How does Wise work? A Low-Cost Choice to Send Money Abroad
TransferWise, which was recently changed its name to Wise, is basically an online account through which you can transfer money overseas, or receive money in other currencies and make purchases on travel with their Wise debit card.
Wise allows you to transfer funds quickly and with low rates of exchange because they hold thousands of bank accounts across the globe that hold local currencies.
Thus, when Jane wants Wise to transfer 1000 USD to her friend Maria from Spain, Wise sends Maria about 900 EUR via the regional bank in Europe. Jane’s money is deposited into Wise banking account located that is in the US and Maria gets paid out of an account at the banks in Europe. Of course, sometimes it is hard to keep track of all your movements, but there is personal money management software to help with that.
The reason Wise is able to offer such low rates is that the currency never leaves the country and isn’t required to be converted. Thus, Wise can offer an exchange rate that is similar to the mid-market exchange rate. There is also an intermediary, it’s just that the cut they make is usually between 4 and 8 times lower than the bank’s offer.
The company earns its revenue through the fees associated with the transactions that are determined prior to the commitment being made. You can access their converter on their homepage even before you have to sign up.
The transaction fees are usually low for transactions made via a money transfer (ACH) or bank wire. Credit cards are handy, but they are expensive for the international transfer of funds. Also, the most costly method to make a payment to transfer money is to use a credit card.
Margins on the conversion of currencies are extremely near to the actual conversion rate. They typically are less than 1 percent. Money changers and banks generally charge 3 percent. Airports are among the most expensive places to purchase foreign currency. They typically charge +6%.
Transfers to and from international banks have been the main ability of TransferWise or Wise. At present, users can transfer money in over 50 currencies. In fact, Wise supports users to transfer money and receive it from 22 currencies. Users can also send funds (not receive) in a further 27 currencies using local transfer.
Paying money through Wise is quick and easy. The recipient doesn’t have to have an existing Wise account to be able to access the money, but only the person who is sending the money needs to establish an account.
The person who receives the money must have an account with a bank. Send your bank account details to the person who is sending the money. Wait for the funds to appear in your account. Typically, money transfers are processed in 2 days but sometimes it may take just only a few hours.
Wise’s multi-currency bank account is similar to having several international bank accounts. It allows users to hold funds in more than 50 currencies.
For example, imagine that there are British pounds (GBP) as well as euro (EUR) in addition to Australian dollars (AUD) in your Wise account. If you wish to transfer money into euros, Wise will use your euros’ balance to do so automatically. If you’re making transfers that exceed euros than you’ve got, Wise will automatically convert one of your other currencies to pay for the difference.
What are Wise benefits?
- Accounts for business and personal accounts are available. Business accounts have additional options, including the capability to pay invoices across 70plus countries Pay up to 1,000 individuals at once, and allow multiple users to use the account.
- High daily limit on sending. Wise has a maximum limit that is PS1 million for each transfer however some of the sending methods and destinations may have lower limits.
- Different payment choices. You can pay with either a debit or bank account or credit card or via wire transfer. If you use the Wise mobile application, you are able to pay using Google Pay and Apple Pay.
- Pay as if you were locals in 10 of the world’s major currencies. You can get your personal UK account number as well as Euro IBAN, Australian BSB code, US routing number, and much many more. All of it in one place. You will be able to receive your salary and pension, and invoice payments as well as profits from shares to the account of your Wise account.
- There is no cash pickup option. The funds must be transferred to the account of the recipient’s bank and there is no possibility of cash-pickup.
- Fees. Since Wise offers a rate that is mid-market it is dependent on charges to earn profits. Wise declares that it keeps the fees to a minimum and invests the profits back in the business.
- It is not protected by the Financial Services Compensation Scheme (FSCA). Wise isn’t a bank; it’s an “e-money institution”. Your funds are secured (held separately from those employed by the company and not loaned out) however it is not covered by the FSCA.
Is Wise secure and legitimate?
Yes, it is.
Wise makes use of security standards that are bank-grade and is regulated around all over the world. On their site, they utilize HTTPS encryption as well as 2FA for passwords and logins for money transfers.
The law requires them to protect your funds. This means they have to ensure the security of 100% of it by putting your money into separate accounts in banks of 1st class like Bank of America, Deutsche Bank, or BBVA.