This peer-to-peer fintech industry disruptor is on a mission to save businesses and individuals time and money when it comes to secured international money transfer.
Launched in 2011, Wise, formerly known as TransferWise, makes sending money around the world simple, easy, and convenient. It prides itself as a service characterized by transparent operations and no hidden fees. It’s no wonder it’s Trustpilot page is adorned with thousands of five-star reviews.
The fintech company doesn’t alter exchange rates for financial gain or any other reason. Compared to UK banks and the myriad of money transfers, it offers its customers the mid-market rate, also known as the interbank rate, and transfers, especially from Great British Pounds (GBP), are usually completed in a day.
Continue reading to view our detailed analysis of the peer-to-peer money transfer services.
Wise International Money Transfers in a Nutshell
Here are the core reasons and market differentiators that make Wise stand out.
Wise and Exchange Rates
If there’s a specific aspect of international money transfer where Wise excels, it’s exchange rates.
Sometimes, when sending money internationally, people and organizations are usually confronted with unfavorable fluctuating exchange rates set by banks and specialists to earn a profit. With TransferWise now called Wise, the case is different, as it uses the mid-market rate, reinforced by a guaranteed rate, which is much more competitive and makes transferring money internationally through Wise up to eight times cheaper than through similar services.
What is the mid-market rate?
The mid-market rate is the true worth of your money compared to the destination currency on the global market. For instance, if you are transferring £500 to someone in the US, the mid-market rate is the true worth of £500 in USD on the global market.
On the other hand, going by how Wise puts it on their website, the mid-market rate is the fair exchange rate. That is the rate that shows up on independent sources like Google, XE, and Yahoo Finance. It’s the midpoint between demand and supply for a currency, the exchange rate banks and specialists use when trading currencies among themselves, and not the skewed one they offer their customers.
Offering the mid-market rate is one of the ways Wise saves its customers money.
What is a guaranteed rate?
Another way Wise saves its customers money is by offering them what it calls a guaranteed rate. This is basically the mid-market rate you see at the time you finished setting up your transfer.
- The guaranteed rate is valid for two working days on transfers from UD, BGN, BRL, CAD, CHF, EUR, HKD, HRK, JPY*, RON, and SGD.
- On transfers from other currencies, except GBP, the guaranteed rate is valid for one working day.
- On transfers from GBP, it’S valid for 24 hours, weekend included.
So, as long as Wise receives your money within the specified time period, the rate you saw when you finished setting up your transfer is what you will get, and it doesn’t matter if the mid-market rate rises during that period.
How Wise exchange rates differ from other institutions
You see, when you do an international transfer through a bank or many other specialists, they charge you an unfair exchange rate in a few ways:
- They offer a skewed exchange rate. Not the mid-market rate. This leaves you paying more.
- Exchange rates fluctuate. They may delay your transfer so they can dispatch your money when the mid-market rate is lower.
- If the mid-market rate rises and lowers throughout the overall time span of processing your transfer, the bank may modify the initial rate offered to an unfair version of the highest rate for that period, but only send your money when the mid-market rate is significantly lower.
The great thing is that with Wise, you won’t have to worry about delays and shady currency exchange practices.
How much does it cost to use Wise?
Basically, there are two types of fees per transfer through Wise
- The flat fee
- The percentage fee
It is actually a common practice among banks and similar services. What sets Wise apart is that its fees are transparent (no hidden or undisclosed charges) and fairly lower compared to other institutions. Plus, Wise fees have been dropping and dropping since the company’s conception. Apparently, it’s truly dedicated to its mission to zero fees.
How Wise keeps your money safe
For starters, Wise is regulated by the Financial Conduct Authority (FCA) in the UK, meaning the company is required by law to store your money in a low-risk financial institution. So basically, Wise stores your money in reputable traditional banks. In the UK, it’s Barclays. In the US, it’s Wells Fargo. These are well known names in the industry. So you have absolutely nothing to worry about. Should Wise disappear today, your money would be paid back from these banks.
Wise is also licensed by Mastercard International Inc. to issue its borderless account customers debit Mastercards.
How does peer-to-peer money transfer work under Wise?
Peer-to-peer foreign currency exchange has been a thing since the late 1990s. It’s all about fair and transparent access to foreign currencies, about matching people and businesses that need to exchange Currency A for Currency B, with people and businesses looking to change Currency B to Currency A instead of passing through banks.
This is how Wise offers its customers better exchange rates and lower transfer fees. In fact, when you fund a transfer to the US using GBP, the money never really leaves Wise Barclays’ account. The company basically pays your beneficiary the USD equivalent from their Wells Fargo account. Simply put, Wise uses any supposedly outgoing GBP to pay beneficiaries in the UK, and then uses supposedly outgoing USD to pay beneficiaries in the US.
That way, wise doesn’t really carry out any real currency exchange, which is why it’s able to offer its customers mid-market rates and lower transfer fees.
How do I do a peer-to-peer international money transfer via TransferWise?
It’s very easy. Simply click here to visit Wise. Choose origin and destination currencies. Then input the origin currency amount. The system automatically displays the total charge, the exchange rate, and the total amount your beneficiary will receive. As you can see from the image above, to send 1000 GBP to the US, the total fee is 4.78 GBP, which is extremely cheap compared to what other services offer.
Once you have checked your input to ensure everything is intact, click “Get started” and the system will take you to where you can sign up. Once you have signed up and verified your account, you can complete your transaction by inputting the recipient’s account details or just the email address if the person is already a Wise user.
Here is a video on how to send an international payment via Wise.
Does Wise offer other services?
Yes. Apart from the peer-to-peer international money transfer, here are more products from Wise that might interest you.
- The Wise borderless account, which allows both individuals and businesses to hold over 40 currencies with local bank details in USD, GBP, EURO, and AUD. This means users can accept payments in local currencies with zero fees.
- The Wise debit Mastercard, which allows borderless account users to spend in local currencies anywhere online or offline that Mastercard is accepted.
- Wise Batch Payments, which allows businesses to handle international payroll with ease, saving them both time and money.
- The Wise Payout API, which allows businesses to integrate their Wise with tools like Hubstaff and TIme Doctor to facilitate payroll through automation.