TransferWise: The In-Depth Review

Thanks to rapid advances in technology, international money transfer has been made easier. We are now seeing an unprecedented rise in cross-border monetary transactions.

That’s what led to the establishment of an international money transfer company called TransferWise. TransferWise offers a new, better way to send money overseas, which is cheaper and faster than traditional methods.

TransferWise offers its customers some unique benefits that banks don’t. Regardless of location, people can send money swiftly, safely, and cheaply to their business associates, family, or friends across the world.

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History

TransferWise was founded by Taavet Hinrikus, who also happens to be Skype’s first employee, and Kristo Käärmann, a financial consultant at the time. The two Estonian founders came up with the concept of TransferWise due to their firsthand experiences of the “pain of international money transfer” back when they used to transfer funds between the UK and their native country, Estonia.

They had to pay high bank charges for conversions from euros to pounds, and vice versa. Hinrikus, expressing his anguish, said later in an interview:

I was losing 5% of the money each time I moved it. At the same time, my co-founder Kristo Käärmann (also from Estonia) was starting to get paid in the UK and was losing a lot of money transferring cash back home to pay for a mortgage there.

Their agonies ultimately led the two entrepreneurs to devise a crowdsourced currency exchange service that offered a cheaper alternative to existing traditional institutions.

Eventually, in 2011, their ingenuity led them to create TransferWise. Since then, TransferWise has flourished and has been groomed as one of the leading fin-tech money transfer providers, and is now deemed by many as the “Robin Hood” of the money transfer industry.

Currently, TransferWise operates in more than 40 currencies, and with its innovative money transmission model, it even outsmarts the operations of big banks like JP Morgan Chase and Bank of America. TransferWise offers unique benefits like great transfer fees, exchange rates at mid-market prices, and safe and speedy delivery of funds.

Currently, it has six million customers worldwide, and it processes, on average, $5 billion (£4 billion) worth of money orders per month.

How It Works

The rising popularity of TransferWise as an international money transfer platform can be attributed to its innovative business model. Its money transfer system, unlike banks, eliminates the need for middlemen, whether it’s within or outside national borders. This, in turn, significantly reduces the transfer fees incurred by customers.

Using its Peer-to-Peer (P2P) model for money transfers, TransferWise is able to transfer large sums safely and quickly while lowering transfer fees or currency conversion rates.

So how does the P2P system work?

Suppose someone in the U.S. wants to transfer money to a business associate in India. Using TransferWise, the person in the U.S. will first transfer funds in TransferWise’s U.S. account.

The company’s system will then be notified that someone in India needs to make a transfer toward the opposite direction. The person in India would then deposit funds into TransferWise’s Indian account. This Indian currency will be used later to pay the Indian recipient from the transaction initiated in the U.S.

In this way, currencies aren’t actually transferred internationally, which substantially decreases transfer fees.

Pricing

TransferWise is known for its inexpensive and transparent fees system, satisfying the money transfer needs of thousands of people from all over the world.

The reason for the lean fees charged by TransferWise can be attributed to the P2P system of transactions, as previously mentioned.

Under this system, there is no actual exchange of cash between the two concerned physical locations.

Since TransferWise has accounts dotting almost all countries and regions, they do not have to rely on and pay any middleman. This, in turn, saves a considerable amount of money which otherwise would have significantly increased transfer fees.

The P2P system facilitates the payment to the beneficiary out of the deposit made by another customer in the same currency in the destination country’s account.

Let us now examine the different types of fees that TransferWise charges:

Transfer Fees

Customers are charged transfer fees on the basis of currencies in which they are sending and to which destination. Fees charged vary for certain currencies based on the total transfer amount.

For instance, if a person is transferring funds in GBP (British Pound) to a recipient who will receive funds in EUR (Euro), a 0.35% transfer amount and a fee of £0.80 will be charged to the concerned parties.

Similarly, the same charges will be applied if the currencies of the funds being transferred were to be reversed — i.e., a EUR (Euro) to GBP (British Pound) transfer will incur a charge of 0.5% of the amount transferred and a flat fee of €2. When sending funds in DKK (Danish Kroner) to EUR (Euro), the customer will be charged 0.5% of the transfer amount when transferring DKK 50,000 and an additional 0.3% on anything exceeding that.

Currency Exchange

The currency conversion rates that TransferWise charges are based on what is called the “mid-market rate’ as opposed to the non-market exchange rate charged by banks.

The mid-market rate is the exchange rates between banks before they marked up the price and sell currencies.

