In a globalized economy, people need ways to transfer money overseas quickly and efficiently.
In the past, you would usually have to go to a big banking branch to do an international money transfer. This would mean you’d have to pay some pretty exorbitant fees, on the order of 3%-5% of the amount you want to transfer.
In recent years though, the internet has been doing its thing and several international money transfer companies have come to the fore.
These companies aim to streamline the process of sending money overseas and provide a place where you can quickly check exchange rates and send money.
The money transfer industry has become very popular with customers lately due to multi-currency options and banks charging a high rate for currency exchange.
Transferwise is an online money transfer service that aims to make the process of sending money overseas as fast and as painless as possible.
If you are planning to use Transferwise as a company send and receive money internationally, then we recommend you read this review.
We will cover the features, benefits, pros, and cons of Transferwise, all before giving our final give our verdict on whether Transferwise is an international money transfer provider that is worth checking out.
While you’re here, also consider checking out:
What Is TransferWise?
First founded in 2011 by Taavet Hinriku and Kristo Kaarman, Transferwise is a money transfer provider that has a fully online platform.
Since its founding, Trnasferwise now serves over 6 million customers worldwide, has facilitated nearly £3 billion in transactions and allows for transfers to both individuals and companies.
Transferwise is designed to streamline the process of sending money overseas. Using the service, you can exchange your money for a currency of your choosing and send it to over 100 different countries.
Currently, Transferwise allows 19 different currencies, including AUD, BGN, CAD, EUR, GBP, HRK, JPY, and USD, among others. With Transferwise, you can send a money transfer to over 100 countries, including Argentina. Brazil. Georgia, Hungary, Mexico, China, Denmark, Norway, Poland, Ukraine, Uganda, Romania, Hong Kong, and more.
Even if a country is not directly supported by Transferwise, you might still be able to send them money if they use an account that is denominated in USD, EUR, or GBP.
The real draw of the service is how cheap Transferwise is.
If you use a large local bank to transfer money, then you might have to pay some fairly exorbitant fees to send money across borders. Transferwise has a unique pricing model that makes their transfer rates extremely cheap (more on that later).
Overall, Transferwise is best for people who send money internationally a lot and who want the lowest fees when doing so.
The Transferwise mobile app and website are cleanly designed and streamline the transfer process, whilst the Trasnferwise mobile app delivers a good user experience.
How Does Transferwise Have Such Low Fees?
(Note: All currency figures and exchange rate figures are current as of the time of writing. However, they may be subject to change over time.)
In order to figure out how Transferwise can get away with their very low fees, it’s important to understand a bit about how foreign currency exchange works.
Between any two pairs of global currencies, there is what is called the mid-market exchange rate. The mid-market rate refers to the midpoint between the buy and sell prices of any given pair of currencies.
In general, the mid-market rate determines how much currency of one denomination will trade for the currency of another denomination.
As an example, say that an exchange institution is prepared to pay 1.5 USD against GBP and a seller wanted to sell 1.6 USD against GBP.
The mid-market rate, in this case, would be 1.5 USD/GBP. Generally, when you search for currency exchange rates on Google or another search engine, the number you see is the mid-market exchange rate.
Generally, banks and other large financial institutions will exchange currency for a bit less than the mid-market rate. So for example, as of the time of writing, the exchange rate between the pound and the euro is 1 GBP to 1.13 EUR.
A local bank or other large financial institution might offer to exchange the currency at a lower rate (say 1.09 EUR) and pocket the difference to make a tidy profit. It varies depending on the specific institution, but banks can charge up to 3%-5% of the mid-market rate in fees for this type of transaction.
This is how these institutions profit off of the currency exchange rate and currency transactions.
Enter Transferwise. Unlike a large bank (or even other online money transfer companies), Transferwise works with the true mid-market rate when exchanging currencies.
That means that they do not exchange at a lower rate so they can pocket the difference, resulting in the person that you are sending money to receiving the full value of the currency. That means no hidden fees.
Instead, Transferwise charges a custom fixed fee for each transaction that is based on the type of currency being transferred, the method of funding the transfer, and the location the transfer is being sent to.
This unique fee structure is what allows the company to undercut large banks and their transfer fees. Ultimately, that means that more of your money goes where you want it to go, and less of it into the pockets of rich bank executives.
The best part is that Transferwise is very transparent about the fees you pay. When you log on to the website and set up a transfer, you can clearly see the current exchange rates and mid-market rates, along with all of the relevant fees you will have to pay.
As an example, let’s say that you want to send £1,000 to France (which uses the Euro). According to the currency exchange rate calculator on their website, sending £1,000 would translate to €1,125.83.
Below the calculator, you can see comparisons on how much you would get using another money transfer service. For example, with Nationwide, you would have to pay nearly £26 more in fees and with PayPal, you would have to pay nearly £45 more in bank fees.
Transferwise allows for three types of money transfer service: bank accounts, debit or credit cards, or from a GBP account that is outside of the US. Unlike Xoom, Transferwise does not have an option to fund transfers with your PayPal account.
Sending money with a bank account is the cheapest option. Transferwise charges a flat £3.75 fee for low-cost transfers from bank accounts and also a £3.75 fee if you use a bank account outside of the United Kingdom that is denominated in GBP.
If you opt for a credit card or a debit card, then they charge a flat £6.73 fee. Keep in mind that if you opt to use a credit card to fund your transfer, then you might be required to pay a cash advance fee to your credit card company.
Transferwise fees are based on the current exchange rate, types of currency, and the location of the recipient. As such, the exact fees you will have to pay can differ from day to day.
