As an expat in any country, you will inevitably have to do an international money transfer. As TransferWise has gained ground in the international financial field, more expats are looking into whether or not it’s the best option for sending money abroad. From my experience, TransferWise has always been the cheapest, fastest, and safest service. This article explains the following 6 things you should know about the international money transfer service:
- What Is TransferWise?
- Costs: Rates & Fees
- How TransferWise Operates
- Currencies Supported
1. What is TransferWise?
TransferWise is an international money transfer service. This service lets you transfer money between different countries and currencies at a very low cost. It’s the modern, affordable, and more transparent version of a bank transfer.
2. Costs: Rates & Fees
How much does TransferWise cost?
The cost of any international money transfer service is composed of two things: the exchange rate and the transfer fee. TransferWise is exceptionally low-cost because they use the mid-market exchange rate and have minimal fees. You can also lock in an exchange rate for 24 to 48 hours, depending on the currency.
TransferWise Exchange Rate
TransferWise uses the mid-market exchange rate. This is the fairest and cheapest exchange rate you can get for international money transfers.
In addition, TransferWise lets you secure an exchange rate for a specified amount of time. They refer to this as a guaranteed rate. TransferWise offers this guaranteed rate because the mid-market exchange rate is always changing. With a locked exchange rate, however, the recipient of your money receives the amount you initiated the transfer with. How long this guaranteed rate is available to you depends on the currencies you are transferring money between. As long as you pay for the transfer within the specified amount of time, you will get the guaranteed rate.
If TransferWise does not receive your money within the specified period of time, the exchange rate is no longer guaranteed. Your money will still be transferred, but at the most current mid-market rate.
What happens if my transfer occurs on the weekend?
Since banks only process transfers Monday – Friday, TransferWise doesn’t consider Saturdays & Sundays as part of the time frame for the guaranteed rate.
Guaranteed Rate Example
It’s Friday at 5:00pm. You would like to send 1,000 GBP from your British bank account to your German (EUR) bank account. You go to the TransferWise website to begin the process. At 5:00pm Friday the mid-market rate is such that 1 GBP → 1.11483 EUR. You will see that the guaranteed rate for transfers from GBP to EUR is 24 hours.
Therefore, after you set up the transfer process, you have 24 hours for TransferWise to receive your payment to have the guaranteed rate of 1 GBP → 1.11483 EUR.
Because TransferWise doesn’t include the weekend when they determine the guaranteed rate, you have until 5:00pm on Monday to submit your payment, rather than 5:00pm on Saturday.
If you submit your payment by 5:00pm on Monday, 1,000 GBP will be transferred in EUR using the mid-market, guaranteed rate from the previous Friday. If you submit your payment after 5:00pm on Monday, the mid-market rate will have very likely changed, and this would instead be the exchange rate used to complete your transfer.
Exchange Rate Tip #1: Unlike TransferWise, banks will charge you an exchange rate that is higher than the true mid-market exchange rate and then keep the difference for themselves. You can find the mid-market rate on Google. For example, you can type into the Google search bar, “Current exchange rate between the US dollar and the Euro.” Google search results will tell you how many US dollars you can get for 1 Euro as of that time. This is the rate TransferWise uses, and is the best rate you can get for international money transfers.
Exchange Rate Tip #2: Be cautious of any service claiming to have a ‘0% fee’ or ‘zero commission’. It’s never free to do an international money transfer. Any service making these claims is charging you a higher exchange rate than the true mid-market exchange rate. One reason I use TransferWise is because they always use the true rate. Therefore, TransferWise is completely transparent about how much money I’m paying in fees.
TransferWise Transfer Fees
TransferWise fees depend on two things: the amount of money you are transferring and the currencies you are transferring money between.
The fee is usually a percentage of the transfer amount. For small transfers, however, sometimes the fee is a very low, flat fee. The percentage you are charged also depends on the currencies you are using.
