TransferWise

TransferWise
Type of site
 Private company
Available in Multilingual
Headquarters London, United Kingdom
Area served Global: Europe, US, Canada, Asia-Pacific, Latin-America
Key people Taavet Hinrikus (Founder, Executive Chairman)
Kristo Käärmann (Founder, CEO)
Services Financial services
Employees 1000+ (2018)
Website transferwise.com
Alexa rank Increase 3,713 (June 2018)[1]
Registration Yes
Launched 2011 (2011)
Current status Active

TransferWise is an Estonian developed and UK-based money transfer service launched in January 2011 by Kristo Käärmann and Taavet Hinrikus with headquarters in London and offices in a number of cities including Tallinn, New York and Singapore.[2][3][4] TransferWise supports more than 300 currency routes across the world as well as providing multi-currency accounts.[2]

The concept was to match transfers with other people and then have a small commission while using the inter-bank mid exchange rate, unlike traditional currency transfers where there are buy and sell rates and the broker takes the difference between the two.

History

TransferWise was inspired by the personal experiences of Taavet Hinrikus, Skype's first employee, and financial consultant Kristo Käärmann. As Estonians working between their native country and the UK, they had personal experience of the "pain of international money transfer"[5] due to bank charges on the amounts they needed to convert from euros to pounds and vice versa. In the words of Hinrikus, "I was losing five per cent of the money each time I moved it. At the same time my co-founder Kristo Käärmann (also from Estonia) was starting to get paid in the UK and was losing a lot of money transferring cash back home to pay for a mortgage there".[6][7]

TransferWise co-founder Taavet Hinrikus in 2017

It inspired them to make a private arrangement, with Hinrikus – who was paid in euros – putting this currency directly into Käärmann's Estonian account so he could pay his mortgage without having to convert pounds to euros, while Käärmann returned the favour by putting pounds into Hinrikus' UK account.[8] This arrangement led them to start developing a crowdsourced currency exchange service to offer a cheaper alternative to established institutions.[9]

In February 2012, their approval with the UK financial regulator was finalised.[10] In April 2013, they stopped letting users purchase Bitcoin, citing pressure from banking providers.[11] In its first year, transactions through TransferWise amounted to €10 million.[12] In May 2017, the company announced its customers were sending over £1 billion every month using the service.[13]

In May 2016, TransferWise's claim "you save up to 90% against banks" has been considered as misleading by the Advertising Standards Authority.[14] According to independent comparison site Monito.com, Transferwise was actually on average 83% cheaper than the big four UK banks on major currency "routes", but could be up to 90% cheaper in some occasions.[15] In April 2017, an internal memo from Santander showed how much the bank was making from its charges on international money transfer and how much it could lose to new entrants, specifically TransferWise.[16]

In April 2017, it announced its decision to move its European headquarters from London to the continent due to Brexit.[17] The same month, the company announced its APAC hub in Singapore after becoming one of the first remittance companies to be allowed to offer online verification in Singapore.[18]

In May 2017, TransferWise launched a new service, the Borderless account. Initially the account is for businesses and freelancers with an account and card for consumers planned for later in the year.[19] The Borderless account was available in Europe and the US at launch.[20] A Mastercard debit card was launched in January 2018 for select existing customers to use their Borderless account in 28 currencies and support was added for consumers.[21]

Also in May 2017, the company announced it had been operationally profitable since the beginning of the year.[22]

How it works

Regular money transfer versus peer-to-peer money transfer

TransferWise routes payments not by transferring the sender's money directly to the recipient, but by redirecting them to the recipient of an equivalent transfer going in the opposite direction. Likewise, the recipient of the transfer receives a payment not from the sender initiating the transfer, but from the sender of the equivalent transfer. This process avoids currency conversion and transfers crossing borders.[23] The markups applied usually are not volume-dependent which is of benefit to individuals who are sending small regular transfers abroad.[24] A minor drawback of the procedure is that the recipient gets no information how much money has been sent in the original currency.

