When talking about bureaucratic and finantial stuff, I’m pretty bad, and I admit to pass most of my life trying to avoid and postpone them the more I can. However, living between two countries, I knew that sooner or later the international money transfer matter was coming.
It happened some months ago: after years passed jumping between a “I’ll think of it” and a “later“, finally the day came and, useless to say, I wasn’t ready. Me and Stephen agreed to rent a house in Belfast, but unluckily at the moment of giving the deposit I was in Italy, and so were my bank accounts and all my money.
As a digital nomad, I will never curse banks enough (also telephone companies, but we’ll talk about this another time) since, even inside European Union, they pave the road of their poor account holders abroad of fees, various taxes and duties that have no clear sense.
Wanting or not, I found myself with a necessity: suddenly I had to transfer a good amount of money from an Italian bank account to a UK one and I didn’t want to pay the obscure, unjustified and pretty expensive bank duties.
How could I do?
A service for digital nomad, professionals and expats
This is the exact same question that the two founders of TransferWise, Taavet Hinrikus and Kristo Käärmann, asked themselves. Hinrikus was Skype’s first employee (!) while Käärmann was a financial consultant; the two men, both Estonian, because of their jobs were living half in Estonia and half in UK and soon they knew very closely the pain of the international money transfer system: Hinrikus, with a payment in euro, had to pay the rent in UK, while Käärmann, with payement in pounds, had to transfer the money to an Estonian account to pay a mortgage. At every transfer they were loosing about the 5% of their money. Soon they had enough and did a private arrangement: Hinrikus started to transfer the euro needed to pay the mortgage on Käärmann’s Estonian account, while him started to cover the rent in pounds for Hinrikus.
The idea was pretty good and let them save a lot of money, so, pretty soon, the two sensed the opportunity and in 2011 founded TransferWise.
As I wrote at the beginning of the article, I’m not a big expert of financial services, so I will not go in depth about how the movings are working. What I know (and before sending money I assure I did all the research to be sure that it was not a fraud, included a chat with the group of Italian professionals in UK) is that you just have to do an international wire transfer but, since TransferWise is a peer-to-peer service, the transferred money actually never leaves the country you live in: once you request the money transfer, the site searches for another user who needs to do the opposite operation (I need to send money from Italy to UK, the other user has to send money from UK to Italy) and the money actually never moves. This is why TransferWise asks so little rates, as 1 euro on transfers up to 200 euro and just 0,5% for bigger amounts: it completely avoids the banks’ fees for international money transfers.
In detail, you access the site (if you want to receive the first transaction for free, you can use this link [but before read ahead, please]) and you create a personal profile; from there you will make your transfers, inserting your details and the beneficiary ones. Once you request the transfer, TransferWise will send you back a mail with all the details to make the operation through your home banking system.
Advantageous and, above all, clear!
A pretty positive fact is that from the beginning we will be accompanied in our planning by a very useful tool: it’s a calculator, the one you can find on the site’s Home Page, that reports in every moment the amount of money that will arrive to the foreign account on the base of how much you want to send, how much you will save in the operation and in how many days it will take to the money to arrive to the other side of the transfer.
With this tool you will be able to control all the factors that generally create anxiousness and confusion (at least for me) in this kind of operations:
- the exact exchange rate
- the cost of the service
- the times
Also TransferWise’s tool indicates how much we save compared with a bank transfer: in fact, on the opposite of the banks’ one, fixed to be advantageous for them, the exchange rate used by TransferWise is the true one on the market.
If you read with attention the part related to how it works, you can understand how the involvement of a lot of people is fundamental to TransferWise for making the system work: the secret at the back of cutting banks’ fees is to have a high number of international transactions, so it is possible to never move the money. It will not be a surprise, knowing this, that there are advantages if you recommend the service, for both those recommending and those using it: when you create your TransferWise account, it comes with a link through which you can invite people to the service; when a new user signs in to TransferWise using your link, he obtains a transaction up to 3000 euro for free, and you, for every 3 users, receive a 50 pounds discount on the cost of further transactions.
Now that I explained you how it works (clarity first of all) and you know we can all have advantages, if you have never used TransferWise before and after reading my article you want to try it, you can use this link to make your first transaction for free.
I hope the link and the article have been useful, if you have any doubts leave a comment or visit the TransferWise official site 🙂