Company:TransferWise

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Short description: A British online money transfer service


TransferWise Limited
Transferwise.svg
Type of site
Private company
Available inMultilingual
FoundedJanuary 2010; 14 years ago (2010-01) [1][2][3]
HeadquartersLondon, United Kingdom
Area servedGlobal: Europe, United States , Canada , Asia-Pacific, Latin-America
Founder(s)Taavet Hinrikus[1][2][3]
Kristo Käärmann[1][2][3]
Key peopleTaavet Hinrikus
(Executive Chairman)
Kristo Käärmann
(CEO)
ServicesFinancial services
Revenue£179 million (2019)[4]
Employees2000+ (2020)
Websitetransferwise.com
Alexa rankIncrease 3,713 ((As of June 2018))[5]
RegistrationYes
Launched2011; 13 years ago (2011)
Current statusActive

TransferWise is a London-based online money transfer service founded in January 2011 by Estonians Kristo Käärmann and Taavet Hinrikus.[1][2][3]

The company supports more than 750 currency routes across the world including GBP, United States dollar , EUR, AUD and CAD, and provides multi-currency accounts.[1] In 2018, TransferWise's net profit reached $8 million[6] and its customer base reached 4 million with monthly transfer of around $4 billion.[7]

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.

TransferWise is available in 12 languages: English, French, German, Hungarian, Italian, Japanese, Polish, Portuguese, Spanish, Romanian, Russian, and Turkish.

History

TransferWise was founded by Taavet Hinrikus, Skype's first employee,[8] 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"[9] 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 percent 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".[10][11]

TransferWise co-founder Taavet Hinrikus in 2017

This 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 reciprocated by putting pounds into Hinrikus' UK account.[12] This arrangement led them to start developing a crowdsourced currency exchange service to offer a cheaper alternative to established institutions.[13]

In February 2012, their approval from the UK financial regulator was finalised.[14] In April 2013, they stopped letting users purchase Bitcoin, citing pressure from banking providers.[15] In its first year, transactions through TransferWise amounted to €10 million.[16] In May 2017, the company announced its customers were sending over £1 billion every month using the service.[17]

In May 2016, TransferWise's claim "you save up to 90% against banks" was considered as misleading by the Advertising Standards Authority.[18] 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.[19] 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.[20]

In April 2017, it announced its decision to move its European headquarters from London to the European continent due to Brexit.[21] The same month, the company announced its APAC hub in Singapore[22] after becoming one of the first remittance companies to be allowed to offer online verification in Singapore.[failed verification]

In May 2017, TransferWise launched a new service, the Borderless account. Initially, the account was for businesses and freelancers with an account and card for consumers planned for later in the year.[23] The Borderless account was available in Europe and the US at launch.[24] A multi-currencies Mastercard debit card was launched in January 2018 for customers located in the European Union and support was later added for customers in the United States with more countries expected to follow in 2019.

Also in May 2017, the company announced it had been operationally profitable since the beginning of the year.[25]

Two years later, in May 2019, the company had the secondary investment round of $292M and reached the total valuation of $3.5B, more than double the valuation TransferWise achieved in late 2017 at the time of its $280 million Series E round.[26]

Transfer process

Regular money transfer versus peer-to-peer money transfer

TransferWise routes most payments not by transferring the sender's money directly to the recipient as it is in the case of SWIFT, but by matching the amounts with other TransferWise's users sending the other way around. TransferWise then uses these pools of funds to pay out transfers via local bank transfer.[27]

This process avoids currency conversion and transfers crossing borders.[28]

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.[9]

In 2018, TransferWise revamped its fee structure to a percentage of the amount alongside a fixed fee (for example 0.35% + £0.80 when sending from GBP to EUR). In 2019, the fixed part was cancelled and the total fee became a decreasing percentage of the amount—for example £0.26 when sending £1 and £0.30 when sending £10 (both transfers with exchange to euros), the percentage dropping to a little below 0.4% (in the case of these currencies) with large amounts.

