Transferwise… The Robin Hood of transfers

 At a Glance

TransferWise is a British online money transfer service. It was founded by Kristo Käärmann and Taavet Hinrikus back in January 2011. The brainchild of the two Estonians is based in London.
TransferWise supports more than 750 currency routes across the world including GBP, USD, EUR, AUD and CAD, and provides multi-currency accounts. In 2018 TransferWise's net profit reached $8 million and its customer base 4 million people, who collectively transfer around $4 billion per month.
The basic concept behind the inspiration was to match transfers with other people and then have a small commission while using the inter-bank mid exchange rate, unlike traditional currency transfers where there are buy and sell rates and the broker gains the difference between the two.
TransferWise is currently available in ten language versions: English, Polish, French, Spanish, Italian, Hungarian, Portuguese, Chinese, German and Russian.

Opening an account at Transferwise is super easy: it takes only a couple of minutes via your phone, and you will receive your physical card in just a few days as well.

TransferWise is a top choice for international money transfers. They are known for their great customer service, have excellent reviews on Trustpilot, and provide speedy transfers. And what makes them stand out from their competition is that they also provide spectacular user experience, from an easy sign-up process to efficient transfers, as evidenced in our in-depth UX analysis of what first-time users think of TransferWise. Some users were so impressed they thought it is too good to be true. Yes, it is a dream come true! They’ve seen massive growth since 2011 and are an extremely competitive, high-profile disruptor of the traditional money transfer model. TransferWise is frequently referred to as a no-nonsense company that is sparking a revolution.

 

History

TransferWise was founded by Taavet Hinrikus, who was the first employee of Skype and the financial consultant Kristo Käärmann. As compatriots working between their country Estonia and the UK, they had personal experience of the "pain of international money transfer" due to bank charges on the amounts they needed to convert from euros to pounds and vice versa. In the words of Hinrikus himself, "I was losing five percent 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".
That was the inspiration to create a private arrangement, with Hinrikus – who was paid in euros – putting this currency directly into Käärmann's Estonian account so he could pay his mortgage without having to convert pounds to euros, while Käärmann reciprocated by putting pounds into Hinrikus' UK account. This arrangement was the beginning to develop a crowdsourced currency exchange service to offer a cheaper alternative to established institutions.
In February 2012, their approval with the UK financial regulator was finalized. By April 2013, they stopped letting users purchase Bitcoin, citing pressure from banking providers. In its first year, transactions through TransferWise amounted to €10 million. In May 2017, the company announced its customers were sending over £1 billion every month using the service.
In May 2016, TransferWise's claim "you save up to 90% against banks" was considered as misleading by the Advertising Standards Authority. According to independent comparison site Monito.com, Transferwise was actually on average 83% cheaper than the big four UK banks on major currency "routes", but could be up to 90% cheaper in some occasions. In April 2017, an internal memo from Santander showed how much the bank was making from its charges on international money transfer and how much it could lose to new entrants, specifically TransferWise.
In April 2017, TransferWise announced its decision to move its European headquarters from London to the European continent due to Brexit. The same month, the company announced its APAC hub in Singapore after becoming one of the first remittance companies to be allowed to offer online verification in Singapore.
In May 2017, TransferWise launched a new service, called the Borderless account. Initially the account is for businesses and freelancers with an account and card for consumers planned for later in the year. The Borderless account was available in Europe and the US at launch. However by January 2018 a multi-currencies Mastercard debit card was launched for customers located in the European Union and support was later added for customers in the United States with more countries expected to follow.
Also in May 2017, the company announced it had been operationally profitable since the beginning of the year. In May 2019, the company had the second investment round of $292M and reached the total valuation of $3.5B, more than double the valuation TransferWise achieved in late 2017 at the time of its $280 million Series E round.
As far as the investors of TransferWise and its value, the company received seed funding amounting to $1.3 million from a consortium including venture firms IA Ventures and Index Ventures, IJNR Ventures, NYPPE as well as individual investors such as PayPal co-founder Max Levchin, former Betfair CEO David Yu, and Wonga.com co-founder Errol Damelin. TransferWise also received investment after being named one of Seedcamp 2011's winners. In May 2013 it was announced that TransferWise had secured a $6 million investment round led by Peter Thiel's Valar Ventures. TransferWise raised a further $25 million in June 2014, adding Richard Branson as an investor. In January 2015, it was announced that TransferWise had raised a $58 million Series C round, led by investors Andreessen Horowitz. In May 2016, TransferWise secured a funding of $26 million, which raised the company's valuation to $1.1 billion. As of May 2016, TransferWise has raised a total of $117 million in funding. In November 2017, the company raised a $280 million Series E led by Old Mutual Global Investors and IVP, as well as Sapphire Ventures, Japanese Mitsui & Co, and World Innovation Lab. The company's revenue reached $151 Million in September 2018.

