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It is safe? Complete guide with pros and cons

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Transferwise Review – Is it safe?

In a not too distant time, trying to send and receive money across borders was a financial and logistical nightmare. Regardless of whether you use your local bank or a money transfer company like Western Union, you would not only be accustomed to high rates and long delays, but you would also need to sign countless documents.

Fast forward to 2019 and it is now possible to transfer funds abroad at the click of a button, both quickly and economically. One of the main online platforms in this regard is TransferWise.

Therefore, if you are considering using Transferwise for your international transfer needs, be sure to read our detailed review. We cover everything you need to know, such as how the platform works, rates, transfer times, regulation, security and more.

Let's start by getting an overview of what Transferwise is.

Take a look

Transfer Review
Money transfer transfer – Visit
Transfer type Online only
Enrollment $ 2 up to $ 400 / ~ 0.5% More than $ 400
Transfer speed From the same day
Mobile app ✔️
Minimum transfer £ 1 / $ 1

Visit Transferwise

What is TransferWise?

Launched in 2011 and founded by Taavet Hinriku and Kristo Käärmann, Transferwise is a money transfer services company that operates exclusively online. The founders launched the platform with the aim of revolutionizing the cross-border payments sector, to the extent that they wanted to offer more competitive exchange rates for everyday consumers.

To achieve this, the general concept of TransferWise is that they offer customers the average market exchange rate in their chosen currency pairs. This is in stark contrast to the traditional financial institutions, which they will add, but they will certainly add a percentage above the market rate they get. We will explain how this works in more detail below.

Transferwise website

However, the TransferWise platform has become so popular that it now serves 6 million customers in 59 individual counties. With offices now located in 12 different countries, the platform also states that it facilitates international transfers worth $ 4 billion each month, which saves customers $ 1 billion per year, if they had followed the traditional route.

As the company behind TransferWise has grown in size, its product range has followed suit. An example of this is your Account Without Borders offer. This makes the money transfer process easier, especially since account holders will have access to a full prepaid Mastercard. As we will discuss later, the borderless account also comes with bank account numbers located in multiple jurisdictions, including the US. USA, United Kingdom, Australia and New Zealand.

So, now that you have an idea of ​​what TransferWise does, in the next section we will unravel how the platform can offer super low rates.

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Why is TransferWise much cheaper?

First, to understand how TransferWise can reduce banks and traditional money transfer companies, it is important to understand how cross-border exchange rates work.

Middle Market Rates

Also known as the interbank rate the middle market rate It is the difference between the purchase and sale price of two native currencies. In simple terms, this is what an institutional buyer is willing to pay for the currency, against the price for which an institutional seller is willing to sell it. After all, it is the banks and large-scale financial institutions that ultimately drive real-time currency prices.

Take the US dollar (USD) and the pound sterling as an example currency pair (GBP / USD). If an institutional buyer was willing to pay USD 1.4 against GBP, and an institutional seller was willing to sell it at USD 1.6 against GBP, then the average market rate would be USD 1.5 / GBP.

That said, when you search for the exchange rate chosen on Google, the type presented to you is, in fact, the middle market rate.

Transfer Rates Compared

Do I get the middle market rate?

Although the difference between the purchase and sale rate will dictate the average market rate that large-scale institutions can obtain, unfortunately, this is not the rate that everyday consumers will get when they transfer money abroad. On the contrary, it will pay a strong margin over this rate, which will subsequently grant the banks a somewhat orderly gain.

In terms of the charge itself, this will generally be a percentage margin, a fixed rate and a combination of both. It is not uncommon for money transfer companies to offer something similar to "0% commission" or "No fee surcharges." However, while you may not pay a fee to say, you do so indirectly with the specific exchange rate offered.

TransferWise themselves offer a simple example of how this can affect you, which we have highlighted below:

  1. The current average market rate GBP / EUR is £ 1 = € 1.43
  2. As such, when converting £ 1,000 into euros, you should receive € 1,430.
  3. However, it only receives € 1,370, which means that it effectively receives a rate of 1.37, not 1.43.
  4. The difference between the two rates (1.37 and 1.43) is the gain obtained by the underlying transfer company.

So, now that you know how the mid-market rate works, and that you will generally receive a much worse exchange rate than traditional banks can get, let's explore how much TransferWise costs in comparison.

How much does TransferWise cost?

First, it is important to keep in mind that the specific fees charged by TransferWise will vary considerably depending on a number of key factors.

In particular, this includes the amount you are sending, the currency you are sending, the currency the beneficiary receives and how you plan to finance the transfer. As such, the best way to measure how much TransferWise costs is to look at some examples.

Example 1: US $ 1,000 shipping UU. India

At the time of writing, the average market rate in USD / IDR is Rs 71.2 for every $ 1 you exchange. This means that an exchange of $ 1,000 at the mid-market rate would produce IDR 71,200.

When using TransferWise for the same exchange, the beneficiary would receive 70,429 IDR. Breaking down rates, this includes a flat fee of $ 7.08 charged by TransferWise and an ACH fee of $ 2 to fund the transfer.