However, based on our calculations, Transferwise fees will always be cheaper than using a traditional bank to send currency, no matter which payment options you choose to fund the transfer.
Even if you pick a credit card which is the most expensive option, it would be cheaper than going to do bank transfers.
How Does Transferwise Work?
Here is a quick rundown of how to send money using Transferwise.
First, you will have to make an account. Making an account is a simple process and requires you to give a name, email address, and other relevant information like your bank account or debit card information.
Once you make an account, you can head to the Transferwise main page and select the kind of currency that you want to transfer. You will also select the currency that the recipient will get.
So, for example, if you want to send money from the UK to the US, then you would have to choose GBP and USD.
Once you select the currencies you want to exchange, enter the specified amount to want to send. Once you do this, Transferwise will give a full breakdown of the fees you will have to pay.
This is a great feature as they are very transparent and you always know exactly what fees you will be charging. Many other money transfer services do not have this kind of transparency about the fees that you will have to pay.
After entering the currency denominations and amount, you will then have to enter the details of the recipient you are sending the money to.
Trasnferwise needs to know the name, BIC number, and IBAN of the person to which you are sending money. You will then be required to pick a reference number of your choosing. Make sure that you remember this reference number as it will be used to verify the transaction.
Here is where we see the first real limitation of Transferwise: the recipient must have a bank account to receive their funds. Unfortunately, you cannot send the money to an e-wallet or to another institution for them to pick up.
This is one thing that some services like Xoom do better than Transferwise.
Next, select the method of payment option. In the UK, users can choose to fund transfers with a bank account, credit or debit card, or a non-UK bank account that is denominated in GBP.
If you pick a credit or debit card, you can complete the transaction right on the website without leaving. However, if you choose a bank account, you have to confirm the transaction externally. If you opt for a bank transfer, you need to send the unique reference number along with the transfer funds.
You have to include the reference number or else the transfer will be delayed. Make sure that you have properly entered the details of the recipient’s bank account asTransferwise does not have a money-back guarantee for funds that are sent to the wrong account.
After that, just wait for an email confirmation and you will be good to go. From there, Transferwise will handle everything for you.
They will make sure that your money goes where it needs to go and you will get another email saying that your funds have been received.
How Long Do Transferwise Transfers Take?
It depends on the specific payment options, type of currency, location of the recipient, and amount of money transferred.
Generally speaking, if you do a bank transfer, then it will take 2 business days for your money to go through and be available.
In general, if you are transferring between major currencies, things should go very quickly.
For example, if you were exchanging GBP for USD, then it would go through very quickly because both are major currencies that are traded all over the world.
On the other hand, if you sent money to India, then it would probably take longer to go through because the Indian rupee is not as widely traded.
The transfer time also depends on the recipient’s baking institution. Some banks might make the funds available immediately while others may take a few working days to go through.
Similarly, the payment method matters. Credit and debit card payments usually go the fastest, within a few hours or even instantly. As you might expect though, making payments through a bank account usually takes longer.
No matter which method you choose and what type of currency you are exchanging, Transferwise will give a rough estimate of how long it will take so you have a rough idea.
Most of the time, you can transfer money without having to verify your identity because Transferwise can verify your identity from third-party sources.
However, at some point, they may need extra information to verify your identity.
If you live in the UK, you will have to provide your National ID Number and a copy of a utility bill to verify your address. Fortunately, you only have to verify your information once, but it could delay any pending transfers.
Transferwise has recently introduced Borderless Accounts for users who frequently send money abroad.
The Borderless account is essentially a multi-currency account and supports up to 40 different types of currencies, making it a great choice if you send money internationally on a regular basis.
The Borderless Account gives you access to a bank account in one of 5 countries: the United States, UK, Australia, New Zealand, and Europe.
This structure lets you accept and make payments easier. You will also get a handy MasterCard which lets you use this account to make ordinary merchant payments and withdraw cash from ATMs,
Transferwise Pros & Cons
- Excellent transfer fees. Transferwise fees are so low because they operate off the true mid-market rate and do not upcharge to make a profit. This means that the person receiving the money gets more of the full value of the currency exchange.
- Transparency. Transferwise is very transparent about the fees that you will be charged. Before you make any transaction, there is a small window that gives a rundown of the exact amount of fees you will have to pay and where they come from.
- Send money to several countries. Transferwise allows you to send money to over 100 countries worldwide in several different currency denominations. Users can also request money from any country where they can receive money.
- Borderless accounts. Transferwise’s borderless accounts basically act as an international checking account that you can use to regularly send money overseas and make purchases. You even get a slick MasterCard for the account that you can use at ATMs.
- Wait times. Generally, you will have to wait a day or two for your transfers to go through. Transfers funded with a credit card or debit card go through essentially instantaneously, but an ACH bank transfer will usually take 1-2 business days. The type of currency you are transferring also makes a difference as to how long the transfer will take.
- Limited customer support. Transferwise has limited customer service options. You can only call customer support by their phone number on weekdays between 9 AM to 5 PM. The FAQ page is also relatively limited in information.
So, is Transferwise worth using? We say yes, 100%.
They offer some of the lowest transfer fees among international money transfer services and they support a huge range of currencies and countries. The process is super-streamlined and easy to pull off so you don’t need to know anything about exchange rates or currencies. The only real downside is that the bank transfer times tend to take about 1-2 days. Otherwise, it’s is an excellent money transfer company to use to send money internationally and comes highly recommended by us.
- Compare the Best Online Trading Platforms in The UK (March 2022) - March 15, 2022
- The Best Budgeting Apps in The UK (March 2022) - March 15, 2022
- 5 UK Bill Management Apps (That Save You Time) - March 4, 2022