In 2012, the company's charges were €1—in 2015 raised to €2, £2, $3 etc. (depending on the currency sent)—or 0.5%, whichever is larger, in or of an equivalent amount in the customer's currency.[5]

TransferWise's system has been compared to the hawala money transfer system.[25][26][27][28]

Borderless Account

To setup the borderless account[29], personal identity verification is needed, once a user is approved for this account they can hold multiple currencies concurrently by taking advantage of the market's up-and-downs and decide when to make a transfer to best suit their financial needs. This is similar to having a multi-currency brokerage account without any strings attached.

Investors

TransferWise received seed funding amounting to $1.3 million from a consortium including leading venture firms IA Ventures and Index Ventures, IJNR Ventures, NYPPE as well as individual investors such as PayPal co-founder Max Levchin, former Betfair CEO David Yu, and Wonga.com co-founder Errol Damelin.[30] TransferWise also received investment after being named one of Seedcamp 2011's winners.[31] In May 2013 it was announced that TransferWise had secured a $6 million investment round led by Peter Thiel's Valar Ventures.[32] TransferWise raised a further $25 million in June 2014, adding Richard Branson as an investor.[33] In January 2015, it was announced that TransferWise had raised a $58 million Series C round, led by investors Andreessen Horowitz.[34] In May 2016, TransferWise secured a funding of $26 million, that raised the company's valuation to $1.1 billion. As of May 2016, TransferWise has raised a total of $117 million in funding.[35] Company's revenue Reached $151 Million till September 2018.[36]

Media attention

Named as one of "East London's 20 hottest tech startups" by The Guardian,[37] TransferWise has also been picked as a Wired UK Start Up of the Week[38] as well as being listed as number 12 in Startups.co.uk's list of the top 100 UK start-ups of 2012.[39] TransferWise was also named by TechCrunch as one of five "start-ups to watch" at Seedcamp's 2012 US Demo Day.[40]

In May 2015, Transferwise was ranked No. 8 on CNBC's 2015 Disruptor 50 list.[41]

In August 2015 the company was named a World Economic Forum Tech Pioneer.[42]

