Dandelion: The best competitor to the Wise Platform?
$WSE started in 2011 when founder/CEO Kristo Käärmann encountered a real life problem that he wanted to solve: Make cross-border payments cheaper, faster, and more transparent.
But he was not the first one to try to solve this same problem.
In 1994, another entrepreneur, Michael J. Brown, founded
$EEFT to solve the same problem.
At the time, the solution was different. That was before you could imagine sending money over the internet from your phone. Euronet started by installing ATMs around Europe (and then the world). Later, it acquired payment processing companies and the remittance company, Ria.
Euronet is still led by its founder after thirty years and the company has quite a diversified business model.
But the one business that interests us the most is Dandelion.
Dandelion is a direct competitor to the Wise Platform as it enables banks and other financial institutions to use the liquidity pool of Euronet for their cross-border transfers, bypassing correspondent banks.
Dandelion has one big advantage that
$Wise doesn't. It has a deeper reach through the the Ria network. In order for Wise to work, both parties need a bank account. This is not the case with Dandelion since the money can be transferred to a Ria agent.
Last year, Dandelion partnered with Citi (one of the major correspondent banks) and
$V , further expanding its reach. With their other businesses they are even partnering with Google and Revolut.
This is definitely a threat to the Wise Platform.
But I would still prefer investing in Wise. Because of the way they are approaching the same problem.
Wise is trying to solve one problem: Make cross-border payments cheaper, faster, and more transparent. And from this, they are creating new value-added services.
Right now, it is limited to individual and microbusinesses but as they keep lowering prices, they can offer more and more of these services. It is a flywheel. Someday, Wise might even be able to compete for enterprise market share.
Wise can do all of this by expanding margins and remaining capital-light.
Euronet took the top-down route. They have all these different businesses, some even with competition with each other. And now, they found a way to make them work together to solve the cross-border problem.
Well, ATMs are cash intensive. That's physical cash sitting as inventory and not earning interest. The agent model of moving money is expensive.
Euronet is not the same flywheel as Wise. And at some point, you have to choose between lowering prices and remaining profitable.