While PayPal has increased its fees consistently over the years, TransferWise is doing the exact opposite again. You may have heard about PayPal’s recent USD 3% withdrawal charge for users outside of the USA, which stops us (Singaporeans) from bypassing the expensive PayPal conversion spread any longer. Fret not, TransferWise could (or not) prove to be an even better alternative than ever before. Their mission? Mission 0.
And this update will be carried out in 3 phases.
Back on 21 September 2020, Transferring was Made Cheaper for Most Users
In case you are not kept in the loop, TransferWise is most likely the cheapest way to remit and move money from border to border.
So please stop wasting your hard-earned money at traditional remittance services!
TransferWise’s mission is to make cross-border transfers to become completely free someday. As the user base continues to grow on the platform, the transfers become more efficient.
And with more efficiency comes greater savings. Fortunately, TransferWise passes its cost savings to their customers instead of caring only about its bottom line.
Image Source: Freepik
In an announcement made on 21st September, users will pay lower fees when sending USD/GBP.You will also enjoy more significant savings when sending and converting money to the 10 selected Asian currencies – INR, THB, IDR, MYR, CNY, PKR, VND, KRW, LKR, or BDT. Here’s a rough comparison of the old and new fees:
|Send £1,000 to||Old fee||New Fee||Drop|
|INR 🇮🇳||£5.48||£4.77||⬇️ 13%|
|THB 🇹🇭||£7.00||£5.91||⬇️ 15%|
|IDR 🇮🇩||£5.21||£3.62||⬇️ 30%|
|MYR 🇲🇾||£5.57||£5.22||⬇️ 9%|
|PKR 🇵🇰||£9.00||£7.74||⬇️ 14%|
|CNY 🇨🇳||£12.66||£11.35||⬇️ 10%|
|VND 🇻🇳||£9.97||£7.80||⬇️ 21%|
|KRW 🇰🇷||£9.37||£7.85||⬇️ 16%|
|LKR 🇱🇰||£8.13||£5.79||⬇️ 28%|
|BDT 🇧🇩||£12.37||£8.98||⬇️ 27%|
You can also use TransferWise’s customised September pricing tool to check whether you will benefit from this change.
Sending & Converting from TransferWise In-App Balances was Made Cheaper too since 19 October 2020
The second announcement came with both good and bad news.
For the good news portion, users will save even more when sending money from your TransferWise multicurrency account. To be precise, it will be cheaper for 85% of the available currency routes (according to TransferWise).
|From||To||Old conversion fee||New conversion fee||Drop|
|USD 🇺🇸||EUR 🇪🇺||0.0043||0.0042||⬇️ 2%|
|HUF 🇭🇺||EUR 🇪🇺||0.0049||0.0042||⬇️ 14%|
|USD 🇺🇸||PHP 🇵🇭||0.0057||0.0054||⬇️ 6%|
|USD 🇺🇸||CAD 🇨🇦||0.0047||0.0045||⬇️ 5%|
|CHF 🇨🇭||EUR 🇪🇺||0.0043||0.0039||⬇️ 10%|
|EUR 🇪🇺||TRY 🇹🇷||0.0065||0.0054||⬇️ 16%|
Fees for same-currency transfers will drop up to 45%.
|Sending to||Old fee||New fee||Drop|
|EUR 🇪🇺||0.63 EUR||0.35 EUR||⬇️ 44%|
|USD 🇺🇸||1.40 USD||1.05 USD||⬇️ 25%|
|GBP 🇬🇧||0.60 GBP||0.32 GBP||⬇️ 45%|
|AUD 🇦🇺||1.05 AUD||0.57 AUD||⬇️ 45%|
This means users are encouraged to deposit money into their balances before sending since it logically increases the pool of available cash for more efficient or instant transfers.
Don’t worry. Your money isn’t stuck unlike other e-wallets/balances when depositing on TransferWise. You can still spend freely with the TransferWise Platinum debit Mastercard® or simply withdraw it back to your bank account.
You can also use TransferWise’s customised October pricing tool to check whether you will benefit from this change. This tool will distinguish the fee changes for both the September and October announcements.
Two Little Bad News…Starting 19 December 2020
You may have to do things differently on TransferWise if you are a heavy receiver of pricey wire transfers (USD only).
Do take note!
Receiving US Wires will impose users a 7.50 USD charge.
Wire transfers is the most straightforward and dumb way to move money across borders. It’s as if banks have put no thought into making transfers affordable for their clients.
Way too many parties involved, and way too many fees for a single transfer.
Image Source: Freepik
As mentioned, TransferWise wanted transfers to be free, hence the name: borderless account. But US wires simply don’t align with this goal.
The costs of US wires are currently covered by adding a small fee to all users who send money from their balances; customers who never received US wires had to pay for users who do.
With the 7.50 receiving fee imposed, fees will be charged more fairly.
For example, if the sender wires 1,000 USD, TW will deduct 7.50 and deposit 992.50 USD to your balance.
This is the reason why transfer and conversion fees can now be lowered to such an extent.
Receiving ACH transfers remains free. So it’s not all downhill from here for USD receivers, just remember to ask the sender to stop if they are still wiring instead of transferring. Or better, refer them to TransferWise!
Large Euro Balances will have an annual 0.4% holding fee in light of negative interest rates. SG users are unaffected
The second bad news does not affect Singaporean users at all, as TransferWise balances (same across all platforms) in Singapore are limited to the equivalent of 5,000 SGD.
Due to lowered interest rates, and in particular, the Eurozone where interest rates are negative, TransferWise is paying to hold euro balances for their customers. Hence, a fee for large balances has been introduced to cover the negative interest rates.
Here’s the table for euro holding fees:
|With a personal account||With a business account|
|Holding in any currency other than EUR||Free||Free|
|Holding €15k for a month||Free||Free|
|Holding €30k for a month||5.01 EUR||Free|
|Holding €50k for a month||11.69 EUR||Free|
|Holding €100k for a month||28.39 EUR||10.02 EUR|
The PayPal Problem Statement Remains Unsolved
TransferWise may be the smartest way to transfer money abroad to date, but resistance to change can be a real pain to manage.
Unfortunately, most people are too accustomed to sending invoices and payments via PayPal, and too few have a TransferWise account.
Users on TransferWise are unable to receive money directly in-app, unlike PayPal, where everyone will have a PayPal account.
Image Source: Freepik
Although we are given the option of retrieving bank details for some currencies on TransferWise for receiving money straight into our balances, many clients are still adamant to doing so as PayPal is simply the go-to for both personal and business transactions.
This is a classic example of the Metcalfe’s law, wherein this case, the worth of payment services like TransferWise is determined by the number of users in their network.
That being said, we firmly believe that the best way to do things will always prevail.
It’s just a matter of time.
Be part of the TransferWise’s mission 0 today!