However, if you used a bank transfer, this would cost $ 5.34. In addition, a deposit with a debit and credit card would cost $ 7.44 and $ 32.88, respectively. As such, we recommend that you avoid using a credit card to fund your TransferWise transfer.

United States to India

However, the previous example illustrates that, in fact, you get the TransferWise mid-market rate, minus the aforementioned fees of $ 9.08 (more if you don't use ACH), which is then indirectly included in the exchange rate.

In comparison, the same transfer with the leading money transfer company MoneyGram would leave the recipient with only 69,425 IDR. This includes a debit / credit card fee of $ 14.99.

Example 2: Send $ 1,000 to the United Kingdom

In our second example, we analyze how much it would cost to send $ 1,000 to the United Kingdom. At the time of comparison, TransferWise was quoting £ 0.81 for every $ 1 it transferred. Within this fee, a $ 7.21 TransferWise fee was included, which included the $ 2 ACH deposit.

That said, a transfer of $ 1,000 would leave the beneficiary with £ 804.15. In comparison, although Western Union only charged a flat fee of $ 2.99 for the same transfer, the exchange rate they quoted us was £ 0.76 for $ 1.

United States to United Kingdom

As such, the beneficiary only receives £ 760.10. Compared to the use of TransferWise, the Western Union transfer would leave the receiver with £ 44.05 less.

This example further highlights the point we discussed earlier about hidden fees, to the extent that although Western Union charges a lower fixed rate, they are actually more expensive since the exchange rate on offer is significantly less favorable compared to TransferWise. .

Example 3: TransferWise versus a traditional US bank. UU.

Although the exact rates will vary depending on the bank you use, this is by far the worst way to transfer funds abroad. First, you should visit your local branch and sign a variety of documents before the bank can execute the transfer. Then, as the bank will need to use the SWIFT network, the beneficiary will probably have to wait 3 business days before receiving the funds.

Finally, and perhaps most importantly, you will pay huge fees, both directly and indirectly. First, financial institutions like Chase Bank normally load a flat rate of $ 45 for facilitating an international transfer within the branch. Second, it would not be unusual for the bank to add 3% -5% above the average market rate they can get.

As such, regardless of where you send the money and for how much, TransferWise will always be cheaper.

How does the money transfer process work?

So, now that you know how much cheaper TransferWise is compared to traditional banks and established money transfer companies, let's take a look at how the process works.

How does it work

Step 1: Enter the transfer details

Your first port of call will be to go to the TransferWise homepage and choose the currency you are sending and the currency the beneficiary will receive. For example, if you want to send money from the USA. UU. To your friend in Germany, you must select USD and EUR.

The best thing about TransferWise is that they are very transparent about how much they charge. As such, when you enter the amount you want to send, TransferWise will not only show you how much the beneficiary will receive, but you can also break down the rates by clicking on "View calculation".

If you are satisfied with the rate offered on the screen, click on the "Start" button.

Step 2: enter beneficiary details

The next stage will require you to enter the bank account details of the person to whom you want to send the money. In the same way as any other bank transfer, you need to enter the full name of the recipient, the BIC number and the IBAN. You will also be asked to enter a reference number of your choice.

Make sure these details are correct, as TransferWise will not be liable in case the funds are sent to the wrong account.

Step 3: choose your payment method

Now you will be asked how you want to finance the payment. Do not forget, TransferWise is a company only online, so you can not deposit funds in person. However, the specific payment options available will depend on where you are. If you reside in the USA UU., You can pay by ACH, bank transfer, debit card or credit card.

As we briefly noted above, ACH is by far the cheapest option, since it only costs $ 2 per transfer.

Step 4: transfer the funds

If you are using a debit or credit card, you simply need to follow the instructions on the screen, as TransferWise makes the whole process easier. However, if you wish to pay by ACH or a bank transfer, you must complete the process externally.

TransferWise will give the account details to which you should send the funds, along with a unique reference number. It is imperative that you include the reference number within your transfer, otherwise, this will delay the transaction. In addition, you should also ensure that the name associated with your bank account matches the name you entered with TransferWise, and the amount you transfer must match the amount of TransferWise with the "cent".

Step 5: wait for confirmation by email

Once you have made the required transfer (or paid by debit / credit card), TransferWise will notify you by email once the funds have been received. Once they have done so, TransferWise will execute your transfer. We will discuss the deadlines in more detail in the next section.

How long do TransferWise payments take?

Again, the amount of time it will take for the beneficiary to receive the money will depend on several factors. According to the TransferWise platform, this covers four main metrics.

Sender and receiver location

The main factor that will influence the transfer time is the location of the sender and the receiver. First, this covers the specific currencies involved. For example, if you sent US dollars and the beneficiary received pounds sterling, the transfer would be ultrafast, especially since both USD / GBP are the main currencies.

On the contrary, if I was transferring funds from the USA. UU. To Kenya, this could take up to 2 business days to run, since the Kenyan Shilling is an illiquid currency.

TransferWise also points out that the respective bank of the beneficiary can influence the transfer time. For example, while some financial institutions have the ability to credit customer deposits instantly, others only do so once a day.

