Bye bye bank fees, hello world.

Banks could charge you up to 5% in hidden costs when sending money to any bank account abroad. TransferWise is up to 8x cheaper. It's only fair.

How is this different than a bank account?

Your TransferWise borderless account is an Electronic Money account. It's different from a bank account because:

You won’t be able to get an overdraft or loan
You won’t earn interest on your account
Although your bank details are unique, they don't represent real bank accounts, but simply ‘addresses’ for your Electronic Money account, meaning you can receive payments much like a real bank account
Your money is protected and safeguarded, but not guaranteed by the Financial Services Compensation Scheme (FSCS) that you may get with a bank account.
There's no limit for how much you can receive and hold in your different borderless account currencies right now, with the exception of US Dollars.

The great thing about your TransferWise borderless account is that you can use it just like a bank account in many cases, like making payments with your TransferWise debit Mastercard® (currently available for those in EEA). You can also send payments to other accounts and receive payments from your clients or employer using the bank details attached to your borderless accounts.

The main benefit of using your TransferWise borderless account over traditional accounts is that you won’t be charged international transaction fees or outrageous exchange rates.

Your TransferWise borderless account is an Electronic Money account. You can send, receive and convert currencies all in one account. You’ll always get the real exchange rate and the lowest possible fees.

KRISTO Kaarmann and Taavet Hinrikus are the two Estonian founders of TransferWise, the peer-to-peer platform for transferring money. Parallels between TransferWise and Skype abound, not least because Hinrikus was Skype’s first employee. But the likenesses don’t stop there: they want to “make the world smaller, just as Skype has done”; they want to make transfers cheaper, just as Skype made communication cheaper. Their goal is to lower the cost of transferring money, in stark contrast to banks that “seek ways to make it as expensive as possible for the consumer”.

In 2003, both were working internationally – Hinrikus at Skype, Kaarmann at Deloitte – and they quickly discovered that tranferring money was expensive. Kaarmann was paid in sterling but owned property in Estonia; Hinrikus was paid in euros but needed living expenses in sterling. So they started a two-man currency transaction service (later expanded to the “Skype club” – a handful of friends that grouped together to save on exchange rates).

Simply put, banks “don’t use the mid-market rate when transferring your money, meaning that customers pay far more than the transaction fee”. But people don’t necessarily understand that banks make their money on the spread, not the transaction fee. “We see ourselves as missionaries, educating people on the true cost of going through a bank”. Because, they say, “no more effort is required by the bank to send money abroad than is needed to send an email abroad”, says Hinrikus. TransferWise charges £1 for transactions up to £300, and above that they will charge a small fee – typically 0.5 per cent. A bank will “usually end up taking 4.5 per cent”.

You get the impression that the pair genuinely want to make transferring money as cheap as possible for their customers. They want increased transparency in the industry, because “it is very unlikely the government will force banks to be transparent in the near future”. And they’re undercutting their competitors by a significant margin. “I think my greatest achievement”, grins Kaarmann, “was making a transfer for the chief executive of a bank yesterday – because he wanted to save money on the transaction”.

TransferWise is growing at 20 to 30 per cent per month. At the start of this year, it had eight members of staff. It now has 21. In their first year of operation, they had £10m in transaction volume. But it’s a huge market that they are eager to dominate: banks make “somewhere in the tens of billions of dollars per year just on the spread”.

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