With the holiday season fast approaching, many Canadians will likely be sending monetary gifts to friends and family due to ongoing travel restrictions.
TransferWise, a European FinTech company, aims to give Canadians a cheaper way to send money abroad this holiday season.
The international money transfer company, which was founded in January 2011 and launched in Canada in 2015, says that its service is up to eight times cheaper than traditional banks.
TransferWise has been applauded as a rare FinTech startup that has continued to see growing success, even amid the challenges of the COVID-19 pandemic.
The service’s head of growth for the Americas, Nick Lembo, spoke to MobileSyrup about how TransferWise has become a regularly-accessed tool by millions and how it fares against its competitors.
Lembo outlined that one of the reasons many of its users stick with TransferWise is because it’s cheaper than the competition. For instance, TransferWise charges a 0.67 percent rate for international transfers.
“The way we display that price is also more transparent than a bank. For most people, when they’re sending money abroad, they may be told by their bank or another service that there is a certain dollar amount fee for making that transfer.”
He noted that most people don’t realize that the majority of what they’re paying for is essentially a hidden markup fee on the exchange rate.
“Our biggest differentiator in why most people turn up to us is that we’re just strictly cheaper than the competition. And we also display that change. So when you sign up and spend money on TransferWise, you’ll see a real exchange rate,” Lembo outlined.
“We found that the average markup for Canadians sending money abroad is usually around five percent and that actually adds up to about $13 billion a year.”
When customers go on TransferWise, even if they don’t have an account, they can see what it would cost to send money to a specific country. It will also then show you a list of other providers and show a comparison of the actual total fee.
Further, Lembo noted that another reason why users choose TransferWise is that it is fast and convenient. He said that when you use traditional service to send money worldwide, people usually have to wait three to five business days before it arrives in the recipient’s account.
However, he said that with TransferWise, 30 percent of payments are sent instantly and that the service hopes to get even faster with its transactions.
Lastly, Lembo outlined that many users choose TransferWise because everything can be done directly within the app and that it’s easy to sign-up and get started with the service.
How it works
To start sending money through TransferWise you have to sign up for a free account. You can sign up as an individual or as a business. From there, users have to add information about who they’re sending money to.
You can send money to yourself, someone else or a business. It’s worth noting that the recipient doesn’t need a TransferWise account to get their money, they just require a bank account.
“Our smart technology links local bank accounts in countries all over the world. So often we’re able to use money from a TransferWise user sending money the other way around,” TransferWise notes on its website.
TransferWise essentially doesn’t wire transfer the money, it instead has bank accounts in countries around the globe. When users transfer money, they are paying into one of TransferWires’ accounts, after which the company pays out the equivalent from one of its other accounts. This process saves users both time and money on their transactions.
The service is currently available in 12 languages: English, French, German, Hungarian, Italian, Japanese, Polish, Portuguese, Spanish, Romanian, Russian, and Turkish.
COVID-19 pandemic and holiday trends
In terms of trends amid the COVID-19 pandemic, TransferWise has seen a 15 percent increase in registrations. The company has noticed that the volume of the amount of money it’s moving on behalf of its customers has remained steady amid the pandemic.
For instance, TransferWise has been moving around $7.8 billion CAD every month. Lembo stated that transactions have remained stable, mainly because the company believes many users send money regularly for recurring needs, such as users sending money to family or to children studying abroad.
“Obviously, there’s macroeconomic changes and worries about the economy that go into how people think about money. But for the most part, we’ve seen our usage and the amount that people are sending pretty stable after that activity at the very start of the pandemic.”
With ongoing travel restrictions, TransferWise expects to see an uptick in transactions during the holiday season. Lembo stated that the company has done some research and talked to users around the world and expect there to be more monetary gifts sent abroad this year.
Regarding TransferWise’s user base in Canada, Lembo noted that half of its users are native-born residents of Canada, while the other half are either immigrants or people who are staying in Canada temporarily.
One of the largest destinations for the money being sent from Canadians is the U.K but also the Eurozone. Other popular markets include India, Brazil and Australia.
“Then after that, there’s kind of a third tier, of countries mostly across Southeast Asia, where Canadians are sending a lot of money to primarily, such as the Philippines, Singapore, Indonesia, Thailand.”
The service currently has eight million users worldwide, and may even see an uptick in registrations ahead of the unprecedented holiday season.
TransferWise can be accessed on desktop or on mobile, through the Android and iOS apps.
