Wise shares fell sharply on Friday after US regulators rejected the company’s application for a banking licence, dealing a setback to the payments group’s expansion plans in what it has described as its largest growth market.

The London-founded fintech said the US Office of the Comptroller of the Currency (OCC) had turned down its application for a national trust bank licence. The OCC is the federal regulator that charters and supervises national banks, making its approval important for companies seeking to replace fragmented state-by-state oversight with a single federal framework.

Wise said the OCC’s decision would not affect its current US operations and confirmed that it intends to file a new application. Its shares dropped more than seven per cent in early trading in London following the announcement.

According to Wise, the regulator’s decision concerned its original application, which was submitted more than a year ago. The company said it had since made changes to its compliance systems, customer checks and financial crime controls.

“We have invested significantly in enhancing our processes and controls globally and in the U.S. since the original application for the trust charter was prepared, including those to prevent financial crime alongside other forms of risk,” the company said.

Wise added that changes to US payment rules meant the original application was no longer the appropriate route for securing a licence. The company’s next filing will therefore be watched for how it addresses both the updated regulatory route and the OCC’s expectations around risk management.

A US banking licence would allow Wise to operate under a single federal regulator rather than depending on dozens of state licences. Such a structure would make it easier for the company to expand its range of products in the US.

US expansion plans

The rejection follows Wise’s move of its primary listing from London to Nasdaq, while maintaining a secondary listing in the UK. At the time, the company said the switch would increase its visibility in what it called its “biggest market opportunity” and provide better access to US investors.

Wise has been investing heavily as it seeks to expand beyond international money transfers. The company now serves about 19 million customers worldwide and processed more than $240bn in cross-border payments last year.

The US has become an important market for European fintech companies, but banking licences remain difficult to secure because applicants must satisfy regulators on capital, governance, compliance and financial crime controls. Rival Revolut submitted a fresh application for a US banking licence earlier this year after dropping a previous attempt.

A licence would enable fintech firms to offer a broader range of banking products directly, rather than relying on partner banks.

Despite Wednesday’s decision, Wise said its US business would continue operating as normal under its existing licences across 48 states and four territories while it prepares a new application.