TransferWise is an online company that provides money transfer services to its customers. The company started in Northern Europe and is currently based in the United Kingdom. TransferWise believes that money transfers should be cheap, convenient, and more importantly transparent.
A lot of businesses are shifting from traditional bank transfers to TransferWise, but is it worth it? Let’s take a look at the pros and cons of using their services from a business’s standpoint.
Easy Sign Up
Signing up on transferwise is easy, and the user interface is very intuitive. TransferWise will require you to supply some supporting documents such as valid identification for safety purposes. Account approval usually takes around 1-3 days, and you’ll be notified once the account has been approved. The onboarding process is faster if you’re from the UK or Europe as you only need to supply relevant documents and your account can be approved within the same day.
There’s no need to line-up at the bank to set-up your business account. You can set everything up in a matter of minutes. If you need a more detailed guide on how you can start using the platform, you can check out this video:
TransferWise is only one of the few money transfer services that offer mid-market rates to its customers. Mid-market rates refer to the fair value of a currency or the midpoint between the buy and sell rates in the market. This means that there’s no markup value, and currencies are being converted at the fairest value. If you want to know the mid-market rate of a currency, you can find that on independent sources like Google and Yahoo Finance.
This level of fairness is beneficial for businesses receiving money for services rendered or products sold because you don’t lose money in the process and you also avoid the risk of overpaying.
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Safe And Regulated
Safety is one of the leading concerns when using any online services that deal with money. TransferWise is regulated by one of the world’s leading financial institution regulators, the UK Financial Service Authority (FSA). This means that they’re bound by law to protect their customer’s money in a low-risk financial institution. If the company declares bankruptcy, their customer will have no problem in getting a full refund. According to FSA, the company has never been in trouble for deceiving customers. This level of regulation is vital for business owners as the risk of using TransferWise’s service diminishes.
For businesses doing international transactions, a borderless account is a real money-saver. A borderless account is a multi-currency account that enables you to keep more than 40 currencies at a time and convert them at a mid-market rate on demand. Think of it as having a local account in the country where your business operates in, but without exorbitant fees. This level of flexibility is highly beneficial for companies that operate worldwide. Customers in Europe can also apply for a TransferWise debit card that can connect with their borderless account. The debit card lets them spend money anywhere in the world without worrying about exchange rates.
They Offer Batch Payment Tool
If you have a business account, you can take advantage of TransferWise’s batch payment tool. This tool enables you to create a number of transactions with a single file upload. Once the transfers have been uploaded, all you need to do is fund your account and the transfers will be initiated. What’s even better is that there’s no additional fees when you do this.
Batch payments are the perfect tool for businesses that make a lot of money transfers in a day. For instance, an employer who’s going to pay his remote employees around the world can make use of the tool so that all payments are initiated at the same time.
No Cash/Cheque Payout And Deposit
The only way for you to fund your TransferWise account is through your credit card, debit card, local bank transfers, SWIFT international transfer, or wire transfer. The company isn’t also able to pay out its customers in the form of cash. If you want to get your money, you’d have to transfer your money from your account to your local bank account.
Not Ideal For Large Transfers
While they don’t have a minimum transfer amount, using Transferwise may not be ideal for large money transfers. The company uses a percentage system to charge transfer fees, as the amount you transfer increases so is the percentage that they get. For example, when you transfer 10,000 USD, TransferWise will charge around 0.5-1.5% depending on where you’re sending the money while other money transfer services offer a fixed rate. Even if the difference is only a couple of dollars, over time the compounded amount will be significant.
Transferwise lets you send money to and from all over the world. As of writing the company only supports 55 countries as compared to other leading money transfer service providers who support over 200 countries. However, TransferWise has coverage in significant regions of the world and covers the most popular currencies in the market. For personal users, this kind of inconvenience may seem insignificant, but for business owners having a broader reach means reaching more paying customers.
Chances Of Account Deactivation
One of the ways that Transferwise makes it possible for new users to transfer money immediately is because they don’t require a lot of documents when you sign up. However, when you reach a certain transfer limit, they’ll require you to provide additional documents and identification. They do this to protect their business and other users as well, failure to comply will result in account deactivation.
The money will be refunded to the customer’s account, but it can cause a tremendous inconvenience for businesses. For example, when you’re paying for a product or service that your business needs to operate and you can’t send the money in time, your daily operations could be disrupted which could result in financial losses.
As with all money transfer services, there are advantages and disadvantages of using the service. But with Transferwise, you can clearly see that the pros outweigh the cons by a mile. If you’re a business who frequently sends and receives money from partners around the world, Transferwise is the best option in the market.