Wise Transfers Your Cheaper Way to Send Money Abroad Wise Transfers (formerly TransferWise) is one of a number of fintech startups that have sprung up over the past decade to offer low-cost international money transfers.

The way Wise achieved this goal Wise Transfers Your Cheaper Way to Send Money Abroad:

was by forgoing profits from currency exchange fees, which make up the bulk of traditional banks’ net income when moving money across borders.

Consumers liked TransferWise’s low fees and the whole package the startup offered them, and the company quickly grew to become Europe’s most valuable fintech in 2019, with six million customers paying $5 billion every month and worth 3 .5 billion dollars. Two years later, in July 2021, Wise listed on the London Stock Exchange at $11 billion and boasted 10 million customers.

Let’s take a look at why Wise has become popular with millions of people around the world in just ten years, and why you should also consider using it for cheap international money transfers Wise Transfers Your Cheaper Way to Send Money Abroad.

Content:

How Wise Transfers started
How do smart money transfers work?
How much do wise transfers actually cost?
Why are wise transfers cheaper?
How is a wise money transfer done?
Create a Wise money transfer account
Tell Wise where your money transfer is going
Pay for Wise money transfer
Track your transfers Wise
Big advantage: TransferWise customer service
Takeaway

How Wise Transfers started Wise Transfers Your Cheaper Way to Send Money Abroad:

TransferWise was launched in 2011 by two London-based Estonians: Taavet Hinrikus, famous for being Skype’s first employee, and financial advisor Kristo Kaarmann, and processed $13.4 million in low-cost money transfers in its first year Wise Transfers Your Cheaper Way to Send Money Abroad.

The story of how these two Eastern Europeans came up with the business idea that would make them one of the world’s most successful entrepreneurs has long since become a myth, but like all good legends, it contains at least a grain of truth.

Kaarmann and Hinrikus met at a party in 2007. At the time, Hinrikus was paid in Estonian kroner, which he exchanged monthly for British pounds. Kaarmann was paid in pounds, which he converted into crowns to pay off the mortgage at home in Estonia Wise Transfers Your Cheaper Way to Send Money Abroad.

Both soon had enough of the exorbitant bank fees they were paying. So they came up with a clever plan. Kaarmann topped up Hinrikus’ account in GBP every month, while Hinrikus did the same for Kaarmann’s Estonian krone, calculating the amounts using the mid-exchange rate, i.e. without fees. Shortly after, two Estonian expats started a business to provide a similar service to others Wise Transfers Your Cheaper Way to Send Money Abroad.

How do smart money transfers work?

All money transfers across currencies that Wise allows are done using what is known as the real exchange rate. This is the mid-market rate (sometimes referred to as the interbank rate or spot rate) used in global financial markets.

The mid-market rate is the rate between the bid and ask rates that you typically see on money exchanges. Wise rightly states that most banks and brokers hide the true exchange rate from people by marking it up significantly for their own benefit. For its part, Wise will apply the mid-market rate at the time of pairing, i.e. after it receives the user’s deposit and activates the conversion payment.

The rates used in Wise money transfers are aggregated from a number of markets and constantly updated throughout the day. These can be checked on finance.yahoo.com, xe.com or oanda.com to verify that the rate used on Wise is close to the current market rate.

How much do wise transfers actually cost Wise Transfers Your Cheaper Way to Send Money Abroad?
Well, that’s a question that isn’t as straightforward as society would have us believe. For each transaction, the company charges a flat fee, which varies, plus a share of the transaction amount, which also varies. To illustrate, let’s cite three examples:

If £1,000 is to be converted to EUR, the flat fee will be £0.20 and the share of the transaction amount will be 0.35%, so the total fee will be £0.20 + £3.49 = £3.69.
If 1000 USD is to be converted to EUR, the flat fee will be 4.67 USD and the share of the transaction amount will be 0.43%, so the total fee will be 4.67 USD + 4.26 USD = 8.93 USD.
If INR 1000 to EUR is to be converted, the flat fee will be INR 61.66 and the share of the transaction amount will be 1.78%, so the total fee will be INR 61.66 + INR 16.41 = INR 78.07.
In contrast, when the company started, it charged a small flat fee for transfers up to £200/€ and 0.5 percent of the transaction amount for larger payments. This turned out to be unsustainable, as we predicted at the time Wise Transfers Your Cheaper Way to Send Money Abroad.