How it works


TransferWise routes most payments not by transferring the sender's money directly to the recipient as it is in the case of SWIFT, but by matching the amounts with other TransferWise's users sending the other way around. TransferWise then uses these pools of funds to pay out transfers via local bank transfer. This process avoids currency conversion and transfers crossing borders.
Its reputation is built on the fact that it is the cheapest way to transfer money. In 2012 the company's charges were €1—in 2015 raised to €2, £2, $3 etc. (depending on the currency sent)—or 0.5%, whichever is larger, in or of an equivalent amount in the customer's currency.
In 2018, TransferWise revamped its fee structure to a percentage of the amount alongside a fixed fee (for example 0.35% + £0.80 when sending from GBP to EUR). In 2019, the fixed part was canceled and the total fee became a decreasing percentage of the amount—for example, £0.26 when sending £1 and £0.30 when sending £10 (both transfers with exchange to euros), the percentage drops to a little below 0.4% (in the case of these currencies) with large amounts.
TransferWise's system has been compared to the hawala money transfer system.
Borderless account
To set up the borderless account, prior personal identity verification is needed. Once a user is approved for this account, they can hold multiple currencies concurrently, and decide when to make a transfer to best suit their financial needs. Personal local bank details can also be issued in a handful of currencies to receive payments from third parties, therefore avoiding the use of SWIFT transfers or having the sender register with TransferWise. This is similar to having a multi-currency brokerage account.

Features

Transferwise offers features that are similar to that of high street banks. However, it still lacks plenty of additional features that other digital banks offer:
Your spending is not categorized by the type of transaction (e.g. shopping, restaurants). You cannot set monthly budgets or send money to other users for free nor request money. Smart savings are also not available, so for example you cannot round up the amounts you actually spend and store the difference as savings. Savings cannot be stored separately from your main account balance. It offers no interest on your savings and you cannot set up direct debits. Overdrafts are not possible. And neither are joint accounts. 3D Secure online payments are currently only available for cards issued in the UK or the EEA. You can use Transferwise through your mobile app and it is available on a desktop computer as a website. However, there aren't any additional features like loans, insurance, or investments at Transferwise.

TransferWise currently supports sending money to 71 countries and sending money from 43 countries. The company covers 1000+ routes (country combinations) across 57 currencies, and they are also one of the few companies offering the true mid-market rate.
Most currencies supported by TransferWise offer one option: a bank transfer from one bank to another. For some currencies, you can pay with debit and credit cards or use a SOFORT transfer option. Apple Pay or Android Pay is also available for certain currencies via TransferWise iOS and Android apps. In most cases, the recipient will get the money within one to two business days.

Fees

TransferWise is an innovative international money transfer provider that is often dubbed the “Robin Hood” of the money transfer industry. They focus on making bank transfers more affordable than traditional banks by charging low and transparent transfer fees and converting money at the true mid-market exchange rate. In other words, there’s zero markup on the exchange rate. (As a comparison, banks usually give customers an above-market rate, the margin is part of their fees and in general, they are not transparent about this.)
When it comes to smaller transfers one the easiest ways you stand to lose the most money is to not be aware of the fees banks charge at each end. I call these hidden fees because while you may think money transfer companies are powerless to do anything about these fees they can!
Although it is expensive to have local bank accounts in almost every country in the world, this is exactly what the best money transfer services do to avoid (as much as possible) banks hammering you with fees of $10 – $50 USD at each end.

Customer Service

Customer service for Transferwise is quite satisfying with a Live chat that connects immediately and a phone line assistance which is both quick and helpful. However it is not available 24/7. In fact the U.S. phone support is available only from 8 a.m. to 8 p.m. ET on weekdays.
WEBSITE & APP
Straightforward website. The homepage has a cost calculator that makes it easy to see fees and rates, and FAQs online are well-organized and helpful. Rates for transfers from U.S. dollars are guaranteed once you start setting up a transfer, and you can click to cancel transfers that haven’t been converted yet.
The user experience is user friendly as it is easy to set up and login. You can register for TransferWise by using an email address, or syncing up your Google or Facebook account, which isn’t typical for a transfer provider.
TransferWise mobile apps have great ratings on Apple’s App Store (4.7/5 stars on 19,300 ratings) and Google’s Play Store (4.4/5 on almost 80,000 ratings). According to TransferWise customers, the app is "an invaluable tool for anyone moving money internationally".

Awards Media Attention

Named as one of "East London's 20 hottest tech startups" by The Guardian, TransferWise has also been picked as a Wired UK Start Up of the Week as well as being listed as number 12 in Startups.co.uk's list of the top 100 UK start-ups of 2012. TransferWise was also named by TechCrunch as one of five "start-ups to watch" at Seedcamp's 2012 US Demo Day.
In May 2015, Transferwise was ranked No. 8 on CNBC's 2015 Disruptor 50 list and in August 2015 the company was named a World Economic Forum Tech Pioneer.