Wise, formerly Transferwise is a new type of financial company launched in 2011 by two Estonian friends who realised that they were paying too much for international money transfers. Since then, they have revolutionised the way in which people transfer money across borders and have been backed by investors who believed in their idea, such as Paypal co-founder Peter Thiel and Virgin’s founder Richard Branson.
More than one million people around the world use Wise and they send $1.5 million every month. By doing so, they save $2 million every day because Wise’s technology allows them to transfer money overseas using the real exchange rate and a small, upfront fee. It is cheaper to use that other providers because the transfers are actually made through local bank accounts, which means that money doesn’t actually cross borders.
Because of this, more people are exploring how to transfer money using Wise, and we’ll show you how to do that in this guide.
Transferring via PayPal costs a minimum of 4.5% when transferring money across borders. MassPay, their cheapest method charges a 2% fee and then adds an additional 2.5% currency transfer fee.
Yep, that’s a total of 4.5% that you are charged with the transfer fee and the currency transfer fees, which most times you’ll find out about after you make the transfers.
If you send $1000 abroad PayPal charges you $45. By using Wise you are only charged a maximum of 1% for the transfer and no hidden fee for the currency exchange which means the total cost is $10. That’s quite a difference!
Every bank and almost every money transfer company such as Western Union make their money from a hidden currency exchange fee. Wise does not have any hidden fees and they declare all their fees upfront:
More about hidden currency exchange fees. If you’re not sure what I mean by “hidden currency conversion” check out our explanation in this article.
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It’s really simple! What you have to do is go to their website, set up a transfer and create an account. You can start here by using the calculator below.
Then they will confirm the transfer amount and show you the exact exchange rate then add your details:
You can select a previous recipient or add a new recipient:
The last step is for you to send the money to Wise.
There are a few ways you can do this, each with their own benefits and disadvantages.
The fastest option is paying by debit or credit card. The money will get to Wise almost instantly so they can start converting it for you right away. There is an additional fee for credit cards, however, and this method can only be used for amounts up to $1,000.
You can also pay by direct debit, which allows you to connect your online banking directly to Wise, formerly TransferWise. This method comes with no extra fees and it’s pretty convenient. You’ll verify your details using your online banking username and password and, in some cases, micro-deposits sent to your account. Direct debit will get your money to Wise in anywhere from 1-3 working days and can be used to send up to $10,000.
If you want to send more than $10,000, you’ll have to make a local wire transfer. The downside to this is that your bank will probably charge you an additional fee when you have them wire the money from your account to Wise’s, but it’s pretty fast; your money will get to Wise in a few working hours. You can also send up to $1,000,000 per transfer when you’re sending your money by wire.
Whether you choose banks, Paypal or better alternatives to Paypal, there are different options available. However, if you want a reliable and fairly priced provider which will save you money, we recommend you Wise, formerly Transferwise.
Rob Rawson is a co-founder of Time Doctor which is software to improve work productivity and help keep track of what your team is working on, even when working remotely.