Why are wise transfers cheaper?

Although Wise’s fee structure may be more complex now than it once was, the savings are real, with transaction costs according to one estimate as low as 15% or even less of what banks typically charge. One of the reasons such savings are feasible is that Wise is not burdened with the legacy IT systems that plague traditional banks.

In addition, the company is building direct relationships with several banks, even though these lenders are getting rid of correspondent partners abroad Wise Transfers Your Cheaper Way to Send Money Abroad.

Perhaps a big part of the reason why Wise is probably the cheapest way to send money abroad is that it aggregates money transfers and offsets them against payments that go the other way.

For example, daily transfers from the US to India are aggregated, as are those from India to the US. Indian recipients will be paid the total amount that went to India and U.S. recipients will be paid out of the total amount that went to the U.S. Of course, the two totals will never match perfectly, but Wise will need to borrow on currency to meet customer requirements markets only the difference between the two totals, and only in the country in which the daily total is lower.

So if the total amount per day to India was equivalent to $2 million and the total amount per day to the US was $1 million, there would be enough money in Wise’s US account to meet customer demands, but Wise’s account in India would be $1. million that would need to be borrowed. Compare that to having to borrow the equivalent of $2 million in INR and $1 million in USD Wise Transfers Your Cheaper Way to Send Money Abroad.

How is a wise money transfer done? 

Before making a Wise transfer, you should always check their current fee structure to make sure you understand what you’re paying. You can do this using the calculator that Wise has on its home page. It’s simple: just tell them how much money you want to send, in what currency and where you’re sending it Wise Transfers Your Cheaper Way to Send Money Abroad.

You don’t need an account to do this, just sign in and see the TransferWise fees and exchange rate in advance. This way you can compare the offer you receive with other services.

According to the World Bank, people in the US send a hefty $74.6 billion to individuals in low- and middle-income countries each year. And fees, averaging 6% daily, add to the cost of these transactions — so sending $1,000 to a friend abroad can cost an extra $60 Wise Transfers Your Cheaper Way to Send Money Abroad.

Forbes Advisor analyzed a number of money transfer services to determine which ones provide the best value. We have selected the best in each category based on fees, availability, available payment methods and delivery speed. Details are accurate as of February 3, 2023.

View summary
Recommended offers of money transfer partners
Xe money transfer
Xe money transfer
More information

Through the Xe website
International transfers
98+ currencies available for transfer to 130+ countries Wise Transfers Your Cheaper Way to Send Money Abroad.

Quick and easy
Initiate transfers 24/7

Fees
Xe offers low to no fees for money transfers

CurrencyFair
CurrencyFair
More information

Through the CurrencyFair website
Multicurrency accounts
Hold more than 20 currencies

International transfers
Send and receive to over 150 countries

Fast and safe
Money transfers up to 8x cheaper than traditional banks

4 Best ways to send money
Here’s an overview of the best ways to send money abroad.

Best for peer-to-peer transfers and sending large amounts
PayPal
PayPal beats out other peer-to-peer (P2P) money transfer apps like Venmo and Zelle with its accessibility and choice of payment methods. Funds can be received immediately into the recipient’s PayPal account and then transferred to a bank account the very next day Wise Transfers Your Cheaper Way to Send Money Abroad.

Another major advantage of PayPal is that if the recipient doesn’t want to link a bank account, they can use their PayPal balance to spend money instead, as the platform is widely accepted as a payment method.

PayPal international transfers come with hefty fees, so it’s better to send money within the US. There’s no overall limit on how much you can send when you have a verified account, although individual transactions are limited to $60,000 (and some are limited to $10,000).

How it works Wise Transfers Your Cheaper Way to Send Money Abroad: PayPal account holders can send money to friends and family through the app or online through a web browser. Account holders can send money through a variety of payment methods; recipients must also have a PayPal account, but can sign up for free Wise Transfers Your Cheaper Way to Send Money Abroad.

Payment options: Bank account (no additional fees), credit and debit cards (small fee).

