The Business Decoupling—Why Remitly’s Slowdown is Actually a Wise Commercial
The End of the "Rising Tide" Era
For much of the last decade, the fintech thesis was simple: “Anything is better than a bank.” Investors poured capital into any app that offered a cleaner UI than Wells Fargo or a lower fee than Western Union. In that zero-interest-rate environment, Remitly and Wise were viewed as peers—two sides of the same disruption coin.
However, the fiscal data from 2025 has forced a decoupling. We are no longer looking at two variations of the same business; we are looking at two fundamentally different species of economic animal.
Remitly is a Service Business. It provides a fantastic, empathetic service to migrant workers, but it pays a high marginal cost for every dollar of revenue it generates. Its recent guidance for “high teens” revenue growth in 2026 suggests the law of large numbers is finally catching up to its paid acquisition model.
Wise is an Infrastructure Business. It has spent a decade digging tunnels under the global banking system. With 70% of its growth coming from word-of-mouth and a balance sheet that generates massive interest income, Wise has built an economic engine that gets more efficient as it scales, not less.
This report breaks down the unit economics, the infrastructure moats, and the strategic pivots that define this new reality.
1. The Unit Economics of “Gravity”
To understand the divergence, you have to look at the Cost of Acquisition (CAC). In the remittance game, CAC is gravity.
Remitly: The Paid Acquisition Treadmill Remitly is a marketing machine. In Q3 2025 alone, the company spent $79.3 million on marketing, which equates to roughly 22.5% of its total revenue. While this is an improvement from previous years, it reveals a structural vulnerability: Remitly effectively “rents” its growth.
The moment Remitly stops feeding the Google and Facebook ad auctions, its growth engine stalls. As they saturate their core corridors (like US-Mexico), they must hunt for customers in more expensive, lower-volume corridors. This creates a “CAC floor” that is hard to break through. The “high teens” growth guidance for 2026 is an admission that the hyper-growth phase of buying cheap users is over.
Wise: The Viral Anomaly Wise operates in defiance of standard fintech physics. In FY2025, approximately 70% of new customers joined via Word of Mouth (WoM) . This is the holy grail of consumer tech. It means Wise effectively pays zero dollars for the majority of its growth.
Because Wise doesn’t have to give 20%+ of its revenue to Mark Zuckerberg, it reinvests that cash into what it calls “Price Investments.” In Q4 FY2025, Wise drove its average cross-border take rate down to 0.53% (53 basis points). This creates a “virtuous circle of death” for competitors:
Wise lowers fees.
The product becomes undeniably better.
Customers evangelize the product (WoM).
Volume grows (£145.2 billion in FY25).
Unit costs drop due to scale.
Wise lowers fees again.
Remitly cannot mathematically compete with this loop because their margin is earmarked for ads; Wise’s margin is earmarked for price destruction.
2. The Infrastructure Moat: “Renting” vs. “Owning”
The difference in speed and cost is not just about software; it’s about plumbing.
Remitly’s Aggregator Model Remitly largely relies on a network of partner banks and third-party aggregators to settle funds. When a user sends money to the Philippines, Remitly is often instructing a partner to pay out the funds. This is capital intensive (requiring pre-funding) and relies on the partner’s operating hours and fees. This is why Remitly emphasizes its “partner network” of 470,000+ cash pickup locations—it is an asset, but it is also a toll booth .
Wise’s Direct Connection Model Wise has spent years obtaining its own licenses to plug directly into central banking systems, bypassing the correspondent banking chain entirely.
Brazil: Wise is a direct participant in Pix, the instant payment network .
Japan: Wise is connecting directly to Zengin .
Philippines: Direct integration with InstaPay.
The result is raw speed. In Q2 FY2026, 63% of all Wise transfers were instant (delivered in under 20 seconds). This infrastructure allows Wise to move money at a marginal cost close to zero, while Remitly is still paying interchange and partner fees.
3. The Pivot Points: Desperation vs. Domination
Both companies know that simple money transfer is a race to the bottom. Their reactions to this commoditization tell the story of their future.
Remitly’s Pivot: The Risk Curve (Lending) Facing decelerating user growth, Remitly is attempting to monetize its existing base more aggressively through Remitly Flex, a small-dollar lending product.
The Bull Case: Remitly has proprietary data on user cash flows and can underwrite risk better than a payday lender.
The Bear Case: This introduces credit risk to a previously risk-free fee business. In a macroeconomic downturn, migrant remittances are resilient, but loan repayments are not. If unemployment rises in the US, Remitly’s loan book could sour quickly.
Crypto Experiment: Remitly has also partnered with Circle to enable USDC stablecoin payouts . While innovative, this feels like a niche solution for hyper-inflationary markets rather than a global standard.
Wise’s Pivot: The Platform Play (B2B) Wise is pivoting to become the “Intel Inside” of global finance. Wise Platform allows banks and enterprises to embed Wise’s infrastructure into their own apps.
The Scale: Wise is now powering cross-border payments for Nubank (Brazil), Standard Chartered, and Google Pay .
The Strategy: This is classic “Aggregator Theory.” By serving its competitors, Wise aggregates more volume, which drives down its costs, which allows it to lower prices, which attracts more partners.
Revenue Quality: Platform revenue is high-margin, recurring, and extremely sticky. Once a bank integrates Wise, they are unlikely to rip it out.
4. The Hidden P&L Driver: Net Interest Income
Perhaps the most overlooked aspect of the Wise valuation thesis is its transition from a payments company to a neobank.
Because Wise users now hold substantial balances in their multi-currency accounts (£21.5 billion in customer holdings as of FY25) , Wise generates massive interest income.
In FY2025, Wise generated £594.3 million in gross interest income .
Even after returning a portion to customers, this creates a “profit buffer” that Remitly simply does not have.
Wise’s “Interest Income Framework” dictates that they retain ~20% of this income to boost margins and return 80% to customers to drive growth. This allows Wise to remain highly profitable (GAAP Net Income) even while aggressively cutting transfer fees. Remitly, by contrast, lives and dies by the transaction spread.
5. Conclusion & Valuation Implications
Remitly (RELY) is priced as a maturing growth stock. It is a fantastic business that serves a critical human need, and it will likely generate consistent cash flow. However, its reliance on paid marketing and the saturation of its core corridors caps its upside. The move into lending increases its beta (risk profile) without guaranteeing a corresponding jump in alpha (return).
Wise (WISE.L) is priced as a strategic platform. It is trading on the potential to become the default settlement layer for the internet. Its unit economics (6-month payback period ) and viral growth (70% WoM) justify a premium multiple. The upcoming dual listing of shares (potentially in the US) could unlock significant liquidity and close the valuation gap with US peers.
Bottom Line:
Remitly is winning the battle for the specific “cash-to-family” use case.
Wise is winning the war for the global movement of money.
In the long run, infrastructure always beats service. Remitly is a better Western Union. Wise is a better SWIFT.