It doesn’t matter if you are a frequent traveler, expat, freelancer, or entrepreneur – at some stage, you will most likely have to send money from one country to another. The most obvious way would be to use your normal bank. But as you have probably figured out by now, this would also be the most expensive way. I have been using an international money transfer service called TransferWise for years now and decided to give you a review of their benefits and downsides.
What Is TransferWise?
TransferWise is a revolutionary currency transfer system that makes sending money abroad easier, cheaper and much more transparent than most other international transfer services.
It all started in the UK in 2010 when two Estonian migrants were tired of extremely high exchange rates when sending money abroad. With their incredibly smart idea how to transfer money across countries their fairytale success story began.
Today, they have offices around the world, employ more than 650 people and send more than 750 million USD around the word every single month. More than two million customers trust TransferWise.
Their concept is so great that even Sir Richard Branson (yes, the famous entrepreneur and Virgin Group founder Branson himself) invested 25 million USD in the company! If that doesn’t scream “Your business is freaking awesome!” then I don’t know what does.
How Does TransferWise Work?
Curious what makes TransferWise so special? The company is using a network of people who all want to do the same as you: transfer money internationally. This approach allows them to use a genius technique. Instead of actually physically exchanging money, TransferWise uses its own bank accounts in many different countries to simply trade the currencies with peer-to-peer technology.
Let’s look at an example:
Paul wants to send 500 USD from the USA to Anna in France. A normal bank would take Paul’s money and send it to France. TransferWise doesn’t.
They leave Paul’s 500 USD in their bank account in the USA and take the equivalent in EUR out of their bank account in France to give it to Anna. That means Paul’s money never leaves the USA. It simply gets redirected if someone else is doing a transaction the other way round. The money never crosses borders, which makes the process easier and so much cheaper.
What Exchange Rate Does TransferWise use?
That’s one of the best parts of TransferWise: They use an exchange rate called mid-market rate, which is the exact same rate that banks use to trade money between themselves and the only real exchange rate out there.
The reason why other international money transfer service companies have different exchange rates is simply because they mark this rate up, i.e. add a hidden percentage to make a profit.
You might find other money exchange companies that don’t charge a fee but I can almost guarantee you that they will use higher exchange rates. After all, they need to make a profit, too. In most cases, you are better up paying a fee and the real exchange rate instead of no fee and a markup rate.
TransferWise is up to 8 times cheaper than a normal bank!
Nerd Wallet, the go-to website for all financial questions, confirms that TransferWise has the best exchange rates in comparison to other big name money transfer services.
What Are The Transfer Fees?
As most exchange companies, TransferWise charges a fee for their international money transfer service. This fee depends on how much money you send and your currency. In most cases, it is between 0.5% and 0.7%. A few currencies, like the Brazilian Real, can be 1.5%.
If you want to check how much exactly you would pay for your individual inquiry, have a look at the TransferWise page and use their calculator for free.
How Can I Pay For My Transfer?
TransferWise offers bank transfer for most currencies, debit and credit card payments for many currencies and SOFORT payment option for some European countries. If you want to make transfers from USD or CAD you have the additional direct debit option.
Please bear in mind that, for example, if you pay via credit card, your card provider or bank will charge an extra fee. Unfortunately, this is something that you can’t avoid, no matter what international money transfer service you use.
But don’t worry, TransferWise will let you know how much exactly that external fee will be as soon as you pick your payment method.
How Long Does It Take To Transfer The Money?
Again, the duration of your money transfer depends on several factors.
The involved countries. Some countries and currencies take a bit longer. Depending on how quickly your recipient’s bank can process the money, it can take up to 5 days. But it is very rare that it takes that long.
Your payment method. A general rule: card payments are quicker than bank transfers.
Time of your transfer. Quickest time to process is during normal banking hours. Weekends or national holidays in the finishing countries will slow it down.
Although there are many factors and steps involved, it usually takes between 1 and 4 days. For me personally, it never took longer than 2 days. I even had one transaction processed the same day! Only a couple of hours! That was a transfer from Australia to Germany and I’m still astonished how fast that went.
Anyway, TransferWise will let you know how long it’s going to take before you submit your payment. They will also send you an email to tell you the status of your payment. You will know exactly where your money is right now at any time. Transparency at its best.
Is TransferWise Safe?
You bet! TransferWise is authorized in the UK by the Financial Conduct Authority (FCA). This regulatory body makes sure that customers get a fair deal and financial markets are run with integrity.
They also keep their own business accounts completely separate from their clients’ funds, as per FCA regulations. In case TransferWise should have any difficulties, your money is safe!
In addition, your personal information on the website is protected by using HTTPS security encryption.
Can I Receive Money Via TransferWise?
