Be a Global Citizen With the Bank of the Future: TransferWise

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TransferWise
TransferWise | Transferwise.com

The TransferWise automatic system matches users who own currency and those who need it, eliminating high fees and processing times from overseas money transfers.

New technologies have made many sectors of the economy more oriented towards “low-cost” models, which has become a value for sustainability and growth.

That said, the traditional banking world seems to be one of the last strongholds resisting this “fashion.” Fintech solutions, continuing its disruption of traditional banking, are beginning to provide cheaper and faster alternatives to online financial services.

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TransferWise, Money Without Borders

In 2011, an Estonian duo of immigrants in Britain, Taavet Hinrikus, Skype’s first employee, and Kristo Käärmann, teamed up and created the Fintech startup, TransferWise.

Headquartered in Old Street’s Roundabout, or London’s “Silicon Valley” neighborhood, TransferWise has other offices in New York, Tokyo Sydney, Singapore, with most of its employees are based in Tallinn, Estonia.

As they commuted between Estonia and the U.K., the two co-founders were confronted with the money transfer services of the traditional banks.

Being paid in Euros and then having to spend in Pounds, they discovered considerable hidden fees. They then decided to find a way around this system.

Hence the idea of specializing in money transfers from one currency area to another, with the aim to shake the business model of major banks.

Transferring Money Wisely and With no Fees

If you try to make an international money transfer with traditional banks, be prepared for a somewhat unfavorable service. Banks usually use the mid-rate exchange to their advantage (pocketing the difference between selling and buying rates) then, on top of that, add an often-undisclosed margin (a.k.a. hidden fees).

TransferWise and other Fintech startups are remedying this issue.

With TransferWise, money doesn’t even cross borders. A user transfers funds to TransferWise account in the country where you are. And the system will detect a user who wants to transfer money in the other direction. Transferwise then uses the mid-range exchange rate and applies a small, transparent charge. TransferWise supports 41 countries, including the U.S., and the list is growing.

According to Business Insider (BI Intelligence report), in 2014, the US P2P payments, from one person to another, was estimated at $540 billion USD with all means of payment considered (check cash, and digital transfers).

By 2019, mobile P2P payments are forecast to hit $174 billion USD, given the diminishing use of cash and checks.

With these bright perspectives, new money transfer operators (MTOs) with innovative and low-cost models started reshuffling the cards within the currency transfer market.

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