Transferwise Review: Transfer Money Overseas For Just 1% - Mad Lemmings

Transferwise Review: Transfer Money Overseas For Just 1%

Do you have to charge your clients via Paypal or bank transfer? Or maybe just send money overseas?

You probably lose a boatload of money in the transaction, right?

I do, and it really annoys the hell out of me. On average I lose about 3-5% when I use paypal, and with the banks, maybe a little bit less.

Then I heard about Transferwise!

OMG, they have revolutionized my business because I no longer lose so much money when working with clients overseas.​

Imagine, if I charge a client $1000 for a website or SEO services, I lose 50 bucks each time!

With Transferwise it is about $10 instead.

Now as you business grows...imagine that x 100. I am saving thousands of dollars in fees!

LET IT RAIN!

What Is Transferwise?

Transferwise is an online service that a​llows you to easily and cheaply transfer money internationally. It can be used to request money, pay bills, charge clients or just send someone money.

They even allow the use of debit and credit cards, and have an app. So the process is very very simple.

Why Is Transferwise So Cheap?

Because it works in a revolutionary way, Transferwise keeps the transaction fees to around 1%. They avoid the massive fees that banks normally charge, and keep costs down, all to your benefit!

Instead of transferring the money between your account and the destination account, money is moved to and from their bank accounts in each country. So, no money is sent between countries which is where it normally costs more (because the banks take a piece). 

It sounds a little confusing, but basically they keep track of the money from each customer, and make sure everyone's accounts are balanced in each country. 

Transferwise Example

A client of mine wants to pay me $1000 (US Dollars).

I live in Switzerland and need to be paid in CHF (Swiss Francs)

My Client pays me via Transferwise​:

  1. $1000 goes into Transferwise's US account​
  2. $1000 is coverted to Swiss Francs at the current market rate (NOT the lower bank rate you normally get)
  3. Those Swiss Francs are transfered from Transferwise in Switzerland to me

In the background, the $1000 is balanced by paying someone else in the US who needs that money, and someone in Switzerland pays in the equivalent in Swiss Francs. So, the opposite transaction takes place. The accounts are always kept balanced, BUT no money is moved between countries!

All you really need to understand though is

  • That they charge a very low fee
  • Your money is secure.
  • And it ends up in the right place.

Pretty cool if you ask me!

If you want to see the video from Transferwise with a full explanation, you can check it out below:

Is Transferwise Safe & Secure?

I can understand you are sceptical, and so was I.

It kinda sounds like "free money! sign up here!"

First off, if you know Skype, then you know the makers of Transferwise!​ Those smart guys who revolutionized the telephone for us :>

Even ignoring their past successes, Transferwise actually just uses the standard banking system. They just don't transfer the money internationally.

They are also held accountable and registered just like your normal bank are.​

You can read more about how they keep things safe and secure​.

And to add another level of trust, here are a couple of notable people who have invested in the company:​

  • Sir Richard Branson (Yes, Mr Virgin Airlines himself)
  • Peter Thiel (ironically Founder of Paypal, and backer of Airbnb and Stripe)

So, some pretty big names are behind this company and they obviously think Transferwise has a big future.

Transferwise vs Paypal - A Huge Difference

This is one of the killer reasons I switched all my clients to Transferwise. 

The amount of money you can save (or not lose actually) is huge. Especially when you add it up over the year.​

Here is what it looks like when you transfer $1000 to 1000 Euros for example

Transferwise Exchange Rate

A $1000 transfer to Switzerland with less than 1% fee

So, you have to pay a fee or $9.90 and you lose nothing in the exchange.

So if one of my clients paid me $1000 I would get 1013,76 Swiss Francs​ (US dollars and Swiss Francs are almost the same)

Compare that to Paypal for a business online:​

  • There is a transaction fee of 2.9% plus $0.30 - so in this case: $29.3
  • Then there is the currency rate (hidden fee) which is often 2-2.5%

Here is what today's exchange rate looks like (left) compared to what Paypal give (right)

A $30 loss with the Paypal exchange rate

So, all in all, I would be handing Paypal something like $60 instead of $10 with Transferwise!!!! Insane, right?

Transferwise vs Bank Fees - Still A Big Difference

If I can transfer my money within Switzerland (and I am sure it is similar where you live) then there is no fee, or very little.

If I transfer within Europe (which Switzerland is not techncially a part of) it can be free or cheap.

But any other country, it costs me $20 to send money, and at least $6 to receive it (and the sender often has to pay money on their end too).

Then there is the hidden fee in the exchange rate, which I am not able to find at my bank right now, but I am sure they are not giving me the market rate like Transferwise are!​

Let's take a look at an example from Transferwise:​

Transferwise vs Bank Fee

As you can see in the above example, in the middle row, there is a loss in the exchange rate of at least 1-2%.

So again, if you add this to the fee to send the money (which your client or friend might not want to cover).

There is a huge difference - $30 or more. Instead of $9.90 with Transferwise.

It is very hard to do exact comparisons as it depends on the country, the bank and the exchange. The more away from the western world you are, the more likely you are to pay more in my experience too!​ (ie. not US, EU, Canada, Australia, etc) Not trying to discriminate here, but I lost a lot of money sending money to Iceland even, just because their currency, even 10 years ago, was not Euros!

What Else Can Transferwise Do?​

I won't spend hours boring you with the details, here (you can read it on their website)​. But, here are some other cool things worthing knowing:

  • Transfer money overseas to 39 countries in a lot of different currencies
  • Send money requests to people
  • Pay-in with credit/debit card, Apple Pay and bank transfer
  • Track your money transfer online via your account
  • Mass payments via file upload or API
  • Make payments via their IOS and Android apps

Transferwise Pros & Cons

No system is perfect, and of course there are a few pros and cons worth thinking about with Transferwise.

For me, it is mainly a system for transferring money to and from clients and family internationally. But it can do a bit more than that with payments via other avenues. Worth checking out the details on their site.

The downsides are small, but worth noting. This is not a complete replacement for Paypal or Stripe (both have similar high fees) but will save you lots of money on direct money transfers.​

Transferwise Pros

  • Very low cost money transfer internationally
  • Easy to do and set up
  • Lots of options (cash, card, apple pay etc)
  • Uses real exchange rate at time of payment

Transferwise Cons

  • Needs a little set up, but not more painful than paypal (have to send ID etc)
  • Transfers can sometimes take days while amounts are matched on both sides
  • Not as long-standing or known like Paypal or banks
  • Integrate online payment systems not a strength (I still use Stripe and Paypal unfortunately)

About the Author Ashley Faulkes

Ashley is obsessed with SEO and WordPress. He is also the founder of Mad Lemmings. When he is not busy helping clients get higher on Google he can be found doing crazy sports in the Swiss Alps (or eating too much chocolate - a habit he is trying to break).

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