An Overview of TransferWise
Transferwise UK, a money transfer service was incepted in the month of January 2011 by two friends Kristo Käärmann and Taavet Hinrikus, who believed in the free flow of money, irrespective of the country from which it got transferred. The service is based in United Kingdom and has its headquarters in London, with several regional offices based in Berlin, New York and Tallinn.
How did it all happen?
- Taavet Hinrikus used to work for Skype, which is located in Estonia and Kristo Käärmann used to work in London, where he used to get paid in Pounds.
- It got a bit difficult for both of them, as Taavet Hinrikus used to live in London, but got paid in euros, and on the other hand, Kristo Käärmann used to get paid in Pounds, but had to repay mortgage back in Estonia, which he had to pay back in Euros.
- To solve this situation, they both created a scheme which allowed them to get the currency they needed without any hindrance. They topped up each other’s bank account with the currency they required and solved the crisis, by neither of them paying an extra cent in bank charges. This is when the basic idea and structure of Transferwise occurred, enabling them to start a company that could solve this crisis for people all over the world. After its inception in the year 2011, the company received its first approval in the year 2012 from UK financial regulator, which was initially started as a Securities and Investment Board in the year 1985.
Founders of Transferwise
- Kristo Käärmann and Taavet Hinrikus are the founders of Transferwise. Kristo Käärmann has been working in the finance field for quite some time now.
- Previously, he has worked with PwC and Deloitte, where he facilitated banks and other insurers to bring their systems and processes into the 21st century, through innovative and cutting-edge ideas. With his own personal experience with financial institutions, he decided to move ahead and do something that’s revolutionary and worthwhile and that’s when Transferwise happened. At Transferwise, he is responsible for technology-related, development and operation related and other compliance and regulatory related issues and operations.
- Taavet Hinrikus, the other founder of Transferwise, who was also Skype’s first employee, has been an investor and an advisor for years now, before becoming Transferwise’s trusted marketing, Public Relations, Product Development and Investor relations personnel.
Transferwise’s Investor list
As of 2016, a total of $117 million through funding has been raised by the company. The company’s prime investor list includes IA Ventures, Seedcamp, PayPal, Wonga.com, Valar ventures and others.
About Transferwise.com website
Transferwise.com is a website that provides vital information about money exchange and also allows its customers to compare prices on the go. A quick tutorial on how Transferwise works is also provided in the website along with more information on borderless accounts and other important topics pertaining to the financial world through their blog page in the website.
How does TransferWise work and is it safe?
With the help of TransferWise, you can transfer money at a rate that’s almost eight times cheaper and economic than transferring your money through the bank. The service was found in the year 2011 by two friends Kristo Käärmann and Taavet Hinrikus, who have had prior experience and expertise in the field. A peer-to-peer system is followed by the company to match one’s currency requirement with another. For instance, if someone wants to convert their money from dollars to Euros, then that person’s request would be connected to someone who has requested to convert their money from Euros and dollars. This is basically how TransferWise works. The system is constantly updated on the market exchange rates and based on that matches the corresponding currency flow. Through this method, one can totally avoid the traditional banking system and its fee altogether. The system is also highly known for its fair, economical and transparent methods of transferring money, making the system more credible and trustworthy. The system follows a local bank transfer method, unlike an global one and here’s how it works.
- The first and foremost step is to create your TransferWise profile which can be done in minutes.
- The next step is to provide the system with the recipient’s bank account details to which one would like to transfer their money.
- By using this system, you get to have two accounts, one of the country, in which you are residing, and the other of the country to which you want to transfer the money.
- The money that you enter in the system, is then converted based on the market value mentioned in the Reuters.com, which is the most trusted website for information pertaining to market rates and values. The system is constantly updated with information pertaining to market rates and values, in order to enable its customers to have a fair experience of transferring money from one country to another.
- The system also has a bank partner, through which they transfer money in the local arena.
