Table of Contents
Introduction
TransferWise, now known as Wise, is a fintech company that has revolutionized the way people send and receive money internationally. With its transparent and low-cost approach, Wise has gained popularity among individuals and businesses alike. In this article, we will explore everything you need to know about Wise, including its history, services, fees, and benefits.
The History of Wise
Wise was founded in 2011 by two Estonian entrepreneurs, Taavet Hinrikus and Kristo Käärmann. The idea behind the company came from their personal experiences of dealing with international money transfers and the high fees associated with them. Hinrikus, who worked for Skype, was paid in euros but needed British pounds to cover his living expenses in London. Käärmann, on the other hand, was paid in pounds but had a mortgage in euros back in Estonia. They realized that by exchanging money directly with each other, they could avoid the hefty fees charged by banks.
This simple idea led to the creation of Wise, a peer-to-peer platform that allows individuals and businesses to exchange money at the mid-market exchange rate, with only a small transparent fee. The company quickly gained traction and attracted significant investments from prominent venture capital firms.
How Does Wise Work?
Wise operates on a peer-to-peer model, which means that when you transfer money with Wise, you are matched with someone who wants to send money in the opposite direction. For example, if you want to send money from the United States to the United Kingdom, Wise will match you with someone who wants to send money from the UK to the US. This matching system eliminates the need for traditional currency exchange and reduces the costs associated with it.
When you initiate a transfer with Wise, you simply need to provide the recipient's details and the amount you want to send. Wise will then calculate the exchange rate and fee, which are displayed upfront. Once you confirm the transfer, you can pay for it using a bank transfer or a debit card. The recipient will receive the money in their local currency, usually within one to two business days.
Services Offered by Wise
Wise offers a range of services to cater to different needs:
- International Money Transfers: Wise allows individuals and businesses to send and receive money internationally at the mid-market exchange rate, with low and transparent fees.
- Borderless Account: The Borderless Account is a multi-currency account that allows you to hold and manage money in multiple currencies. It comes with local bank details for the US, UK, Europe, Australia, and New Zealand, making it easier to receive payments from abroad.
- Wise Business: Wise Business is designed for businesses that have international payment needs. It offers features such as batch payments, API integration, and multi-user access.
- Wise Card: The Wise Card is a debit card linked to your Borderless Account, allowing you to spend money in different currencies at the real exchange rate.
Fees and Exchange Rates
One of the key advantages of using Wise is its transparent fee structure. Wise charges a small percentage fee based on the amount you send, which is typically lower than what banks and traditional money transfer services charge. The exact fee depends on the currencies involved and the payment method used.
Wise also offers the mid-market exchange rate, which is the real exchange rate that you would find on financial markets. This means that you get a fair and transparent rate without any hidden markups. However, Wise does add a small margin to the mid-market rate to cover its costs and generate revenue.
Compared to traditional banks, which often have high fees and poor exchange rates, Wise provides a cost-effective solution for international money transfers.
The Benefits of Using Wise
There are several benefits to using Wise for your international money transfers:
- Cost-Effective: Wise offers competitive fees and exchange rates, helping you save money compared to traditional banks.
- Transparent: Wise provides upfront information about the fees and exchange rates, ensuring that you know exactly how much you are paying.
- Fast: Most transfers with Wise are completed within one to two business days, allowing for quick and efficient transactions.
- Convenient: The Borderless Account and Wise Card make it easy to manage and spend money in different currencies.
- Secure: Wise is regulated by financial authorities in various countries and uses advanced security measures to protect your money and personal information.
Case Studies and Statistics
Wise has gained significant traction since its inception, and its impact can be seen through various case studies and statistics:
- In 2020, Wise reported a revenue of £302.6 million, representing a 70% increase compared to the previous year.
- According to a study by Consumer Intelligence, Wise was found to be up to eight times cheaper than traditional banks for international money transfers.
- Many individuals and businesses have shared their positive experiences with Wise, highlighting the cost savings and convenience it offers.
Conclusion
Wise has revolutionized the way people send and receive money internationally. With its transparent fees, competitive exchange rates, and user-friendly platform, Wise provides a cost-effective and convenient solution for individuals and businesses. Whether you need to send money to a family member abroad or make international payments for your business, Wise offers a reliable and efficient service. By leveraging technology and the power of peer-to-peer transfers, Wise has disrupted the traditional banking industry and continues to innovate in the world of international finance.