See also

References

  1. ↑ "transferwise.com Traffic Statistics". Alexa Internet. Retrieved 9 June 2018.
  2. 1 2 Bryant, Martin. "Money may make the world go round, but at what cost?". BBC. Retrieved 1 April 2015.
  3. ↑ "TransferWise Steps Toward Banking With Multicurrency Account". Bloomberg.com. 2017-05-23. Retrieved 2017-05-31.
  4. ↑ Bryant, Martin. "TransferWise valued at $1bn by top Silicon Valley venture capital fund". The Independent. Retrieved 1 April 2015.
  5. 1 2 Ajilore, Joseph. "Skype's first employee: How Taavet Hinrikus left Skype and founded TransferWise". YHP. Retrieved 1 October 2012.
  6. ↑ Lytton-Dickie, Tom. "How TransferWise is making international money transfers transparent?". Hot Topics. Archived from the original on 25 February 2015. Retrieved 27 January 2015.
  7. ↑ Griffith, Gabriella. "Q&A: Taavet Hinrikus, co-founder of TransferWise which has landed $1.3 million funding". London Loves Business. Retrieved 1 October 2012.
  8. ↑ "TransferWise was born out of frustration". TransferWise. Retrieved 1 October 2012.
  9. ↑ "Can TransferWise transform money transfers". Mindful Money. Retrieved 1 October 2012.
  10. ↑ "Financial Services Authority approves TransferWise without limits". Retrieved 13 October 2014.
  11. ↑ "Bitcoin | TransferWise Support & FAQ - International Money Transfer". transferwise.com. Retrieved 2017-05-31.
  12. ↑ Bryant, Martin. "Peer-to-peer currency exchange service Transferwise handles $13.4m in its first year". Insider. Retrieved 1 October 2012.
  13. ↑ CNBC.com, Neil Ainger, Writer at (2017-05-17). "Fintech unicorn Transferwise achieves first profit". CNBC. Retrieved 2017-05-31.
  14. ↑ "ASA Ruling on TransferWise Ltd". 2016-05-04. Retrieved 2016-11-21.
  15. ↑ "TransferWise – Are they that cheap or is it just (inaccurate) advertising?". www.monito.com. Monito. 2016-05-26. Retrieved 2016-11-21.
  16. ↑ Collinson, Patrick (2017-04-08). "Revealed: the huge profits earned by big banks on overseas money transfers". The Guardian. ISSN 0261-3077. Retrieved 2017-05-31.
  17. ↑ Kelly, Jemima (12 April 2017). Brexit prompts Transferwise to move Europe headquarter from UK to continent. Reuters. Retrieved 30 April 2017
  18. ↑ Russell, Jon. "TransferWise moves into Asia Pacific with opening of regional HQ in Singapore | TechCrunch". Retrieved 2017-05-31.
  19. ↑ O'Hear, Steve. "TransferWise launches 'Borderless' account for businesses, sole traders and freelancers | TechCrunch". Retrieved 2017-05-31.
  20. ↑ Groenfeldt, Tom. "FinTechs Are Surpassing Banks On Cross-Border Payments". Forbes. Retrieved 2017-05-31.
  21. ↑ Williams-Grut, Oscar (8 January 2018). "TransferWise is launching its new borderless account and debit card today — check it out". Business Insider. Retrieved 8 January 2018.
  22. ↑ "TransferWise becomes profitable six years after being founded". BBC News. 2017-05-17. Retrieved 2017-05-31.
  23. ↑ Price, Rob. "How TransferWise Works". Retrieved 24 February 2015.
  24. ↑ "Transferwise Exchange Rates". internationalmoneytransfers. Retrieved 2018-01-11.
  25. ↑ Price, Rob (27 January 2015). "London's $1 Billion Finance Startup TransferWise Is Just Like An Ancient Islamic Money Transfer System". Business Insider. Retrieved 19 October 2015.
  26. ↑ Marco della Cava (18 August 2014). "London's TransferWise aims to disrupt banking". USA Today. Retrieved 19 October 2015.
  27. ↑ Bennett Voyles (9 September 2015). "Online money transfers and the "Skype" of money". Forbes India. Retrieved 19 October 2015.
  28. ↑ Leander Bindewald (8 July 2015). "You need never use a bank again. Here's why". The Guardian. Retrieved 19 October 2015.
  29. ↑ Forbes News
  30. ↑ Johnson, Bobbie. "Transferwise unveils Levchin, other superstar backers". Gigaoam. Retrieved 1 October 2012.
  31. ↑ "TransferWise". Seedcamp. Retrieved 1 October 2012.
  32. ↑ O'Hear, Steve. "P2P Currency Exchange TransferWise Raises $6M Led By Peter Thiel's Valar Ventures, With Participation From SV Angel, Others". TechCrunch. Retrieved 12 July 2013.
  33. ↑ O'Hear, Steve. "Now Backed By Sir Richard Branson, TransferWise Raises $25M For Cheaper Money Transfers". TechCrunch. Retrieved 9 June 2014.
  34. ↑ Price, Rob. "London Cash Startup TransferWise Is Now Worth $1 Billion". BusinessInsider. Retrieved 31 March 2015.
  35. ↑ O'Hear, Steve. "Money transfer company TransferWise raises further $26M at $1.1B valuation". TechCrunch. Retrieved 2016-05-25.
  36. ↑ Kauflin, Jeff. "Here's How TransferWise Has Nearly Quadrupled Revenue In Two Years, Reaching $151 Million". Forbes. Retrieved 2018-09-14.
  37. ↑ Silver, James (8 July 2012). "East London's 20 hottest tech startups". The Guardian.
  38. ↑ "Startup of the Week: TransferWise". Wired. Retrieved 1 October 2012.
  39. ↑ "The 2012 Startups 100: revealed". Startups. Retrieved 1 October 2012.
  40. ↑ Taylor, Colleen. "5 Startups to Watch from Seedcamp's 2012 US Demo Day". TechCrunch. Retrieved 1 October 2012.
  41. ↑ "Meet the 2015 CNBC Disruptor 50 companies". CNBC. Retrieved 12 May 2015.
  42. ↑ Barber, Lynsey (2015-08-05). "Four UK firms named tech pioneers by WEF". Retrieved 2016-11-13.
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