TransferWise's system has been compared to the hawala money transfer system.[29][30][31][32]

Borderless account

File:TransferWiseMulitWährung.tiff To set up the borderless account,[33] prior personal identity verification is needed. Once a user is approved for this account, they can hold multiple currencies concurrently, and decide when to make a transfer to best suit their financial needs. Personal local bank details can also be issued in a handful of currencies to receive payments from third parties, therefore avoiding the use of SWIFT transfers or having the sender register with TransferWise. This is similar to having a multi-currency brokerage account.

Available currencies

List of sending and receiving currencies supported by TransferWise (May 2020):

Currency Receiving Sending Local account number
United States United States dollar Green tickY Green tickY Green tickY
Canada Canadian dollar Green tickY Green tickY
Argentina Argentine peso Green tickY
Brazil Brazilian real Green tickY Green tickY
Chile Chilean peso Green tickY
Costa Rica Costa Rican colón Green tickY
Mexico Mexican peso Green tickY
Peru Peruvian nuevo sol Green tickY
Uruguay Uruguayan peso Green tickY
Europe Euro Green tickY Green tickY Green tickY
United Kingdom British pound Green tickY Green tickY Green tickY
Switzerland Swiss franc Green tickY Green tickY
Denmark Danish krone Green tickY Green tickY
Norway Norwegian krone Green tickY Green tickY
Sweden Swedish krona Green tickY Green tickY
Bulgaria Bulgarian lev Green tickY Green tickY
Czech Republic Czech koruna Green tickY Green tickY
Croatia Croatian kuna Green tickY Green tickY
Hungary Hungarian forint Green tickY Green tickY
Poland Polish złoty Green tickY Green tickY Green tickY
Romania Romanian leu Green tickY Green tickY
Russia Russian rouble Green tickY
Ukraine Ukrainian hryvnia Green tickY
Georgia (country) Georgian lari Green tickY
Australia Australian dollar Green tickY Green tickY Green tickY
New Zealand New Zealand dollar Green tickY Green tickY Green tickY
United Arab Emirates United Arab Emirates dirham Green tickY Green tickY
Israel Israeli shekel Green tickY
Turkey Turkish lira Green tickY Green tickY
Egypt Egyptian pound Green tickY
Morocco Moroccan dirham Green tickY
Ghana Ghanaian cedi Green tickY
Kenya Kenyan shilling Green tickY
Nigeria Nigerian naira Green tickY
Tanzania Tanzanian shilling Green tickY
Uganda Ugandan shilling Green tickY
West African CFA franc Green tickY
South Africa South African rand Green tickY
Bangladesh Bangladeshi taka Green tickY
India Indian rupee Green tickY Green tickY
Nepal Nepalese rupee Green tickY
Sri Lanka Sri Lankan rupee Green tickY
Pakistan Pakistani rupee Green tickY
China Chinese yuan Green tickY
Hong Kong Hong Kong dollar Green tickY Green tickY
Indonesia Indonesian rupiah Green tickY
Japan Japanese yen Green tickY Green tickY
South Korea South Korean won Green tickY
Malaysia Malaysian ringgit Green tickY Green tickY
Philippines Philippine peso Green tickY
Singapore Singapore dollar Green tickY Green tickY Green tickY
Thailand Thai baht Green tickY
Vietnam Vietnamese dong Green tickY

Investors

TransferWise received seed funding amounting to $1.3 million from a consortium including 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.[34] TransferWise also received investment after being named one of Seedcamp 2011's winners.[35] In May 2013, it was announced that TransferWise had secured a $6 million investment round led by Peter Thiel's Valar Ventures.[36] TransferWise raised a further $25 million in June 2014, adding Richard Branson as an investor.[37] In January 2015, it was announced that TransferWise had raised a $58 million Series C round, led by investors Andreessen Horowitz.[38] In May 2016, TransferWise secured a funding of $26 million. This raised the company's valuation to $1.1 billion. As of May 2016, TransferWise has raised a total of $117 million in funding.[39] In November 2017, the company raised a $280 million Series E led by Old Mutual Global Investors and IVP, as well as Sapphire Ventures, Japanese Mitsui & Co, and World Innovation Lab.[40] The company's revenue reached $151 Million in September 2018.[41]

