A Cheaper Way to Send Money Internationally

September 12, 2018

One of the greatest inconveniences of working with team members outside the USA is figuring out an inexpensive way to send money for services performed.

Sure there is XOOM by PayPal, but fees tend to be high. In my case I am permanently banned from using PayPal, due to a dispute with an extremely dishonest person cretin. I’ve never been a fan of PayPal, but in the past I considered it a necessary evil.

Other options such as Payoneer exist, but the service is unreliable and transfer fees are expensive. 

Recently I’ve been using a service called TransferWise. Transfers are cheap, super easy and up to now, glitch free.


TransferWise Money Transfer Service

Founded in 2011, TransferWise is a UK-based money transfer service founded by Taavet Hinrikus, Skype’s first employee, and financial consultant Kristo Käärmann.

TransferWise is based on a peer-to-peer money transfer. When a sender transfers money to a recipient, the transfer is redirected to the recipient of an equivalent transfer going in the opposite direction. This process avoids currency conversion typical of the traditional transfer of money.

concept of money transfer illustration

By EdMercer – CC BY-SA 4.0

Prior to discovering TransferWise, a typical wire transfer played out like the line at the post office, a week before Christmas.

First there was the trip down to the bank, signing in, and waiting (and more waiting) for a bank employee to escort you to a desk.

On my last trip to Wells Fargo, the employee who assisted me did not know how to initiate a wire transfer to Pakistan. I sat idly by as the employee discussed with the manager how to correctly process the transaction.

The entire process took well over an hour and cost $50.

Interestingly enough I was told by the bank if for some reason the Federal Reserve Bank denied the transaction, I may loose my funds. I am not sure how true this scenario is, but I was left with a sinking feeling.

In hindsight, maybe wiring money to a bank in Islamabad is a red flag in today’s world.


TransferWise Fees

The fees imposed by TransferWise are based on the amount of money you transfer and the method you use to process the transfer.

TransferWise does allow you to use other methods besdes a wire transfer. These include, bank debit (ACH), debit card and credit card. My suggestion is to avoid the credit card option unless you want to incur a sizable fee. 

A transfer of $1,000 to a recipient in Europe will cost you a total of $6.96 if you use the wire transfer method. An ACH or debit card transfer will run you an additional $1.50. The recipient gets €855.16 deposited into their bank account.

Updated October 17, 2018

On November 7, TransferWise is raising fees to use debit and credit cards to send USD.

According to TransferWise, the fee increase is due to costs higher than anticipated associated with credit and debit card transfers.

Debit card
Old fee: 0.15%
New fee: 0.75%

Credit card
Old fee: 1.75%
New fee: 3.4%

cost breakdown chart TransferWise

The fee listed as “our fee” is the exchange rate which is based upon the mid-market rate. The mid-market rate is the midpoint between demand and supply for a currency. According to TransferWise, the mid-market rate is is considered the fairest exchange rate.

In the example above, the fee of $6.96 is deducted from the amount being transferred. Meaning your recipient before the actual exchange is getting $993.04. Converted to Euros, the recipient gets €855.16. 

You may have to negotiate with the person you are sending money to as to who pays the fee. While $6.96 is very little money, it can add up quickly if you send money on a regular basis.

A typical transfer from USD to EUR takes about 48 hours to complete. TransferWise will keep you updated via email as to an estimated time of deposit.

TransferWise also has an app available on Google Play or the App Store.

The only negative of the TransferWise service is the recipient of funds is left in the dark as to when to expect the funds to arrive in their bank account.

From my experience, the person I am sending funds to has yet to receive an email from TransferWise. The recipient’s email address is part of the information TransferWise collects from you during the transfer process, so I am not sure why an email is not sent to the recipient.

It will be up to you to keep the person receiving funds updated as to the status of the transfer.

email from TransferWise

Final Thoughts

A TransferWise account can be created in a matter of minutes. The person you are sending funds to does not need to create an account.

TransferWise currently allows you to send money to over 72 countries, including all of Europe.

If you do decide to use TransferWise, start with a few small transactions. Trustpilot rates TransferWise 9.1/10 out of a total of 46,695 reviews. As with all review sites, it’s a good idea to do some digging, to see how users on other sites rate TransferWise. 

TransferWise has recently begun promoting what they call a borderless account.  It lets you hold over 40 different currencies, allowing you to send money overseas or withdraw money using a TransferWise debit Mastercard. You pay only a small conversion fee when you convert your money – typically between 0.35% and 2%.

As of this writing, the U.S. version of the Mastercard is available in 47 states by joining the waitlist


Worth Checking Out

During the course of writing this article, I discovered Veem, a San Francisco based fintech service backed by Google Ventures. Veem allows businesses to send (and request) money in 95+ countries.

I have not personally used Veem so I can’t vouch for the service however at first glance it looks to be even cheaper than TransferWise for international transfers. In fact, according to the website you can send up to 20 international payments for no fee.

If you want the business you are sending money to wants to receive USD, rather than local currency, there is a $20 fee.

From past experience, especially in South America,  the USD is preferred over the local currency. A currency that has a poor exchange rate with the USD may make the $20 fee a negligible amount.

A Cheaper Way to Send Money Internationally
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A Cheaper Way to Send Money Internationally
One of the greatest inconveniences of working with team members outside the USA is figuring out a cheap way to send money internationally for services performed.
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