The table below shows the comparison between Bank of America and TransferWise charges when converting USD to the following currencies (based on November 1, 2019 rates):

CurrencyMarket Exchange Rate(TransferWise)Bank Rate(Bank of America)Diff
EUR1.121.05765.90%
GBP1.28321.22025.16%
AUD0.690.65325.63%
NZD0.640.60495.80%
CNY0.140.13235.82%
CAD0.760.725.56%

Under its “guaranteed rate” feature, TransferWise automatically locks the prevailing exchange rate for a specified time frame, ranging from 24 hours for most countries to 48 hours for others; for BRL (Brazilian Reals), it’s 72 hours.

This shields your transfers from exchange rate fluctuations.

Other Fees

The reason why TransferWise’s total fee amount is lesser than the banks is that it collects and sends funds on or from its local accounts located in various cities in the world. This successfully eliminates the role of a middleman, averting the need for intermediary fees as charged by the banks.

However, those using their credit card for money transfers are charged a credit card fee of 0.3%-2%, which depends on the currency and the credit card being used.

For debit card payments in certain currencies, there’s no debit card fee, while for a few other banks, fees range from 0.15%-2%.

Total Fees

Anyone used to sending money abroad well knows where the shoe pinches the most.

As mentioned above, banks usually charge high transfer fees and currency exchange rates. The total transfer fee charged by banks is 3%-5% of the transaction amount on average.

TransferWise, on the other hand, charge around 0.3-0.5% of the transaction amount.

Here’s an example of an inexpensive transaction involving sending GPB 1,000 to EUR.

Transferring GBP 1,000 to EUR costs just GBP 3.95 in fees, or 0.395% of the transaction cost.

As you can see, the above transfer will cost you GBP 3.95 or 0.395% of the total transaction.

Such a transfer rate marks a breakthrough in international currency transmission.

The traditional methods are given to charging a fixed fee — anywhere from $2 to $50 or above when using a service like Western Union. This is combined with their hidden fees embedded in the poor exchange rate.

When we look at the real costs of the transfer, the total fees stacked up for you can easily amount to 5-10% of the total, and significantly more if you were to send funds to a nation having a less stable currency.

The tables below indicates how cost-effective TransferWise is when compared to banks.

TransferWise Vs. Irish Bank

MethodTransferWiseIrish Bank
You send€10,000€10,000
Recipient gets
€8,317.65€8,520.76
You save€203.11

TransferWise Vs. Australian Bank

Method TransferWise Australian Bank
Recipient to receive€10,000€10,000
You must send
$15,011.81 AUD $15,872.89 AUD
You saveAUD $861.08

Transfer Speed

TransferWise transfers money fast; much faster than banks do.

International payments via major routes, for instance, from the UK and any European country are delivered within 24 hours compared to 3-7 days for a regular bank.

In fact, 25%of all transfers from the UK to any European country are typically delivered within seconds.

The duration of the transfer is determined by the amount, transfer method, currency/currencies being used, and the countries involved in the transfer. A good chunk of transfer time is consumed by additional security checks as in the case of transfers to the U.S., which can take nearly four business days.

The customer is always informed about the time it would take for transfers right at the time of payment, and in certain cases, the information is available beforehand.

TransferWise sends you regular status updates on the transmission of your money, including its current location, etc.

How to Use

TransferWise is easy to use, and with its smoothly operating app and website, offers its customers a good user experience (UX).

To send money abroad via TransferWise, the first thing you need to do is to have a TransferWise account.

Registering a new account is very straightforward that only requires your email address and password for your TransferWise account.

However, TransferWise need to verify your identity before you are able to use their service.

You need to send them a picture of your ID card or a picture of you holding it, proof of address, which can be your credit card receipts, and that’s it.

The verification process normally takes less than two days.

When your account is ready, you can choose the amount you wish to send to the recipient.

The details of the recipient like their name, address, and bank account details have to be provided.

After that, you can choose how you want to transfer funds which can be done by bank transfer, credit card, debit card, and additional regional options like SOFORT, Trustly, or iDEAL.

Once you transfer funds to TransferWise, TransferWise will transfer funds to the recipient within hours or days, depending on their location.

TransferWise will show you all the fees you need to pay before making a transfer.

Transparency

When it comes to serving information to customers on their money transmission, TransferWise doesn’t operate behind any smokescreen.