Media attention

Named as one of "East London's 20 hottest tech startups" by The Guardian ,[42] TransferWise has also been picked as a Wired UK Start Up of the Week[43] as well as being listed as number 12 in Startups.co.uk's list of the top 100 UK start-ups of 2012.[44] TransferWise was also named by TechCrunch as one of five "start-ups to watch" at Seedcamp's 2012 US Demo Day.[45]

In May 2015, TransferWise was ranked No. 8 on CNBC 's 2015 Disruptor 50 list.[46]

In August 2015, the company was named a World Economic Forum Tech Pioneer.[47]

See also

References

  1. ↑ 1.0 1.1 1.2 1.3 1.4 Bryant, Martin. "Money may make the world go round, but at what cost?". BBC. https://www.bbc.co.uk/news/business-31639262. 
  2. ↑ 2.0 2.1 2.2 2.3 "TransferWise Steps Toward Banking With Multicurrency Account". Bloomberg.com. 2017-05-23. https://www.bloomberg.com/news/articles/2017-05-23/transferwise-steps-toward-banking-with-multicurrency-account. 
  3. ↑ 3.0 3.1 3.2 3.3 Bryant, Martin. "TransferWise valued at $1bn by top Silicon Valley venture capital fund". The Independent. https://www.independent.co.uk/news/business/news/transferwise-valued-at-1bn-by-top-silicon-valley-venture-capital-fund-10002618.html. 
  4. ↑ "Error: no |title= specified when using {{Cite web}}". https://transferwise.com/gb/blog/annualreport2019. 
  5. ↑ "transferwise.com Traffic Statistics". Alexa Internet. http://www.alexa.com/siteinfo/https%3A%2F%2Ftransferwise.com. 
  6. ↑ Kauflin, Jeff. "Here's How TransferWise Has Nearly Quadrupled Revenue In Two Years, Reaching $151 Million" (in en). https://www.forbes.com/sites/jeffkauflin/2018/09/09/heres-how-transferwise-has-nearly-quadrupled-revenue-in-two-years-reaching-151-million/. 
  7. ↑ "TransferWise reports 75% revenue growth as customer base doubles to 4 million" (in en-US). 2018-09-10. https://venturebeat.com/2018/09/10/transferwise-reports-75-revenue-growth-as-customer-base-doubles-to-4-million/. 
  8. ↑ Temperton, James (2016-11-03). "Has Skype lost its way? Taavet Hinrikus reveals what the company taught him". Wired UK. ISSN 1357-0978. https://www.wired.co.uk/article/taavet-hinrikus-transferwise-skype-estonia. 
  9. ↑ 9.0 9.1 Ajilore, Joseph. "Skype's first employee: How Taavet Hinrikus left Skype and founded TransferWise". YHP. http://yhponline.com/2012/03/20/taavet-hinrikus-transferwise/. 
  10. ↑ Lytton-Dickie, Tom. "How TransferWise is making international money transfers transparent?". Hot Topics. http://www.hottopics.ht/stories/finance/how-transferwise-making-international-money-transfers-transparent/. 
  11. ↑ Griffith, Gabriella. "Q&A: Taavet Hinrikus, co-founder of TransferWise which has landed $1.3 million funding". London Loves Business. http://www.londonlovesbusiness.com/entrepreneurs/start-ups/qa-taavet-hinrikus-co-founder-of-transferwise-which-has-landed-13-million-funding/2158.article. 
  12. ↑ "TransferWise was born out of frustration". TransferWise. http://transferwise.com/about. 
  13. ↑ "Can TransferWise transform money transfers". Mindful Money. http://www.mindfulmoney.co.uk/mindful-news/can-transferwise-transform-money-transfers/. 
