Is TransferWise the Cheapest Method to Transfer Money Online?

 

 TransferWise : Analysis of Cost, Speed, Hassle and Risk

  •  TransferWise Hidden Costs : Analysis of Cost, Speed, Hassle and RiskOverview :
    • TransferWise is a company created by the team who created Skype, it provides the best market exchange rate (real exchange rate), with service to send funds overseas. In terms of cost this company is not beatable even with CurrencyFair (charges on average $3 per transaction)
    • TransferWise requires that you provide your banking information , withdrawing  funds directly and instantly from your bank account in Canada. However  transferring the funds to the other person account would usually require a wire transfer (3-4 business days)
    • TransferWise model work as following: in each country they contracted  with a local partner (probably a Forex company ) and they request the local affiliate company to send funds to the client and by the end of each month they clear funds between the two entities

 

Important:  You can’t send U S$ to another person in Canada, If you send money to  a person in Canada it should only be in CAD$.  if you send money to a person in Dubai should be converted into UAE dirhams only, if in the UK it should be the local currency.

  • The person receiving the payment should only receive it in their local currency.
  • Meaning you can’t exchange money in the same country to your other US$ bank account, I tried to send US$ to my bank in Canada as well to a friend and both were rejected.
  • This is a service between countries only not inter-country

 

TransferWise1

 

  • Requirements :
    • Create an account
    • In some countries, the payment should go to a bank account  if it was sent in US$
    • When sending CAD$ to a UAE it is possible to send by email or  to another bank account
    • TransferWise has two options to upload funds  (either by wire transfer to TransferWise bank account then they transfer amount to the third party , or directly using direct debit by connecting to your bank account)
    • When using banking information your account information should match your banking information
    •  You would usually log in to your bank directly using direct debit , TransferWise would withdraw money directly from your account
    • TransferWise require to set up a refund bank account in case customer requested to cancel the transfer Here

 

 

 

 

  • Test Scenario  :  Send $100 from Canada to Dubai

 

  • Not possible to transfer funds other than the local currency in the same country.
  • You can’t send US$ to another person directly unless they live in the USA. You need to exchange from one currency to another currency when doing any transaction.
  • The whole process will take 1-4 business days.
  • Wire transfer is quicker than the direct debit however it carries additional fees from $15-30$ , usually, it takes one day to clear from your bank to the TransferWise
  • Transfer limit is in around 1 million $.
  • Quickest way to transfer funds is to send wire transfer to TransferWise (cost around 15$-30$) they send it to the recipient (no charge for wiring the funds) but the recipient bank may charge money to receive the funds ($15-30$)
  •  They have different ways to send funds (their partners in each country  would send funds locally ) they do local bank transfer instead of wire transfer, the bank in partner in the local country would deposit the funds to the recipient (the recipient bank might charge for receiving a deposit)

 

 

 

  • Speed:
    • Speed for  funds upload : instant  when using direct debit or credit card (this only applies to north America banks)
    • Speed for  fund transfer : require few days to clear and usually require 3-4 business days with wire transfer
      • I made 3 transactions to transfer funds (locally, internationally and to my own bank) in all three cases,  and although a confirmation that funds were transferred , the third party did not receive an email with instructions on how to withdraw the funds, when calling TransferWise customer service they mentioned this is an ongoing problem they are facing and I assume it is something they are aware of that fund transfers would take several days to clear but they are not able to do anything about it, it can be also that the fund transfer would go to government clearance agencies before being cleared and they would not be able to process it before this happen.

 

TransferWise2

  • Cost:
    • Cost (Upload funds) : Options for uploading funds:
      •  WireTransfer average transaction fee : $3
      • Wire Transfer:  Wire Transfer Cost $25 (Canadian Bank) ==> CAD $25  Here
      • Credit -Debit Card: Cost around 2%   Here
      • Direct Debit : Free
    • Cost (sending and receiving ) :  Free

 

  • Cost (Withdrawal) : Bank incoming wire transfer ($20)
  • Exchange Fee:  none , almost given the real exchange rate

 

  • Other Costs:
    • N/A.

 

  • Hassle:

 

  • Hassle (Uploading funds) :Hard Here
    •  Required to upload proof of address, banking  information
    • Require a bank account with routing number information , direct debit is free of a hassle but can work only with banks that have direct debit.
    •  in some instances involving US$  required to provide Social Security number.
  •  Hassle(receiving -Sending) : Hard, require few days to clear . In all three cases, the website mentioned an email was sent to the recipient to instruct them to withdraw funds , however, this was not the case, even when the funds were withdrawn from the account.
  • Hassle(Withdrawal) :  Requires a bank information and usually takes few days for wire transfer.
  • Hassle (Other)  :
    •  requires routing information for the recipient as well as their address
    • Funds would be transferred through the banks which would incur a fee as well as processing time.

 

  • Potential:
    • The best exchange rate possible , the real rate that no service can beat.
    • If upload, transfer, and withdrawal were instant without waiting and bank fees this service is  unbeatable.
    • Would be the best solution to transfer large funds to another country without enduring high exchange fees.

 

 

  • Risks :
    • N/A
  • Testing Results:
    • Tested 3 scenarios with details at the end of the page:
      • Transfer from my CAD$ account to US$ account . Result : not possible
      • Transfer from my CAD$ account to another person US$ account. Result : Not possible, reason can’t transfer other than the local currency.
      • Transfer from my CAD$ account to a local account in Dubai. Result : successful, took 5-7 days , cost $3  with no wire transfer as I transferred my funds using direct debit online to TransferWise

 

  • Conclusion:
    • Best exchange rate in all other types even better than opening a forex account
    • Cross country transfer and exchange this service is the most cost efficient, if you live in a country with online banking linked to TransferWise then there is almost no cost  (3$) for transferring funds.
    • Not possible to use this service for intra-country transfers and exchange

 

  • Cost : Only around $3 the cheapest, however since it will involve wire transfer the cost of sending the wire and receiving it can be from $15-60$. Only in North America, you can use direct debit to send funds to TransferWise with no fees.

 

  • Speed: Takes at least 3-5 business days
  • Limitations:
    •  not possible to send funds instantly
    • Can’t send funds in the same country
  • Hassle:
    • Required to upload proof of address, bank information , and required in some instances to provide Social Security number.
    • When sending US$  TransferWise become tricky and require to make wire transfer to TransferWise directly
    • In all transactions, TransferWise requested further information about the recipient
    • Using direct debit is hassle free but this only works if your bank has the capability and your account is already verified