Here an example of a TransferWise transaction that mentions all the important transaction details to the customer — with regard to transfer time, total fees, and the actual amount that will reach the recipient:

As soon as a user makes a payment, TransferWise churns out an estimation on the transfer duration and instantly shares the information. An email is promptly sent to the customer once the transfer has been initiated. It states the precise time when the money got transferred, and when it would reach the recipient’s account.

The fee information is always upfront and the recipient receives exactly the same amount which is revealed during the initiation of the transfer.

The exact amount of the fees is revealed to you each time a payment is made. For a majority of currencies, TransferWise provides the transferer and the recipient with a guaranteed exchange rate, so you also know exactly how much your recipient will receive.

Although it must be reckoned that this feature is not unique solely to TransferWise, banks while guaranteeing exchange rates, charge a significantly higher transfer rate in order to offer that.

Safety and Security

When it comes to international money transfers, it is not uncommon for people to have fears and apprehensions. TransferWise does meet all the strict criteria to assure that the money it handles remains safe during its transition.

TransferWise has licenses with every leading regulatory authority of the land it operates in.

As an Authorised Electronic Money Institution, the firm is regulated by the FCA (Financial Conduct Authority) and HMRC (Her Majesty’s Revenue and Customs) in the United Kingdom, which happens to be its headquarters city.

In the US, it is registered with the Financial Crimes Enforcement Network (FinCEN). Furthermore, it holds licenses as a money transmitter in all the individual American states it operates in.

In Australia, it is regulated by AUSTRAC and the Australian Securities and Investments Commission (ASIC) as a money remitter, TransferWise Inc.

The security system of TransferWise is further bolstered by institutional-grade security for their services undertaken.

As a preventive measure, it asks customers for a 2-step login and verification procedures. It is further strengthened by the use of the latest Transport Layer Security that keeps customer data safely encrypted in transit and encrypt data at rest.

Abiding by one of the important conditions slated in the FCA (which authorizes its business activities) regulations, TransferWise — under its so-called segregated accounts system — keeps its clients’ funds completely separate from its own business accounts.

Thus, the customers’ money remains safe, even in the eventuality of the firm getting in a state of doldrums.

A cluster of elite investors like Sir Richard Branson’s Virgin Group, IVP (Institutional Venture Partners), and Seedcamp associated with TransferWise further goes on to prove the immense trust it enjoys for its financial operations.

What’s more, TransferWise’s revenue, which had jumped a whopping 53% to $222 million for the fiscal year 2019, amply reflects customers’ trust in the fin-tech money transfer firm.

With its distinctiveness in its capabilities and safety features, it is hardly a surprise that its mobile app is rated the highest among the list of its competitors:

Customer Service

Since TransferWise’s growth strategy is centred around a channel of referral system, it ensures an extraordinary customer care service. Their team of amiable phone reps, available 24/7, stand out for their ability to quickly comprehend and personally resolve issues faced by their customers.

The customer staff of TransferWise is able and friendly. The executives always try to offer prompt solutions to resolve issues reported to them.

Benefits

Here are the benefits of TransferWise in brief.

For business people

  • TransferWise is indeed a boon for businesses hiring location-independent, cross-border workers who can be paid their remuneration with much ease and inexpensively without the payment of high transfer and conversion fees.
  • Those businesses that deal with bulky international transactions perhaps have the most to gain from the Borderless Account. As against the traditional model, the money movement is significantly easier, swifter, and cheaper.

With TransferWise, the transfers are much faster and more transparent than the banks’.

  • At first, you are informed about the turnaround time before you finalize your fund’s transfer.
  • The processing time taken by TransferWise transfers is usually one to two business days and in some cases, it happens almost instantly. As TransferWise maintains bank accounts in a host of countries, it is able to execute transfers quickly. Banks, on the other hand, typically take five to seven business days, or even more, to process transfers.
  • Firms and business people who make large and regular payments abroad can benefit a great deal by using TransferWise’s batch payments tool. With a single CSV file upload, it allows a customer to make up to 1,000 transfers.

Benefits for everyone else

TranserWise Borderless Account is a boon for non-business people too. We live in a day and age when people across the world travel and settle abroad for work.

The increased mobility of people comes with their regular need to transfer or receive funds to and from their family and friends in their home country.

You can read more about this topic on our TransferWise Borderless Account review.

Limitations

Let’s take a look at TransferWise’s limitations.

Transfer Amount

TransferWise does impose limits on the amount of money being transferred, depending on the currency being used. For a standard cross-border money transfer, the upper limit of a transfer is 1 million USD, GBP, or EUR per transfer.