Ideal for Small and Medium Sized Enterprises
Small and Medium Sized Enterprises are enterprises whose personnel numbers are less than a certain limit. In spite of the company’s low capital and turnover, its unique and innovative services are always on the high. Risk factor involved in a small and medium-sized enterprise is always low, thus resulting in high innovation and creativity.
- The Transferwise system is thus ideal for Small and Medium Sized enterprises as it’s highly efficient and at the same time low cost and economical, making it an ideal choice.
- From access to real-time mid-air market value to the advantage of having a fixed fee for the transfer, one can get it all by transferring through this system.
- The exchange rate provided by the system is highly accurate and updated, making it easy for the consumer to understand and decide whether to transfer the money or not.
- The process would also be highly professional with timely updates on whether your recipient has received the money or not.
- Proper receipts through email would also be provided by the system, which will enable both the sender and the recipient to have an account of when the transfer occurred and exactly how much money was transferred.
Perfect for freelancers
Yes, the Transferwise system is highly useful for people working as freelancers, as it not only helps them receive money with ease from different parts of the world but also helps them to cut down unnecessary bank charges and rates that make them receive less and pay more money. You would just have to ask your overseas boss to pay you through the Transferwise system, which will be efficient and hassle-free for both the parties involved. And one need not worry whether their currency would be supported or not as the system supports a massive 300 currency routes, spanning several countries across the world. From Us dollars, to Pounds, to Euros, you have got it all covered here.
To understand the process of the Transferwise system and how it works, let’s break it down step by step.
- A simple currency calculator is what you will first see, as soon as you enter the Transferwise website.
- A simple form with details such as First Name, Last Name, Email, Phone, Date of Birth, Name of the country to which you belong, Postal code and address will be asked to be filled.
- After you are done filling the form, the next page will pop, which will be titled, “Who are you sending you”. That’s where you need to enter information about your recipient, i.e., the person to whom you are sending or transferring the money. You can transfer money either to the bank account or through electronic mail, and it’s completely up to the sender and to the recipient and take a call on that.
- If you select the option, “send money to a bank account”, then another form with details such as Routing number, Account number, recipient’s country and the city of residence, address and their postal code will be asked to be filled.
- If you select the option, “Send money via E-mail”, then you would just have to enter the email address of the recipient along with a reference which will enable them to get the mail without any hassle.
- Two payment options are made available by the Transferwise system. One is to pay using their debit card and the other by using the bank transfer option.
- The Debit card option is similar to an online purchase, where you just have to select your type of card, enter the account number and then authenticate with your PIN number, followed by the entry of a One-time password also known as OTP, which would be valid only for a certain period of time.
- If you select the bank transfer option, then you would have to log in to your online bank and then enter the details provided by the Transferwise system. Details such as Sender name, UK Sort code, Account number and reference would be provided by the Transferwise system, which has to be noted down by the sender and use it while filling out the details in the Internet bank form.
- After you are done, you just have to select the option, “I have sent the money through my bank”.
Is transferring money through Transferwise system safe?
The Transferwise system is highly safe and secure as it is fully regulated and controlled by the Financial Conduct Authority, which was incepted in the year 2013 and whose current CEO is Andrew Bailey. Apart from the fact that it is completely regulated by the Financial Conduct Authority, it also makes sure that it allows access only to credible and trustworthy users, who are transferring money without any ulterior motive behind them. Proper background checks of every user is done by the system, ensuring there’s no motive of theft or fraud by any of them.
- The Transferwise system provides real-time exchange rates instantly that are highly accurate and thoroughly updated from time to time. The real exchange rate which has not been tampered in any way whatsoever is provided by the system.
- The real exchange rate which Transferwise uses is the mid-market rate. The mid-market rate is considered as the mid-point between demand and supply of a certain currency. This rate changes all the time. It is regarded as the fairest exchange rate in the market.
- Banks and money transfer agencies generally use this rate when transferring money between themselves but not when converting your money. This way you generally end up paying an avoidable fee to the agency.