  14. ↑ "Financial Services Authority approves TransferWise without limits". https://transferwise.com/blog/2012-02/financial-services-authority-approves-transferwise-without-limits/. 
  15. ↑ "Bitcoin | TransferWise Support & FAQ - International Money Transfer" (in en-us). https://transferwise.com/help/questions/2759169/bitcoin. 
  16. ↑ Bryant, Martin. "Peer-to-peer currency exchange service Transferwise handles $13.4m in its first year". Insider. https://thenextweb.com/insider/2012/02/28/peer-to-peer-currency-exchange-service-transferwise-handles-13-4m-in-its-first-year/. 
  17. ↑ CNBC.com, Neil Ainger, Writer at (2017-05-17). "Fintech unicorn Transferwise achieves first profit". https://www.cnbc.com/2017/05/17/fintech-unicorn-transferwise-achieves-first-profit.html. 
  18. ↑ "ASA Ruling on TransferWise Ltd". 2016-05-04. https://www.asa.org.uk/Rulings/Adjudications/2016/5/TransferWise-Ltd/SHP_ADJ_312197.aspx#.WDK2w_krJhF. 
  19. ↑ "TransferWise – Are they that cheap or is it just (inaccurate) advertising?". Monito. 2016-05-26. https://www.monito.com/blog/transferwise-cheaper-banks/. 
  20. ↑ Collinson, Patrick (2017-04-08). "Revealed: the huge profits earned by big banks on overseas money transfers" (in en-GB). The Guardian. ISSN 0261-3077. https://www.theguardian.com/money/2017/apr/08/leaked-santander-international-money-transfers-transferwise. 
  21. ↑ Kelly, Jemima (12 April 2017). Brexit prompts Transferwise to move Europe headquarter from UK to continent. Reuters. Retrieved 30 April 2017
  22. ↑ Russell, Jon. "TransferWise moves into Asia Pacific with opening of regional HQ in Singapore | TechCrunch". https://techcrunch.com/2017/04/27/transferwise-asia-singapore-office/. 
  23. ↑ O'Hear, Steve. "TransferWise launches 'Borderless' account for businesses, sole traders and freelancers | TechCrunch". https://techcrunch.com/2017/05/22/borderless-banking/. 
  24. ↑ Groenfeldt, Tom. "FinTechs Are Surpassing Banks On Cross-Border Payments". Forbes. https://www.forbes.com/sites/tomgroenfeldt/2017/05/24/fintechs-are-surpassing-banks-on-cross-border-payments/2/#2c845cb3eb51. 
  25. ↑ "TransferWise becomes profitable six years after being founded" (in en-GB). BBC News. 2017-05-17. https://www.bbc.co.uk/news/business-39943651. 
  26. ↑ "TransferWise now valued at $3.5B following a new $292M secondary round" (in en-US). http://social.techcrunch.com/2019/05/21/three-point-five-unicorns/. 
  27. ↑ Kauflin, Jeff. "Here's How TransferWise Has Nearly Quadrupled Revenue In Two Years, Reaching $151 Million" (in en). Forbes. https://www.forbes.com/sites/jeffkauflin/2018/09/09/heres-how-transferwise-has-nearly-quadrupled-revenue-in-two-years-reaching-151-million/#5f2b4c3f2c69. 
  28. ↑ Price, Rob. "How TransferWise Works". http://uk.businessinsider.com/how-transferwise-works-2015-1. 
  29. ↑ Price, Rob (27 January 2015). "London's $1 Billion Finance Startup TransferWise Is Just Like An Ancient Islamic Money Transfer System". Business Insider. http://www.businessinsider.com.au/transferwises-similarities-to-hawala-2015-1. 
  30. ↑ Marco della Cava (18 August 2014). "London's TransferWise aims to disrupt banking". USA Today. https://www.usatoday.com/story/tech/2014/08/16/transferwise-takes-on-banking-money-transfer-fees/13622337/. 