In the case of transfers from the U.S., the ceiling on the amount would vary on the basis of countries and currencies one is sending money between. Additional identification documents might be required for transfers above $10,000.

There is a yearly limit to Borderless Account transfers made in U.S. dollars: USD $1 million for personal transfers, and USD $3 million in the case of business transfers.

When transferring a large sum of money, TransferWise may ask for an additional document to verify the source of that money. They want to make sure that you are not using them for laundering money.

Available Countries

Transferwise has a limited reach. You can send money from around 20 currencies including USD, EUR, GPB, AUD, INR, and HKD.

In terms of receiving money, you have much more choices. It supports 55 currencies including all currencies mentioned above, plus THB, CYN, KRW, and PHP.

TransferWise Borderless account and Debit MasterCard are only available in the UK, US, European countries, Australia, and New Zealand.

However, they are working on adding more countries into their services.

Additional Features

In addition to sending money, TransferWise also offers you two additional features: the borderless account and a credit card.

Borderless Account

The Borderless Account is a virtual multi-currency account that enables the account holder to hold their money in over 40 currencies. Irrespective of the country you open your account from, you gain instant access to local bank accounts in U.S. dollars, British pounds, Euros, Australian dollars, and New Zealand dollars.

For example, suppose you are in America and you have the Borderless Account. Using this account, you can obtain bank information that will help you make transactions throughout the eurozone in a way that you would have done actually being present there.

You can execute several types of transactions through a range of functionalities offered by TransferWise, including account number, SWIFT/BIC, and IBAN codes and sort code/routing number, enabling swift and smooth transactions in the desired local currency.

Money transfers such as ACH transfer would otherwise not be possible unless you possess an account in the country to which the money is supposed to reach.

One of the best things about TransferWise Borderless account is that you can receive money in many countries locally without having to have a bank account there.

In addition, you can send those money locally without having to pay a currency conversion fee.

However, please note that the Borderless Account is merely a virtual account.

It lacks certain features that the latter possesses. The services not covered by TransferWise include: cash transactions, payment of interest and cheques.

Additionally, their Borderless Account, unlike a bank account, is not covered by any insurance schemes run by the government.

You can read our in-depth review of the TransferWise Borderless account for more information.

TransferWise Debit Mastercard

TransferWise Debit Mastercards that are offered free of charge to the customers can be used almost everywhere in the world.

With the Mastercard, you can make payments in local currencies without having to pay any additional currency conversion fees or transaction fees.

Another very beneficial feature of TransferWise Mastercard is that unlike ATM cards, you don’t need to pay any monthly or yearly fee.

The MasterCard also comes with free withdrawals up to USD $250 in every 30 days.

You can find out more about the MasterCard from this article.

Mobile Application

TransferWise apps are available in both Android and Apple stores.

You can use the same TransferWise account to log in to their applications. The money transfer procedure is exactly the same as transferring through their website.

TransferWise Vs. Other Money Transfer Services

You won’t easily get both rates and speed benefits that TransferWise offers when using your bank, PayPal, Western Union, or any other exchange and currency transfer service. The exchange rate of TransferWise is REAL, which you can check on Google or any currency exchange app.

Vs. Bank Transfer

CriteriaTransferWiseBank Transfer
Transfer FeesCustomers are given all the details on the fees payments they make.On average, the transfer fee works out only 1%. It is lesser — i.e., 0.5% for certain destinations, whereas it can rise up to 1.5% for others. The beneficiary doesn’t have to pay any fees.Fixed fees: $2 for transfers below $400. Fund transfer through a domestic wire or a debit card.Bank charges both fixed transfer fee and currency exchange fee. It’s going to range from 3%-5% on average.
Currency Ex FeesTransferWise offers mid-market currency conversion rates, which are much lower than any local bank’s rates.Bank charges additional 1-3% on the currency exchange fees.
SpeedIf you are transferring money from the UK or Europe your payment and transfer will be automatically approved by the system after the provision of the copies. The transfer will happen within a few minutes or within a day at the latest.However, from other regions, the on-boarding process takes longer due to the long compliance procedure.Transfers may take 3-5 business days.
SafetyTransferwise is authorised by the British FCA. Transferwise payments require the prior submission of identification documents.It’s very safe to transfer money through banks. All of them must be authorised by local government organisations in their respective countries.