- Transferwise provides exchange rates which are guaranteed for a specified period of time. The guaranteed rate is specified when someone creates a transfer. Transferwise supports up to 300 currency routes.
- As real-time rates are used to protect its customer from potential downward rate fluctuation rate limits are used. A 3% rate limit is set on all transfers except 5% for guaranteed rate transfers. While transfer rate improves the better rate is always credited to the customer.
- What makes them unique is they have different currencies locally stored. When money is sent from one country, it is stored locally, and the equivalent money is taken from their store present in the recipient’s country. This eliminates most of the paperwork and offers a reduced exchange rate.
- Transferwise has over 40,000 reviews on TrustPilot.com.
- Transferwise has an impressive aggregate score of 9.3/10.
- Over 89% of the users found the service excellent.
- Transferwise is a top choice for transfer between bank accounts. This is evident by the fact that it has excellent reviews on TrustPilot.
- Transferwise has garners extremely positive feedback from customers and critics alike.
- It is easy to use; the service is completely transparent about the transfer rates and timings.
- They are far cheaper than most other services like bank wires.
- Monito.com has given Transferwise an impressive score of 8.30/10 calling it a very good service.
- Low and transparent fees.
- Great user experience.
- Uses mid-market rate.
- Great reviews on TrustPilot.
- Transfers are generally fast.
- The process of sending money is simple, completely transparent and efficient.
- Transfer time varies significantly depending on the country and can be slow.
- Money can only be sent to a bank account.
Competition is fierce for global currency exchange and money transfer. Here are some competitors for Transferwise.
OFX earlier know as OzForex is an Australian based alternative to Transferwise. This company has been in operation since 1998. They have separate websites for Australia, UK, and USA. One can register as an individual, business or as an online seller. The minimum transfer amount depends upon the region.
- Open to individuals, online sellers, and businesses.
- Transfers can be done online or over the phone.
- Transfers can be scheduled.
- Tries to provide best rates.
- No centers to receive cash.
- Not all currencies available online some may require phone calls.
- The website only in cash.
CurrencyFair based in Ireland was founded in 2009. They have a marketplace where the customer can bid for currency rates.
- Can register as individual or business.
- They have offices in Ireland, UK and Australia.
- Excellent rates at the CurrencyFair marketplace.
- Multilingual website.
- Transfers can be scheduled.
- No cash pick up centers.
- US residents cannot send money.
- Though online support is good, phone support is unavailable.
TorFx provides better exchange rates than banks. Since they began operations in 2004, they average £3 billion in international payments every year. While they are primarily based in the UK, they also have a website for Australia. They have offices in UK, Australia, US, Europe and South Africa.
- Tries to provide best rates in the market.
- No fees levied for personal transfers.
- One can sign up as an individual or business.
- Easy scheduled transfers.
- No android app is available.
- The website only in English.
- No cash pick up centers.
Transferwise vs. Paypal
- Paypal is around 2.5-3% costlier than Transferwise and yet is not as secure.
- Paypal enforces a very strict Buyer’s Insurance policy.
- This is great if you want to be protected on the internet buying from untrustworthy sellers. But it gives Paypal the power to take money from your account and then freeze it, and you would not have many options to retrieve your account.
- The process of retrieving or unfreezing your account could take months, and you would be stuck with the Paypal customer support team via e-mails or phone calls.
6th Floor, The Tea Building, 56 Shoreditch High Street,
London, E1 6JJ,
Ph.No: +44 (0) 203 6950 999 (Mon-Fri 8:00 to 20:00 GMT)
TransferWise Ltd. Eesti Filiaal
Veerenni 24 (entrance A),
19 W 24th Street
New York, NY
Ph.No: +1 888 908 3833 (Mon-Fri 8:00 to 20:00 EST)
Regarding questions which are frequently asked one can access them at https://transferwise.com/help
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