FinTech, short for Financial Technology, is slowly revolutionising the banking and insurance business. The earliest and best known FinTech companies evolve around payments. One of these companies is TransferWise. TransferWise is an easy way to transfer money abroad at the mid-market rate and only pay 0.5% or 1€ (whichever is highest) fee for their service.
Say you have a friend in the UK and want to wire some money to him. The traditional way would be you sending money directly from your bankaccount denominated in euros to his bankaccount. Because his bankaccount is in GBP, his bank will then convert the euros into pounds at a hefty fee (sometimes up to 6%)¹.
But their are of course also people who want to transfer money from the UK into accounts that are in euros. This is where TransferWise (and similar companies such as WorldRemit) step in. They help you to swap your euros into a different currency without incurring those fees. You wire your euros to TransferWise’s euro account and they will pay your friend from their GBP account. Because there are at the same time also people who do it the other way around, TransferWise has no trouble finding enough pounds or euros.
‘I would turn down £1bn for my company’
– Taavet Hinrikus, the co-founder and CEO of TransferWise²
Personally I used their service a lot when I was on exchange in Singapore back in 2014. Back then TransferWise was only a small startup, but in the past 2 years it turned into a £1bn company. I opened up a free bankaccount over there and wired my euros through TransferWise into my SGD account. At only 0.5% I would certainly recommend them!
Click here to get your first transfer (up to £500 or equivalent) for free.
But what if you’re on holiday’s abroad and want to avoid foreign exchange fees? There’s an app for that. Enter prepaid travel MasterCards. The most popular one (and cheapest one, because free) is Revolut.
With this free app and card you can pay in 90 currencies at the lowest rate they’re able to find. Most of the times this is the interbank rate, but for some illiquid currencies (such as Thai Baht) this is not possible and therefore slightly more expensive. The card automatically converts into the local currency at the time of purchase. This means that even if you hold euros but spend in Indian Rupee the card will convert from EUR to INR at the time of the transaction. The card will act like a local card everywhere and allows you to spend without fees and withdraw up to £500 (or equivalent) for free each month from ATMs all over the world (after the initial £500 they charge you at a 2% rate to prevent abuse, as ATM withdrawals are expensive for them).
You can download the app and use it immediately as it generates a card number for you to use directly online. If you also want a physical card you can order one for free from the app. Click here to download the app.
¹http://stophiddenfees.co.uk
²http://www.bbc.co.uk/programmes/p048c93g
TransferWise is authorised by the Financial Conduct Authority under the Electronic Money Regulations 2011, Firm Reference 900507, for the issuing of electronic money.
Revolut works with UK regulated entities to provide their platform such as Paysafe Financial Services Limited who are authorised by the Financial Conduct Authority under the Electronic Money Regulations 2011 (FRN: 900015) for the issuing of electronic money and payment instruments, pursuant to a licence from MasterCard International. MasterCard is a registered trademark of MasterCard International.