  31. ↑ Bennett Voyles (9 September 2015). "Online money transfers and the "Skype" of money". Forbes India. http://forbesindia.com/article/ckgsb/online-money-transfers-and-the-skype-of-money/40999/1. 
  32. ↑ Leander Bindewald (8 July 2015). "You need never use a bank again. Here's why". The Guardian. https://www.theguardian.com/sustainable-business/2015/jul/07/banking-sector-credit-unions-local-currency-money. 
  33. ↑ Silver, Curtis (18 April 2018). "TransferWise Borderless Banking Bonks Blistering Bank Fees". https://www.forbes.com/sites/curtissilver/2018/04/18/transferwise-borderless-banking-bonks-blistering-bank-fees/. 
  34. ↑ Johnson, Bobbie. "Transferwise unveils Levchin, other superstar backers". Gigaoam. http://gigaom.com/europe/currency-startup-transferwise-unveils-superstar-backers/. 
  35. ↑ "TransferWise". Seedcamp. http://www.seedcamp.com/companies/transferwise. 
  36. ↑ O'Hear, Steve. "P2P Currency Exchange TransferWise Raises $6M Led By Peter Thiel's Valar Ventures, With Participation From SV Angel, Others". TechCrunch. https://techcrunch.com/2013/05/13/tw/. 
  37. ↑ O'Hear, Steve. "Now Backed By Sir Richard Branson, TransferWise Raises $25M For Cheaper Money Transfers". TechCrunch. https://techcrunch.com/2014/06/09/cheeky-transferwise/. 
  38. ↑ Price, Rob. "London Cash Startup TransferWise Is Now Worth $1 Billion". BusinessInsider. http://uk.businessinsider.com/transferwise-58-million-andreessen-horowitz-2015-1. 
  39. ↑ O'Hear, Steve. "Money transfer company TransferWise raises further $26M at $1.1B valuation". https://techcrunch.com/2016/05/25/money-transfer-company-transferwise-raises-further-26m-at-1-1b-valuation/. 
  40. ↑ "TransferWise Announces $280M Investment Round as Company Focuses on New Products and APAC Expansion". 2 November 2017. https://www.ivp.com/news/press-release/transferwise-announces-280m-investment-round-as-company-focuses-on-new-products-and-apac-expansion/. 
  41. ↑ Kauflin, Jeff. "Here's How TransferWise Has Nearly Quadrupled Revenue In Two Years, Reaching $151 Million" (in en). Forbes. https://www.forbes.com/sites/jeffkauflin/2018/09/09/heres-how-transferwise-has-nearly-quadrupled-revenue-in-two-years-reaching-151-million/#d4281202c69d. 
  42. ↑ Silver, James (8 July 2012). "East London's 20 hottest tech startups". The Guardian. https://www.theguardian.com/uk/2012/jul/08/east-london-20-hottest-tech-companies. 
  43. ↑ "Startup of the Week: TransferWise". https://www.wired.co.uk/news/archive/2012-08/22/startup-of-the-week-transferwise. 
  44. ↑ "The 2012 Startups 100: revealed". Startups. http://www.startups.co.uk/transferwise-taavet-hinrikus-and-kristo-k%C3%A4%C3%A4rmann-startups-100.html. 
  45. ↑ Taylor, Colleen. "5 Startups to Watch from Seedcamp's 2012 US Demo Day". TechCrunch. https://techcrunch.com/2012/02/29/5-startups-to-watch-from-seedcamps-2012-us-demo-day-tctv/. 
  46. ↑ "Meet the 2015 CNBC Disruptor 50 companies". CNBC. https://www.cnbc.com/id/102609977. 
  47. ↑ Barber, Lynsey (5 August 2015). "Four UK firms named tech pioneers by WEF". http://www.cityam.com/221702/world-economic-forum-tech-pioneers-transferwise-and-mike-lynchs-darktrace-among-four-uk-firms. 

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