Using Money Transfer Providers to Save Money: Transferwise and Others

Using Money Transfer Providers to Save Money: Transferwise and Others

TransferWise is a well-known money transfer company. They advertise themselves as being 8x less expensive than banks – claiming that banks often charge up to 5% in hidden costs and fees. You may think that this is a rare thing to find – but you’d be wrong. TransferWise is one of many online-first money transfer organizations who are actively working to change the international money transfer industry. These businesses pride themselves on being transparent about costs and fees, and they often charge low fees. There are comparisons by the World Bank demonstrating they are among the cheapest options for small-size remittances.

These companies can do this for several different reasons. First, they often don’t have brick and mortar locations. This online-only or online-first user experience allows them to cut costs without damaging quality. They pass these savings on to their users. Additionally, they aren’t contained by traditional bank rules and regulations. This also helps to cut back on costs and red-tape to cut through. Finally, many of them have switched to an innovative transfer platform that allows them to make trades in a less expensive way.

What is TransferWise’s business model?

TransferWise prides themselves in being a much less expensive option in comparison to traditional banks. They use the real exchange rate and aren’t sneaky about marking up the exchange cost. Their transfer fees are also very low. Rather than transferring from person to person, TransferWise has bank accounts worldwide.

This connected-bank-account system allows them to circumnavigate the exchange rate fees that normal banks experience. You pay into TransferWise’s bank account in your home country. They then take your funds and pay your recipient from the account in their home country. That way, your funds are never truly “leaving” your country – making transfers faster, more secure, and less expensive.

Do other money transfer companies do this?

In short, yes and no. While some companies follow TransferWise’s business model of money transfer without crossing borders, others follow a more traditional line of enabling customers to transact funds online or via telephone with a specialist currency dealer. About 80% of the companies in the market work in this manner; 10% are online-only, 10% are telephone-only, and the rest offer the mix (that figure does not include companies like MoneyGram which has a completely different business model based on small size remittances).

Both companies specialize in international money transfer like TransferWise, but they go about things differently. WorldFirst, for example, has a much different online platform. They also offer a much more tailored money transfer service – allowing users to pick whether they’re transferring money to their own account abroad or to loved ones, to sell on the international ecommerce market, or for their business.

This truly opens the options for those looking to transfer money abroad. Moneycorp is similar in the fact that they also specialize in international money transfer. But they offer much more personalized services than companies like TransferWise.

Some of these services and perks include a more specialized platform (like we mentioned before), the ability to purchase a forward contract, receiving personal transfer guidance if you transfer £5000 or more, and better customer service. Of course, these companies also charge a different fee structure – so make sure to do your research before committing to one in particular.

Who should you consider working with?

Well, it’s clear that a money transfer company is a better option than a traditional bank. Bank fees are completely unreasonable, especially once you realize that there are other, more affordable, options out there. But what money transfer company should you work with? It honestly depends on the services you need.

TransferWise is ideal for an individual making occasional transfers of small amounts. Their low fee structure and easy-to-use platform is perfect for the occasional user. However, if you’re looking for a more business-focused platform, WorldFirst is likely your best option. Get an expert to escort you every step of the way AND get a guarantee for the best rates in the market, with 0 fees for outbound transfers from the UK. This is a perfect arrangement for a business – small or large – especially if they regularly do business abroad and often engage in ecommerce business, as well.

On the other hand, for those who are looking to track the market, Moneycorp offers a target rate service. This allows you to make exchanges at better rates that aren’t currently reflected in the market, but will be in the future. This is a wonderful set up for those looking to make regular payments and need to consistently save money.

What company will you work with?

Regardless of what company you choose to work with, make sure you do your research ahead of time. With each international money transfer company offering a different set of fees and offers, it’s important to know which one will meet your needs best. By putting in a little bit of time to research and compare on the front-end, you’ll save a large amount of money in the long run. This is the best type of investment – the kind that doesn’t cost you anything but time and results in a better working relationship with your money transfer company!

This is a collaborative post. 

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Using Money Transfer Providers to Save Money: Transferwise and Others

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