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Transferwise for Travelers: What’s It Really Like?

In Websites, Work from the Road by Hanna Watkin2 Comments


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Currency exchange is the bane of my travelling life.

I recently headed to Sweden for a long weekend, but my flight actually landed in Copenhagen. On a whim, I decided to explore the city for a few hours before heading over the border.

After landing and trying to purchase a train ticket into the city, though, I realised that although I had Swedish krona, I hadn’t thought about getting any Danish krone. Oops.

I had to convert some money at the airport, taking a big hit on the exchange rate. It was a stupid mistake, but one that travellers often make.

We all know the struggle of withdrawing and exchanging foreign currency, trying to make sure you’re not getting screwed over by your bank on the one hand, or the bureau de change on the other. It’s an expensive hassle (if a huge privilege, I’ll admit.)

When I stumbled upon Transferwise, a well-regarded money transfer service and online bank, it seemed to be a traveler’s dream.

The company’s basic premise is a simple way to change currencies, eliminating bad exchange rates and high bank fees along the way. It was set up by two Estonians, Kristo Kaarman and Taavet Hinrikus, back in 2011.

The company has recently introduced some new options of interest to travellers, anyone sending money to family or friends abroad, and those who get paid in one currency but regularly use another.

I’ve been putting them to the test.

What is Transferwise?

Transferwise slogan

TransferWise takes a smart approach to converting money, one which can be up to 8x cheaper to use than a high street bank.

The company explains that instead of one international transfer taking place when doing the conversion, two local transfers are made instead. In doing so, it simply bypasses most international fees.

For example, if you want to switch pounds to euros, Transferwise will send your pounds to their sterling account in the UK, and your euros from their euro account in Germany. This saves the company money as the converted cash hasn’t travelled internationally, and it passes those savings on to you.

Even better, Transferwise uses the real, mid-market exchange rate — the same rate that banks use to trade between themselves. That’s a much better rate than banks offer their customers, or what you’ll get at your local currency exchange kiosk, and the company promises never to mark it up.

How Transferwise Works

If you’ve never used Transferwise before, you can see how it all works before needing to set up an account. Just go to the website and plug in how much money you want to transfer, and into which currency. You’ll then see how exactly what the converted amount will be, along with the transparent fee.

To actually send the money, you’ll need to set up an account. You can create it using Facebook, Google, or your personal or business email address.

The best aspect of Transferwise is that everything is shown up front, without hidden costs and dodgy exchange rates. Instead, you get charged a fixed fee plus a percentage of the amount you’re sending, based on your payment method and chosen currencies.

It’s worth checking out the pricing page to find out more. While bank transfer is the most common (and cheapest) way to send money, it can also be done by debit card, credit card, or SWIFT payment for certain currencies.

A payment often takes one working day or less (sometimes, much less), which is much better than the few days taken by high street banks! You’ll get email notifications along the way.

Borderless Account: Perfect for Travellers

Transferwise borderless

If you travel regularly, or earn money in other currencies, there’s another feature of Transferwise that’s particularly useful: a “borderless” account. This multi-currency account is free, and easy to set up once you’ve created your Transferwise account.

After choosing your preferred currencies, you’ll be issued with appropriate bank account numbers where possible. Currently, Transferwise hands out UK, European, US, and Australian bank details, letting you receive money in those currencies no matter where you’re based.

You can hold dozens of other currencies in your borderless account as well, and it’s easy to switch money between them. You can also see the current balance in each account, all on one page. Transferwise uses its usual mid-market rate when moving money around, and charges a percentage on the conversion.

Bank Card: Spend at the Real Exchange Rate

Transferwise card

The idea is that with the borderless account, you also receive a bank card to go with it. It’s currently still in an invite-only beta testing process, but the plan is to soon roll it out to everyone.

Having used Transferwise a lot, I jumped at the chance to test out the card when I was sent an invitation. I’ve paid my share of high bank fees in the past, after running out of money abroad and having to pull out cash with my UK debit card. Being able to spend money in multiple currencies without having to worry about extortionate rates seemed like a dream come true.

So far, honestly, it is.

Transferwise lets you use the card and pay for free from currency balances in your account. You can also take out the equivalent of up to £200 a month from international ATMs at no charge.

When paying with a currency you don’t currently hold in your borderless account, Transferwise will automatically do the conversion at the standard exchange rate, typically charging a fee between 0.35-1%. However, when spending in certain “rare” currencies, you’ll pay the Mastercard rate instead (more on that here.)

Using this card is as simple as using any other debit card. It’s also contactless, which is another great feature (although it does mean I keep forgetting my PIN. Oops.)

I’ve used the card in Germany and the UK, and as well as making things easier and cheaper, it’s also been a pretty efficient budgeting tool. I’d simply put a certain amount of money into my account in advance, then use this card for every transaction.

At the end of the day, all of my transactions are in front of me in the app and on the website, tagged with the name of the store I spent my money in. Thankfully I’ve been mainly in cities so far, making it simple to use my card wherever I go.

On the Go with a Mobile App

Transferwise

At the risk of gushing too much about this service, my final point is about the convenience of that mobile app. The tagline is: “All your transfers at your fingertips.”

The app is especially useful when paired with the Transferwise Mastercard, since as soon as you’ve paid for something with the card, you can get a notification on the mobile app telling you about it. That’s great for both security and budgeting, since it tells you both how much you spent, and how much you’ve got left in that currency account.

As well as your spending, all other transactions can be viewed on your phone, and it’s simple to convert or send money. Better yet, if you’re someone who regularly forgets their PIN (ahem,) it’s easy to find in the app.

 

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Is It Safe?

The company guarantees to keep your money safe, and it’s regulated by the Financial Conduct Authority in the UK.

Transferwise is faceless, however — there’s no branch to walk into if there’s a problem. This may worry some people, especially if the company is slow to reply to queries. I’ve personally had problems with this, but it seems that most people don’t, since reviews of the support experience are overwhelmingly positive in this regard.

The company also has a short track record so, although my experience so far has been very positive, I don’t keep much money in my borderless account. Instead, I just transfer it in as and when I need it.

Conclusion

Ultimately, I’m a big fan of what Transferwise is doing. If you’re a traveller, this website and app is a saviour when it comes to converting cash and spending while you’re abroad.

Particularly when the debit card becomes more widely available, the service has potential to become a real game-changer for travellers and online business people alike. Bring it on!

Main image via stevepb, other images via Transferwise

Testing out Transferwise's promises about slashing the costs of spending money overseas.
About the Author

Hanna Watkin

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Hanna is a freelance journalist and digital nomad who writes about the intersection between technology and travel, from 3D printed trees in Dubai to co-working spaces in Berlin. She spends the rest of her time in cafes with a soya latte and her MacBook, working on her side hustle, Au Pair, Oh Paris.

Comments

  1. Hi Hanna,

    Helpful article!

    Can you set up a borderless account from anywhere? For example, if I’m in Canada (no CAD account available yet from Transferwise), but want a USD account, do I have to be resident in the US? (That’s how it is for most accounts offered by banks.)

    Also, once you’ve used the £200 limit for free withdrawals on international ATMs, what’s the fee?

    Thanks!

    Eric

  2. Without getting the special invite, and the card, this seems pretty worthless. How do you get your money out of the transferwise account after you’ve converted it to the local currency? If you have the card, does it charge International transaction fees? I’ve been using transferwise for a while now, but for the life of me, I cannot see how I would use it for travel.

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