Fees: Sending money abroad to family and friends via PayPal balance, linked bank account, or credit or debit card incurs a fee of 5% of the amount sent, with a minimum fee of 99 cents and a maximum of $4.99.

Speed: Money can be received immediately into the recipient’s PayPal balance and transferred to their bank account the very next day.

Transaction Limits: Verified accounts have no limit on the total money that can be sent, but are limited to up to $60,000 (or sometimes $10,000) in a single transaction Wise Transfers Your Cheaper Way to Send Money Abroad.

Best for quick bank transfers

Zelle
If you need to send money to someone but don’t care for the added bonus of being able to pay directly from an app (like PayPal), Zelle is a great peer-to-peer bank transfer tool. There are now nearly 10,000 financial institutions in the Zelle Network, including about 1,700 in the US, which means a significant number of people have access to fast and free bank transfers. During 2021, approximately 1.8 billion transactions were completed with Zelle, representing $490 billion in transfers Wise Transfers Your Cheaper Way to Send Money Abroad.

How it works: Customers must sign up directly with Zelle, which can often be done from their own bank’s app or website, and register their profile. If your bank isn’t currently partnered with Zelle, you can still use the service through its Android and iOS apps (but the recipient must bank with an institution that’s a Zelle partner).

Payment options: You can only send money directly from your Zelle bank account.

Fees: $0 to send or receive money. (Zelle recommends that you check with your bank or credit union that they do not charge additional fees for using the service.)

Speed: Recipients already registered with Zelle will receive funds within “minutes,” the company says.

Transaction limits: Depends on the sender’s bank or credit union. Customers whose banks aren’t partnered with Zelle and use the service through smartphone apps can only send $500 per week Wise Transfers Your Cheaper Way to Send Money Abroad.

Best for quick international cash transfers
WorldRemit
When choosing a service to send money internationally, it’s important to pay attention to exchange rates and fees – not every service charges the same amount. Even some exchange rates vary from service to service. WorldRemit has some of the lowest cash transfer fees and users can send money to people in over 130 countries Wise Transfers Your Cheaper Way to Send Money Abroad.

How it works: You must have an account to use WorldRemit, but signing up is free.

Payment options: Bank account, credit card, debit card, prepaid card, POLi, Interac, iDEAL, Sofort, Google Pay, Apple Pay, Trustly.

Fees: Transfer fees vary and depend on where you’re sending money. For example, the delivery fee of $50 to Walmart in Mexico is $1.99 Wise Transfers Your Cheaper Way to Send Money Abroad.

Speed: Most transfers are instant or near-instant; Home delivery can take anywhere from 24 hours to seven days depending on location.

Transaction limits: Depends on the country you’re sending money from. If you’re sending from the US with a debit, credit or prepaid card, you can send $5,000 per transaction with a maximum amount of $9,000 in 24 hours Wise Transfers Your Cheaper Way to Send Money Abroad.

Best for globetrotters
Wise (formerly TransferWise)
If you often wake up in one country and go to sleep in another, managing money across borders can be difficult. Repeated exchange of cash for foreign currencies can cost a lot of fees.

With a focus on ‘banking without borders’, Wise makes multi-currency money management a breeze. It is also possible to make regular money transfers through the platform without having to set up its borderless bank account. (Disclaimer: The author of this post had a TransferWise Unlimited bank account.)

How it works: Opening a borderless bank account with Wise is free, and each section of the bank account can be designated for a specific currency. For example, if you add a balance in euros, the bank account will contain a SWIFT number, just like in Europe; if you add a British Pound Sterling (GBP) balance, that balance will have a sort code. A bank account can contain and manage more than 50 currencies Wise Transfers Your Cheaper Way to Send Money Abroad.

The debit card associated with your Wise account is Mastercard and funds can be added in a variety of ways. The account has the ability to transfer currencies across balances (for a small fee), and withdrawing cash from a foreign ATM is about one-sixth the cost of other debit cards, according to the company.

Payment options: Direct debit, bank transfer, debit card, credit card, Apple Pay. Fees for payment options depend on the currency in which payment or transfer is made Wise Transfers Your Cheaper Way to Send Money Abroad .

Sources