How does transferwise work?

This post is also available in: Deutsch (German)

 

Transferwise set itself the goal to be an alternative to expensive international money transfers. International wirements are expensive due to two reasons:

  1. High bank fees for international money transfers
  2. Poor exchange rates. There are often huge spreads (delta between interbank exchance rate and charged rate) of more then one percent. These are hidden costs and they are expensive.

Here exactly comes Transferwise into play. Transferwise charges only a small fixed amount for payments up to GBP 500. After  this threshold 0.5 percent of the wired amount are charged as fees. Transferwise is fully transparent about its costs. For larger payments (+700 GBP), Currencyfair is the cheaper alternative (and comes with EUR 30 bonus for new customers, plus a free transfer).

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Above you can see how you can choose the currencies and amounts. Transferwise always shows the indicative exchange rate plus fees.  One can choose hier if you would like to transfer a fixed amount in the foreign currency or just any amount in your local currency indipendent of the exchange rate. If a fix amount in foreign currency should be transfered transferwise includes a buffer for variations in the exchange rate. This buffer (if not used) will be sent back to your bank account, of course free of charge.

Afterwards you need to sign in the recipients bank account number and add a reference. Now you need to pay, you can either choose to pay by credit card (comes with additional fees, but is very fast) or make a bank wirement within your country to transferwise (transferwise has bank account in many countries).

Transferwise lets you know whats happening and gives status updates (when exchanged, paid out etc).

Last but not least: For new customers, the first transfer up to 500 EUR/GBP/CHF or equivalent is free, if you sign up through a  transferwise link on this page.

If you have questions, do not hesitate to contact me.