Wise PLC moves two hundred forty-three billion dollars a year across borders for nineteen million people — most of them immigrants and small businesses whom the big banks have decided are not worth serving — and last Thursday the London-headquartered payments company reported a market-beating $660 million pretax profit and a fresh $500 million buyback, as Joe Stonor wrote in the Wall Street Journal. That buyback builds on a $470 million repurchase the year before. Friday the shares jumped eight percent to lead the Stoxx 600. A company that exists to move other people’s money returned a billion of it instead to the people who already own the equity.
I will grant the service. The old banks held a cartel on cross-border wire transfers, charging extortionate fees and taking days to move what now moves in seconds. Wise broke that cartel. A buyback is, in the cleanest accounting, a normal capital return to the residual claimants. The company is profitable: its active customer base grew 21%, cross-border transactions rose by more than a third, customer deposits grew 40% to $39 billion, and pretax margins came in at 26%, just above the company’s own 20-to-25% target. I would tell you, having run a farm cooperative for a long time, that there is nothing inherently wrong with a company returning excess capital to the people who put it there.
The trouble is the order of the priorities. The buyback comes first. The other obligations come second. The second is where the public interest lives.
Consider the compliance. The company is under formal investigation by Belgian prosecutors for anti-money-laundering failures involving suspicious transactions totaling more than €500 million — a story we noted when the news first broke on June 1 and has continued to develop since. Its legal and regulatory provisions rose by $6.2 million, to $23.8 million, in the most recent fiscal year. That is not a serious number for a company of this size. It is a rounding error against a buyback more than twenty times its size, and the size of a serious anti-money-laundering program at a firm moving a quarter-trillion dollars a year is many multiples of that. The investigators have said the inquiry is incomplete with no known timeline. The proper response to that uncertainty is not to declare a half-billion in shareholder return. It is to set the money aside, hire the people, rebuild the controls, and let the investigation run.
The abstraction does not care what it is moving. The algorithm does not know the difference between a worker sending his wage to his family and a cartel washing the proceeds of something worse. It only knows the toll. But the toll-taker, at least, knows the pipes are dirty: that $6.2 million hike in compliance provisions, against a buyback more than twenty times the size, is the company’s own admission of the grime. The architecture of the market is designed to feed the abstraction — the corporate tax codes of London and New York reward the buyback, the regulators look the other way while half a billion euros of suspicious money washes through the pipes — and the tollbooth is lubricated by the very gravity of the system. A tollbooth on the abstraction of money is still just a tollbooth. It does not grow the crop, mill the timber, or cast the iron. It lives entirely in the space above the real economy, feeding on the very friction it removes. It is the rentier Belloc described a century ago in The Servile State, the functionless investor who owns nothing but the right to extract. And when the tollbooth brings in $660 million, the company does not use it to build, to hire, to invest in the towns where its nineteen million customers actually live. It launches a half-billion-dollar share buyback. It buys its own paper. The enterprise becomes a serpent eating its own tail, mistaking the consumption of its own equity for growth. When you reduce money to pure information, you strip it of the moral weight of the hands that earned it.
Consider the workers. Headcount grew more than a third over the year. The flywheel Jefferies calls healthy is, in part, a productivity story: more transactions per employee, more revenue per employee, and very likely more hours and more strain at the desk. The earnings-per-share benefit of the buyback is, in the analyst’s own framing — Peel Hunt’s Gautam Pillai and Tanzila Ali wrote it plainly — durable even if revenue growth comes in below expectations next fiscal year. The buyback is the company’s first claim on its own cash. The workers’ wages are, as ever, the line item that bends.
Consider the customers. Cross-border remittance fees are still a tax on the diaspora. The nineteen million active customers are not, by and large, hedge-fund managers wiring margin to Geneva. They are the Filipino domestic worker in Riyadh wiring four hundred dollars home to her mother. They are the Polish contractor in Birmingham paying his subcontractor in Gdańsk. They are the small importer in Lagos buying from a supplier in Guangzhou. A buyback is the explicit choice to take a dollar of profit — earned from the fees the customer paid — and return it to the equity rather than to the next fee reduction or to a product improvement that benefits the user.
The right answer is not to nationalize the company or to break it up under emergency antitrust powers, though the Brandeisian instinct to ask how big is too big is a sound one. The right answer is the one the cooperative tradition has been building for two centuries: the member-owned firm, the credit union, the mutual, the Rochdale principle. A payments cooperative returns surplus to its users, in the form of lower fees or better service, or to its workers, in the form of better wages. It does not extract a billion dollars in two years and return it to outside shareholders. The Capper-Volstead exemption, passed in 1922, gave America’s farm cooperatives the legal room to bargain collectively without being prosecuted as a cartel, and the rest of the economy — payments included — deserves the same. Building that structure at scale is harder than announcing a buyback, but the community banks and rural electric cooperatives are the proof of concept, and the largest in Wisconsin happens to be headquartered in my own county, on a street two miles from the railroad tracks the Chicago & North Western built in 1911 and the freight-only Union Pacific still runs over.
A company that exists to move other people’s money across borders is, in a special way, a steward. The earth was given for all. Property — including the property of a Wise PLC shareholder — is real and good, but it answers to a prior truth. The shareholders got their billion. The compliance budget got six million. The customers got a stock-chart pop and the next quarterly fee schedule. The order tells you which of those the company actually serves — and a structure that put the users in the room where the surplus is decided would tell a different story.