However, when you go through the TransferWise payment process, the platform will give you an estimated deadline.

Payment method

If you are financing your TransferWise payment with a debit or credit card, the payment will be taken instantly. This means that the platform will execute its transfer immediately, subsequently accelerating the transfer by a certain distance.

On the other hand, paying with ACH or bank transfer will take much longer. Not only must you wait for your bank to transfer the funds, but you must also wait for TransferWise to confirm the receipt.

Ultimately, when it comes to payment methods, you must weigh if you want to prioritize rates or speed. While a deposit with a debit / credit card is much faster, it is also much more expensive.

check

There may come a time when TransferWise requires additional information from you before they can execute the transfer. In most cases, you can transfer funds without loading any verification documents, as TransferWise can validate your information through third-party sources.

However, if they cannot do so, you may be asked to upload a copy of your government-issued identity document (passport or driver's license) and proof of address (utility bill, tax return, income statement). bank account, etc.) Although this will delay the financing process, you will only have to verify your identity once.

Transfer time

Finally, the time and day you execute the transfer can have an impact on the transfer time. From the perspective of TransferWise, the platform can only transfer its funds during standard working hours. As such, payments made in the afternoon or during the weekend will be delayed.

At the other end of the spectrum, you should also consider holidays in the recipient's country of origin. This is beyond TransferWise's control, so be sure to verify this with the beneficiary before executing the payment.

TransferWise account without borders

With the challenge of banking space in recent years, TransferWise has decided to enter the sector with its borderless account. The account is ideal if you have the requirement to send and receive international funds on a regular basis, as it supports up to 40 different currencies.

When you sign up for an account, you will have access to local bank accounts in five different counties. This includes the United Kingdom, USA. USA, Australia, New Zealand and Europe (SEPA). By doing so, you will be given a unique account number, which will then allow you to accept payments easily.

In addition, the borderless account also comes with a full MasterCard. Not only does this allow you to make purchases online and in the store, but you can also withdraw cash from ATMs worldwide.

Borderless Account

With everything provided through the native mobile application (Android and iOS only), every time you make an international transfer, you will benefit from the medium market rates. In even better news, you will not be required to pay any monthly fees, nor does it cost anything to open, other than an initial $ 20 deposit.

In terms of ATM withdrawals, you can withdraw $ 250 each month without incurring any fees. However, after this you will be charged 2% of the amount of the transaction.

Take note, although you will benefit from the middle market rates when making a bank-to-bank transfer, you will pay a fee when you use your MasterCard in a currency other than yours. This can vary from only 0.45%, up to a huge 3%, so check it before making the payment.

TransferWise vs. UK Street Banks

Compare the costs Transferwise Barclays Lloyds Santander
Send £ 250 to EUR £ 1.54 £ 7.89 £ 18.73 £ 23.55
Spend £ 250 on a debit card in EUR 83p £ 15.66 £ 17.43 £ 16.91
Withdraw £ 250 / month in cash in EUR £ 1.76 £ 17.14 £ 18.40 £ 20.64
Receive AUD, EUR, GBP and USD in your account Free N / A N / A N / A

Is TransferWise safe?

You should not worry about security when using TransferWise. First, the UK-based institution is authorized and authorized as Authorized electronic money institution by the Financial Conduct Authority (FCA). This ensures that the platform has a strict regulatory regulator that oversees its operations.

In addition, the company is registered in the Financial Crime Execution Network (FinCEN) in the USA. UU. And it is regulated by the Australian Securities and Investment Commission (ASIC). TransferWise also notes that it keeps customer funds in segregated bank accounts, which means that your money is safe in case the entity collapsed.

Finally, you will also benefit from two-factor authentication (2FA) when accessing your TransferWise account, which adds an additional layer of security to your funds.

Transferwise card

TransferWise Review: The end result?

In summary, although TransferWise is not the only online money transfer platform that has completely revolutionized the cross-border payment system, it certainly lives up to the best.

You no longer need to pay exorbitant fees when sending money abroad, nor do you need to wait days for the transfer to run.

On the contrary, TransferWise has the ability to save you a considerable amount of money in exchange rates, all of which can be completed with the click of a button. We also like the fact that you have several payment options to choose from, such as ACH, bank transfer or debit / credit card.

Finally, it is worth considering the TransferWise Borderless Account if you have the requirement to send and receive funds internationally on a regular basis. Not only will you benefit from the average market exchange rates throughout the day, but you will also be given a bank account located in five different countries.

Visit Transferwise

Transferwise

Transfer Review

Pros

  • Excellent exchange rates
  • Competitive and transparent rates
  • Fully authorized and authorized
  • Great coverage around the world

Cons

  • Large transfers may be limited.
  • minimum transfer fee

2,047

Editorial Disclaimer: The opinions expressed here are only those of the author, not those of any bank or credit card issuer and have not been reviewed, approved or endorsed by any of these entities.

Disclaimer: The answers below are not provided or commissioned by the bank advertiser. The responses have not been reviewed, approved or supported by the bank advertiser. It is not the responsibility of the bank advertiser to ensure that all publications and / or questions are answered.

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