Vs. PayPal

CriteriaTransferWisePayPal
Transfer FeesCustomers are given all the details on the fees payments they make.On average, the transfer fee works out only 1%. It is lesser — i.e., 0.5% for certain destinations, whereas it can rise up to 1.5% for others. The beneficiary doesn’t have to pay any fees.Fixed fees: $2 for transfers below $400. Fund transfer through a domestic wire or a debit card.Customers are not given all the details on the fees payments they make.The recipient is supposed to pay 3.4% of the funds received.
Currency Ex FeesTransferWise offers mid-market currency conversion rates, which are much lower than any local bank’s rates.The foreign exchange fees plus the recipient fees amount to 3.9%-4.9% of the amount transferred.The exchange rates are much higher than banks.
SpeedIf you are transferring money from the UK or Europe your payment and transfer will be automatically approved by the system after the provision of the copies. The transfer will happen within a few minutes or within a day at the latest.However, from other regions, the on-boarding process takes longer due to the long compliance procedure.Since the money transfer happens from one PayPal account to another, the transmission of money is instantaneous.However, for the money to reach their account, customers need to wait 2-3 business days.
SafetyTransferwise is authorised by the British FCA. Transferwise payments require the prior submission of identification documents.Paypal is authorised by the American SEC, considered to be more stringent than FCA. Paypal payments initiation requires only relevant customer information and their bank account link.

Vs. XE

CriteriaTransferWiseXE Money Transfer
Transfer FeesCustomers are given all the details on the fees payments they make.On average, the transfer fee works out only 1%. It is lesser —i.e., 0.5 % for certain destinations, whereas it can rise up to 1.5% for others. The beneficiary doesn’t have to pay any fees.Fixed fees: $2 for transfers below $400. Fund transfer through a domestic wire or a debit card.With XE, one does not need to pay any fee on their money transfer, irrespective of their physical location or amount being sent.
Currency Ex FeesTransferWise offers mid-market currency conversion rates, which are much lower than any local bank’s rates.XE’s charges exchange rates that are based on the current foreign exchange markets. They’re often lesser than the bank rates.
SpeedIf you are transferring money from the UK or Europe your payment and transfer will be automatically approved by the system after the provision of the copies. The transfer will happen within a few minutes or within a day at the latest.However, from other regions, the on-boarding process takes longer due to the long compliance procedure.Typically, depending on the currency one pays in and the country funds are transferred to, XE takes 2-4 days for the fund’s transfer.
SafetyTransferwise is authorised by the British FCA. Transferwise payments require the prior submission of identification documents.XE Money Transfer, as part of Euronet Worldwide Group, has been in the business of exchanging currencies for more than 20 years. The group comprises a large, high-end, international financial services businesses.

Vs. Revolut

CriteriaTransferWiseRevolut
Transfer FeesCustomers are given all the details on the fees payments they make.On average, the transfer fee works out only 1%. It is lesser — i.e., 0.5 % for certain destinations, whereas it can rise up to 1.5% for others. The beneficiary doesn’t have to pay any fees.Fixed fees: $2 for transfers below $400. Fund transfer through a domestic wire or a debit card.Revolut offers free money transfer, irrespective of the currencies involved. However, beyond the monthly limit of £5,000 per month, customers have to pay 0.5% fee on each transfer.
Currency Ex FeesTransferWise offers mid-market currency conversion rates, which are much lower than any local bank’s rates.On weekdays, interbank exchange rate without any markup charged irrespective of currencies used, except for the Thai Baht and the Ukrainian Hryvnia, which incur a 1% markup.
SpeedIf you are transferring money from the UK or Europe your payment and transfer will be automatically approved by the system after the provision of the copies. The transfer will happen within a few minutes or within a day at the latest.However from other regions, the on-boarding process takes longer due to the long compliance procedure.Local transfers using GBP usually takes up to 24 hours at most, while local EUR transfers need up to 3 business days.Incoming international funds could take up to five working days; outbound transfers, 1-3 working days.
SafetyTransferwise is authorised by the British FCA. Transferwise payments require the prior submission of identification documents.Revolut is authorised by the Financial Conduct Authority (FCA). However, its services are not covered by the Financial Services Compensation Scheme of the UK.

Now, on to You

TransferWise is fast becoming the most popular option for international money transfer. It’s easy to use, Fast, and safe. More importantly, the rates are one of the best out there.

Although they haven’t covered all currencies, the currencies they do cover are sufficient for a majority of expats out there. Not to worry as more currencies will be added very soon.

So, if you are looking for a practical, speedy,and cost-effective option to transfer your money internationally, TransferWise is your good choice.

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