TransferWise is Undercutting Banks and Changing How Foreign Exchange is Transferred

TransferWise was nominated as one of the top 20 innovative companies in 2015 and its aim is to solve the problem of high fees associated with sending and receiving cross border foreign exchange.

Traditionally, using a bank was the only option to send and receive foreign currency, and it is still used by individuals and large corporations. However, sending money via banks is a time consuming and costly affair. Most international wire transfers through banks takes longer than 3 days and costs on average $30-$45, depending on how lucky you are.

Commenting on the inefficiency of the traditional way of sending money abroad, TransferWise’s founder, Taavet Hinrikus, commented that “If you look around, whether it’s lending, asset management, or money transfer … we’re seeing specialist companies who are doing a much better job than the incumbent banks.”

“That’s happened in the last couple of years because consumers are fed up with their banks. At the same time, people are feeling safer about using the internet. I’m convinced we will see 30-40% of finance being done by new companies, similar to what we see in other industries,” he added.

TransferWise was formed to speed up the transaction and reduce the cost of it by not doing any cross-border transaction at all! As it happens, the company just moves money around within the country to match the transaction.

For example, if Person A in France wanted to send Person B in the United States $100 and Person C in United States wanted to send $120 to Person D in France via TransferWise, it would simply transfer the $100 from Person A to Person D.

By doing so, TransferWise eliminates the need for making any actual transaction as the funds are instantly sent from their bank accounts and the book is updated to keep everyone happy. Hence, TransferWise can offer a very competitive fee to its customers compared to other institutions that sends funds around the globe. For transferring $1,000, TransferWise only charges $5.

TransferWise is a registered company in the United Kingdom and regulated by the Financial Conduct Authority (FCA).