TransferWise fees are very transparent. In other words, there are no hidden fees, and you can see how much TransferWise will charge you before you even have an account. You can simply go to their homepage, and use their calculator to see how much your transfer will cost.
Using this link, you can transfer up to 500 GBP for free. No fees! Below you will find two images of example transfers I did.
(1) 800 USD → EUR and (2) 500 GBP → EUR.
3. How TransferWise Operates
How does TransferWise keep costs low?
TransferWise’s business model is very direct and is the reason they are able to keep their costs so low.
TransferWise has bank accounts all around the world. This lets TransferWise use their own accounts to complete your transfers, and you don’t have to pay any hidden or overpriced bank fees.
For example, let’s say you want to send 500 GBP to Germany. When you pay TransferWise 500 GBP, they deposit this money into their UK account. Then TransferWise converts GBP to EUR, and TransferWise’s German account sends the equivalent in euros to the recipient.
Since TransferWise uses their own bank accounts, the money never really crosses any boarders. It’s called a Peer to Peer service. That’s why their costs are so much lower than banks’ costs.
How long does a transfer take?
1. The countries you are transferring money between.
Each country and currency has varying transfer times. How fast your recipient’s bank can process your money impacts how fast your transfer is completed. TransferWise states on their website, “Converting your money can take a maximum of 2 working days, but it’s very rare that it takes this long.” In my experience, all of my transfers have only taken 1 business day.
2. Payment method.
How you pay for your transfer also impacts how fast your transfer is completed. For example, card transfers usually go through immediately while bank transfers take more time. When you set up your transfer, you can see how much time each payment method will take.
With some currencies, such as GBP and EUR, there are different kinds of transfers. For instance, with money sent from GBP you can choose between Low cost transfers, Fast and easy transfers, and Advance transfers. How long your transfer takes depends on the kind of transfer you choose. Once you set up your transfer, you can see the estimated time of arrival. Below are two examples.
3. The time you pay for the transfer.
Money can only be transferred when the banks are open. For example, if the recipient’s bank is closed because it’s after business hours or it’s a national holiday, the transfer will take a little longer.
4. Security verifications.
On occasion, your transfer might need to be reviewed. TransferWise may need to check your ID, where the money came from, or your address. They refer to this as process verification. Sometimes it makes transfers take a little longer, but it also keeps your money safe.
Is TransferWise safe to use?
As with all banks and financial businesses, TransferWise is heavily regulated and must follow the laws put in place by regulatory boards across the world.
For example, it is regulated by Financial Crimes Enforcement Network (USA), Kanto Local Financial Bureau (Japan), Financial Conduct Authority (UK and EEA), Australian Securities and Investments Commission (Australia), and Authorité des Marchés Financiers (Canada).
In addition to outside regulations, TransferWise goes through their own process verification to prevent fraud and money laundering. TransferWise is a very safe method for transferring money internationally.
6. Currencies Supported
What currencies does TransferWise support?
All major currencies are supported by TransferWise. Currently you can send money in 22 different currencies and receive money in 50 different currencies.
Currencies you can use to send money include AUD, ARS, BRL, CAD, EUR, GBP, HKD, JPY and USD. You can find a list of all 22 currencies here.
Currencies you can receive money in, but cannot use to send money, include AED, BDT, CLP, EGP, MAD, VND and ZAR. You can find a complete list of all the currencies you can receive money in here.
Thai Baht is another example of a currency you can receive money in, but cannot use to send money. For instance, you can transfer USD to THB but you cannot transfer THB to USD.
TransferWise has become my go-to choice for all my transfers. I’ve found that it’s the most fair, fast, and secure transfer option.
If you’re ready to make a transfer, don’t forget to use this link. You can transfer up to 500 GBP for free.
If you’d like to learn more about sending and receiving money abroad, click here to read a detailed article about international money transfers.
Lastly, if you don’t already have a bank account, click here to learn about a great bank for expats!
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