British fintech firm Wise has won approval for direct access to Japan's bank payment clearing network, becoming the first foreign financial company to do so, it said on Thursday.

The move could put pressure on banks including megabanks such as Mitsubishi UFJ and smaller players such as SBI Shinsei and Sony Bank in the competitive market for remittances.

Fees for cross-border payments, which are typically processed by banks, have fallen in recent years but remain high.

The average fee to send $200 from Japan is the highest among G7 countries at 6.94%, according to World Bank data for the first quarter of 2024.

Total remittances in and out of Japan reached ¥1.54 trillion ($10.3 billion) in the 2023 financial year, Bank of Japan data shows, a record high and an increase of 14.4% on the previous year.

Wise said access to the "Zengin" system will allow it to bypass intermediary banks that process and settle funds in Japan, lowering fees and processing times.

The company, whose services include consumer remittances, business accounts and provision of its backend payments infrastructure to financial institutions, says the average fee for its cross-border transactions globally is 0.59%.

It most recently posted a 20% rise in quarterly cross-border volume. In the 2023 financial year, it moved around 120 billion pounds in total, making up 5% of personal remittances and 1% of small and medium business remittances globally.

In Japan, the number of its personal and business customers grew 35% in the past financial year.