Faster And Cheaper Way To Switch Money Overseas

Transferwise is a new way to send cash around the world – and might save you money at the same time as well.

The company is different from other foreign currency exchange bureaux and has attracted the attention of some big investors – including Sir Richard Branson.

Whether you want to convert sterling or US dollars to baht in Thailand or sterling to euros, Transferwise claims to do the job quicker and cheaper than most foreign currency exchange companies.

The business is a disruptive technology that grew out of the need of two Estonians to pay their bills.

Taavet Hinkus worked for Skype in Estonia but lived in London, while his friend Kristo Kaarmann also lived in London.

Avoid hidden bank charges

Both had mortgages to pay – Hinkus in London and Kaarmann in Estonia.

Instead of sending the cash by foreign exchange transfers and paying fees to middlemen, they hit on the idea of finding a fair exchange rate by taking an agreed mid-market rate on a set day.

Hinkus then paid that amount of sterling into Kaarmann’s bank account and Kaarmann did the same for Hinkus in euros.

The aim was both to receive a fair exchange rate without paying bank charges.

Then, they realised millions of people around the world had the same problem, so devised Transferwise, a technology that scales up their basic plan across multiple currencies and countries.

“Banks make claims about free transfers and 0% commission but there are still hidden charges,” said Kaarmann.

Transparent and fair rates

“We remove all the PR and hidden fees and charge a lower transparent fee to let consumers use our service.”

The company can handle most transfers within 24 hours and claims to be shaving time off transactions.

Exchange rates are based on the mid-market rate rather than the company’s own foreign exchange rates.

You can find this rate on Reuters or Google.

“We use the mid-market rate because it is fair. It’s the midpoint between the buy and sell price,” said a spokesman for the company.

“Banks tweak their rates to increase their margins then offer commission free or other fee-free deals, but you still pay more and end up with less money than you should on the exchange.”

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