Cross-border payments still not easy enough, says Revolut Europe CEO

The expansion of fintechs in the eurozone is being restricted by a lack of regulatory unity, said Joe Heneghan, head of Revolut Europe.

“What you meet in different countries, unfortunately, are variations in local laws,” he told Euronews at an event in London, organised by the digital banking firm.

“That’s a headache for a firm who wants to be successful in one country and wants to cross over the border,” he explained, adding that it made it difficult for “European champions to emerge”.

Launched in 2015, Revolut announced this November that it had hit the 50 million customer mark globally, emerging as the most downloaded financial app in Europe.

Revolut aims for competitive edge

While the firm offers a range of services, one selling point is its offering of quick, cheap international transfers.

Revolut offers competitive exchange rates compared to traditional banks – and it doesn’t charge a transaction fee for sending money within the SEPA region.

The SEPA jurisdiction – Single Euro Payments Area – includes EU member states, along with a handful of other countries such as Iceland, Liechtenstein, Norway, Switzerland, and the United Kingdom.

Despite the firm’s success, Heneghan highlighted existing barriers to working across borders.

IBAN discrimination, he told Euronews, is one hurdle. This is where employers or companies only accept national IBAN numbers, refusing to send money using a foreign code.

Although this is forbidden within the SEPA region, he suggested that authorities don’t yet view it as a serious enough problem to tackle it.

IBAN discrimination can, however, block payments for Revolut users.

In many countries, customers of the neobank possess a Lithuanian IBAN, linked to Revolut’s Lithuanian banking licence.

Since 2022, Revolut has been establishing local branches in different EU markets to tackle this problem – at an added expense. 

This allows the neobank to offer local IBANs.

A truly integrated market

Heneghan’s criticism of fragmented markets chimes with recommendations made by Mario Draghi, former Italian Prime Minister, in his recent report on European competitiveness.

While not specifically addressing IBAN discrimination, Draghi suggests Europe must act as a unified bloc to keep up with other global powers.

Draghi notably urges progress on a Capital Markets Union (CMU), a single network to get credit flowing smoothly across the EU.

One European policy which complements the aims of the CMU is the rollout of the digital euro – a digital currency backed by the ECB.

Digital euro more opportunity than competition

Asked if Revolut sees the digital euro as competition, Heneghan argued that the firm rather views it as an “opportunity”.

“That’s another service that we would look to integrate and make available to customers,” he said.

Antoine Le Nel, chief growth and marketing officer at Revolut, also suggested that the digital euro doesn’t threaten the neobank’s offerings in Europe.

“I’m very happy to see that Revolut is inspiring a lot of the industry,” he told Euronews, “not only fintechs but also traditional banks”.

When asked if the firm would collaborate with traditional financial institutions on products, he replied: “No. I don’t think there is anything that we can’t do ourselves.”

More products to come

Also at the event in London, Revolut announced fresh product offerings.

The firm notably confirmed plans to launch its mortgage product in Lithuania, Ireland and France in 2025. Business lending is another offering on the cards for next year.

Looking at growth going forward, Le Nel stressed: “we’re very keen on having a banking licence everywhere where we are operating.”

He specifically confirmed Revolut’s desire to obtain a US licence.

This comes after similar comments made earlier this week by Revolut boss Nik Storonsky.

Stornosky told an audience at the Slush event, Helsinki, that it was a mistake to scale without banking licences.

“For a long time I wanted to be as less regulated as possible, it was the completely wrong decision,” he said. 

Revolut nonetheless remains a giant in the neobanking space, valued at $45bn (€43.19bn) in a share sale in August.