow (and it did). What are your views on the payments industry and the recent fundraising raised by fintech startups in the UK? Ishan Pandey: I believe the tech bubble hasn’t skipped over Fintech startups in the UK. While I do believe there’s a ton of room for innovation in this space, the valuations are tough to swallow. The biggest story of the year in UK Fintech, at least in my view, is the IPO of Wise, the prominent money transfer and multi-currency wallet company, in July of 2021, at a valuation of slightly over 11bn GBP. Alon Rajic: The main takeaways as I see them are: •	At first - investors showed a willingness to demonstrate patience when it comes to profitability. Wise boasts a mammoth £421m revenue from a total volume of £54bn in international money transfer transactions, but the profit generated was just £41m pre-tax (for the financial year of 2021). That means investors were willing to value the company for x268 its pre-tax annual revenues. The promise of a company that holds £1bn of its customers' funds at any given time and has a database consisting of tens of millions of immigrants sparked the investors’ imagination as for future prospects. Over the years operating in the international money transfer industry, I’ve heard speculations about Wise turning into a full-scale bank, starting its own immigrant insurance service, and/or adding share trading to its offering - all of which hasn’t happened as of yet, but can offer a strong upside, and hence justifying (or rather, rationalising) the decision to invest in a company whose valuation is so high relative to its current profits. •	When global stock markets became slightly colder due to inflation concerns and expected interest rate hikes in the U.S - Wise PLC’s stock, similarly to many other tech stocks, took a dive. From October 21, 2021, until today, in just approximately 3 months, the stock shed more than 40% of its value. It did not take much time for investors to lose patience. My conclusion from the above is that the success of tech startups in the coming years and their ability to raise funds at high valuations depends, heavily, on outside market conditions. A valuation of a certain Fintech startup has a lot more to do with the timing of its raising funds, how much free money do investors have at that point in time, and which are the viable investment alternatives at that point in time. In 2021, the market reflected great optimism across the board and specifically in tech/ Fintech. Companies like Revolut have raised incredible amounts ($800m) at unbelievable valuations ($33bn). With global markets changing rapidly, as they adjust to a higher-than-zero interest rate era, risk aversion will propagate into the private market and I do believe that it will become significantly more difficult to raise money, let alone at current valuations.  The real question is whether the above will eat into global growth, and specifically high-tech startups which were the biggest benefactors of ultra-high valuations. What are your views on the pandemic and the rise of electronic payments in the UK? What will be the future of payments post-pandemic? Ishan Pandey: This is the many billions of dollars question. Alon Rajic: The pandemic, which had (or still has) realistic potential to put a real dent on the economy, has caused the opposite effect on the money market somehow. Propelled by government low-interest loans and grants for small businesses, direct stimulus payments, as well as bond-buying, retail investors were gorging every payment and Fintech shares they could get their hands on, while institutional investors were doing essentially the same with pre-IPO payment and Fintech startups. Buying into Fintech and payment shares wasn’t a bad decision, in hindsight. The pandemic, and particularly the long lockdown periods, has changed consumer patterns forever.  Online neo-banks with a smooth app interface suddenly appeared to be a lot more attractive than a bank whose branches are closed anyhow, and customers are forced to use its outdated online banking app. There was an influx of customers who tried to find the best online solutions for their needs - from corporations to small businesses, through private consumers. As lockdowns died out, the world has never returned to normality and it’s plausible to believe it has nothing with new covid waves and variants. It’s just the new consumer normal. Older consumers learned how to use non-bank payment services for the first time, out of necessity, but they don’t really want or need to ever go back. Younger consumers amplified and diversified their usage. The same goes for small (and big) businesses - they already went through the pain of having to set up things like salary payments, HR benefits, and international payments on a whole new system, but now that it’s set-up and their level of satisfaction has increased, they won’t go back to their “offline” pre-covid solution. If anything, they will move over to another provider in the Fintech space. I believe there is a bright future ahead for payment and other Fintech startups, but considering the things I stated earlier in this interview regarding the state of the broad economy, there may be a valuation or funding slowdown. With less available resources, fewer headlines in the newspaper, and generally less of anything than what Fintech has gotten used to in 2020-2021, consumer adaptation may slow down as well but that would only be a temporary bump in the road. What does the roadmap ahead look like for the payments industry as a whole? Ishan Pandey: When we started off, international payments were, for us, just about finding a cheaper and more friendly replacement for banks to transfer money from point A to point B. As we learned more about the industry and what small businesses, startups, corporations and high net-value individuals require, we realised there are just a lot more aspects relating to international money transfers. Alon Rajic: Some businesses need to hedge their foreign exchange exposure so that they will not be too exposed (or not exposed at all) to currency fluctuations. That is particularly important if you have monthly FX costs, get a lot of your income in FX, have loans in a different currency to your earnings, and so forth. For that, there are designated foreign exchange hedging tools such as Forward Contracts which allow you to lock-in today's foreign exchange rates for up to 2 years in the future. Some businesses, including many micro-businesses and sole traders, require bank accounts in different countries to accept foreign currency payments from abroad. For that, many currency brokerages have added a virtual foreign bank account option to their offering. Verified customers can get sub-accounts in a variety of currencies and countries to accept payments without having to go through the trouble and the costs of accepting them through their bank or via services like PayPal (who take exorbitant foreign exchange fees to the tune of 4%-5% of the amount exchanged). Some more technologically-oriented businesses now require API access from their payment providers in order to make payments through their own systems, or issue invoices and receive funds directly through an API, and some international payment providers are already working on enabling that. When all of the different functionalities offered by money transfer companies are “baked” into their online platforms and can connect automatically with other online services, that’s when new dawn in international money transfers will begin. In terms of the business model, there’s also a great shift towards cheaper and more transparent rates led by the aforementioned Wise, but also by companies like Azimo, WorldRemit, and CurrencyFair. There’s even one company that started a “subscription fee” business model which enables customers to make all their international money transfers for free by simply paying a small monthly upfront fee. Time will tell whether the Wise model is viable enough and whether its valuation will hold firmly enough to continue to enable the company to employ 2,400 people across the globe. Disclaimer: The purpose of this article is to remove informational asymmetry existing today in our digital markets by performing due diligence, asking the right questions, and equipping readers with better opinions to make informed decisions.

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