Transferring money and exchanging currencies just got a whole lot easier for businesses, freelancers, and travelers.
UK-based online payment company TransferWise has launched its Borderless account, a new way for managing international finances with “unprecedented simplicity.”
The account allows users to have and manage balances in 27 different currencies with the best exchange rates possible. While it does charge a one per cent fee to convert from one currency to another or to transfer money, this fee is up to five per cent less than what traditional banks charge.
The Borderless account is also free to set up, there are no monthly fees, and it doesn’t cost anything to upload funds to it or receive payments, saving users even more money, Joshua Aziz, product manager at TransferWise, tells ITBusiness.ca.
“TransferWise was started because sending or moving money is expensive, and when you want to exchange currencies, that’s even more expensive,” he explains. “For example, when you travel to the UK from Canada and need to exchange Canadian dollars to British pounds, you’re getting the rate that the bank is giving you, which is usually marked up. Then they charge you a conversion fee and a moving fee on top of that. It’s the same thing if you’re a business paying an international employee; all the extra fees come out of the employee’s pocket.”
He continues to say that current financial systems are expensive and behind the times, but with the Borderless account, “you’re getting the exact exchange rate that you would see when you Google it, and with a fraction of the fees.”
“We built TransferWise out of personal frustration. My bank was screwing me for a long time and now we’ve built a cheaper, easier solution to moving across borders,” says Kristo Kaarmann, CEO and co-founder of TransferWise, in an Aug. 16 press release. “If you’re a freelancer or entrepreneur working with a global network of vendors, the Borderless account will be a game-changer.”
Local accounts simplify payments for global businesses
The Borderless account also boasts a unique feature: users are able to open accounts to pay and get paid as if they were a local business in either the US, UK, or Europe by receiving unique local account and routing numbers for these regions.
“[It’s] like having a local bank account in any country, without ever having to set foot there,” Aziz adds.
“I was on my way to open a euro account and ended up not doing it as TransferWise came up with this new Borderless feature,” explains Irina Turcan, a TransferWise customer and founder of UK health supply company Erbology, in the press release. “It took me 10 seconds to set it up and we’ve been using it ever since. The advantage of the service is clear. You save time, get excellent user experience and most importantly take advantage of low transaction costs. As a small but growing company, it’s valuable to us.”
She continues: “While our operations are in the UK, our customers and suppliers are based worldwide. When we sell to the EU, we get paid in euros. The same applies to our operations in the US and Canada. So if we dealt with a high street bank we would lose a lot of money on the currency exchange and transaction fees. We were losing on conversion rates. In addition, Borderless saves us monthly fees that a retail bank would typically charge. Both the app and the website are user friendly and service is great.”
Aziz points out that beyond the applications for businesses and freelance workers, this feature will also help parents sending their children to school abroad, for example, or snowbirds who purchase or rent international homes.
While only the UK, US, and European local accounts are currently supported, TransferWise is hoping to add Canadian and Australian bank details by the end of the year.
Looking forward
The company has more big plans for its near future, such as its plans to offer a corresponding Borderless debit card in 2018 that would allow businesses and consumers to make payments and purchase goods by accessing all their international currencies in their account.
Aziz explains that the experience will be similar to using a debit card abroad now, with the machine prompting a user to choose which currency they want to be charged in. It will also automatically help users by looking for the best currency exchange rate to save them the most money when purchasing goods.
TransferWise, which has over a million users making more than $1.2 billion worth of transfers every month, will also be working on more functionalities for its mobile app in the next few months, which can access the Borderless account at the moment, but can’t complete any commands.
It will also be adding additional currency support. Currencies currently supported include the Euro, British Pound, Australian Dollar, Canadian Dollar, Swiss Franc, Danish Krone, Hong Kong Dollar, Hungarian Forint, Japanese Yen, Norwegian Krone, New Zealand Dollar, Polish Zloty, Swedish Krona, Singapore Dollar, US Dollar, Bulgarian Lev, Czech Koruna, Croatian Kuna, Romanian Leu, United Arab Emirates Dirham, Georgian Lari, Israeli New Shekel, Mexican Peso, Peruvian Sol, Turkish Lira, Ukrainian Hryvnia and South African Rand.