[lmm]

> So the question is if the margins are so low that they need a billion dollars to make a profit, what kind of scale do they need to be worth a billion dollars.

Well, if we're assuming P/E=20 then they need to be heading for 50 million dollars in profit. Let's guess their "gross margin" from their spread is 2%, so they're currently at top-line revenue of 2 million dollars (and the same in costs). So if their costs were completely flat they'd need to grow to be processing 25 billion dollars of transfers to justify the valuation; in practice growth won't be completely free of costs so we're talking about a bit more, maybe 50 billion dollars. Does that sound vaguely plausible?

> And it somehow it makes me question their business model as well. Sooner or later they will be tempted to raise fees and get more profitability.

I doubt it; there are a lot of competitors in the same space. At the moment TransferWise has the name recognition, but that won't let them raise costs a lot.

[mseebach]

I would assume that they will be able to get significant revenue from building higher-value-added services on top of their infrastructure. The "Borderless account" is a potential step in that direction: https://transferwise.com/borderless

[tryingagainbro]

Plus they'll be able to increase the fees by x% little by little...judging competition