Yes, that is possible, too. You simply select the feature in your TransferWise account, type in the amount and currency you would like to receive and get a link that you can send to the person you want to receive the money from. He or she can then pay via bank transfer or card payment.
Advantages of TransferWise
Ok, that was a lot of background information about TransferWise. Let’s have a look at the summarized advantages of this international money transfer service:
True Exchange Rate.
TransferWise uses the mid-market exchange rate. Unlike other money transfer services, they don’t add any markup onto the rate. That means you get the best possible rate, which results in TransferWise being up to 8 times cheaper than a normal bank.
For many transactions, TransferWise offers a guaranteed rate, which means they lock the current exchange rate for 24-48 hours. This saves you from exchange rate fluctuations and guarantees the exact amount you want to transfer.
The fees they charge for their service are reasonable, fair and you always know exactly how much it is upfront. Absolutely no hidden fees.
With TransferWise you will know exactly what exchange rate is used, how much fees there are (no hidden costs!) and how long the money takes to arrive. The process is very transparent at any time.
Easy to Use.
Both their website as well as the app are super easy and intuitive to use. Their user experience is even rated with 5/5 stars on the Apple app store. Simply log in, select the amount of money and currency, type in the receivers’ details and pick a payment method. To order a transaction doesn’t take more than 2 minutes.
TransferWise is 100% internet based. In case you have any questions, simply drop them an email, call one of their offices or webchat with one of the team members.
Disadvantages of TransferWise
Like any other money transfer service, TransferWise, too, might not work in every situation. Here are the downsides of this service:
At the moment, TransferWise can make international money transactions between 41 currencies. Although the most common ones are covered, such as Euro, British Pounds, US Dollar, Canadian Dollar, or Chinese Yuan, there are still a few missing. However, the team is constantly working on adding new routes.
As already mentioned, I have never experienced any difficulties with their transfer time. My transactions never took longer than 2 days. But after reading a few reviews it seems that for some currencies it can take up to 5 days. Depending on how urgent you need to transfer the money, this might be a downside for you.
Want to learn more about international banking for frequent travelers or digital nomads? Check out my post about the best online bank accounts and learn who has the best conditions for you.
How To Create A TransferWise Account?
Simply go to the Sign Up Page, use your email address, Google or Facebook account and log in. In order to comply with anti-money laundering regulations, you must then verify your identity. But no worries, this is super easy. You simply need to upload a photo of your:
- ID Document, e.g. passport, ID card or driver’s license
In some occasions, depending on your country and amount of money you want to send, they also need proof of address. To do so, simply upload an:
- Address Document, e.g. utility bill, credit card statement, tax bill or a driving license with address
That’s it! The verification is usually very quick and takes no more than 2 working days. After that, you are ready to transfer whenever you wish.
Are There Any Cheaper Options Than TransferWise?
Some other international money transfer services and banks might transfer your money at a similar low service fee or even for free. However, you can be sure they sneak a markup onto the true exchange rate to make a profit. After all, why should they work for free? Of course, they need to make a profit somehow.
Unfortunately, you are often unaware of these hidden fees, so you pay more without even realizing.
Let’s have a look at a few other popular money transfer service companies and their fees and exchange rates:
|TransferWise||Bank of America||HiFX||OFX||MoneyGram||Western Union|
|Fees||0.5% to 1.5%||$25 to $85 or more||$5 for up to $5,000||$0 when sending more than $150||Starts from $4.99||Starts from $5|
|Exchange Rate||Mid-market rate||More than mid-market plus a margin||0.4% above the mid-market rate||0.4% above the mid-market rate||5% or more above the mid-market rate||Up to 6% above the mid-market rate|
*Numbers according to the comparison website Finder.com
This Is What Customers Say
As you may have guessed by now, I’m a total fan of TransferWise and love their money transfer service. They are my go-to solution when I need to send money around the globe and they’ve never let me down.
But I’m not the only one. The review site Trustpilot collected more than 40,000 reviews. The result: TransferWise receives a top customer rating of 9.5/10. Having that many happy customers in the financial industry really says something.
TransferWise Test: Is TransferWise A Reliable Money Transfer Service?
Without a doubt, yes. TransferWise’s revolutionary peer-to-peer technology allows to transfer and exchange money in a completely new way. They are able to give you the real mid-market exchange rate without any markup that other money transfer services would charge you.
Their fees are low and reasonable. Transfer times may vary between 1 and 5 days but are often much shorter than that. The easy and transparent process make TransferWise a very customer friendly alternative to other transfer companies. And thousands of independent customer reviews confirm this.
If you are looking for an international money transfer service with great conditions, TransferWise is a brilliant option, in most cases even the best. I’m very happy I’ve found them years ago and wouldn’t want to use any other provider anymore.
Click here if you want to test Transferwise for your next transaction.
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