Transferwise or Bank Transfer: Which is More Effective?

Transferwise or Bank Transfer: Which is More Effective?

What to Use When Sending Money Overseas- Transferwise or Bank Transfer?

With international money transfer services, people are allowed to send funds across the world in an easier way for different reasons. It includes the following:

  • Acquiring properties in another country
  • Settling payments for tuition fees overseas
  • Paying for mortgage liabilities in another country
  • Investing funds overseas
  • Paying for overseas holiday expenses
  • Sending money to friends or family members in another country
  • Paying for any type of bills overseas

For whatever reason, it is best for you to consider which way of sending money overseas suits you. You can transfer money through retail bank accounts, international money transfer operators, and foreign exchange brokers, among others.

As time passes by, technology advances and introduces new ways of transferring funds from country to country. Financial technology comes into the picture. It also now allows people to transfer money to the other side of the earth with just a few clicks. Among these financial technology firms, is Transferwise.

Now, the public has more options to send their money remittances. This article will discuss what platform is best for the clients: Transferwise or bank transfer?

Considering the Different Features Offered to Customers

When transmitting funds either through Transferwise or bank transfer, customers are looking into the different featured services. It allows them to maximize their user experience.

Transferwise is providing simple international money transfer service which incorporates digital capabilities. Its digital wallet called Borderless account allows money transfer for different currencies, including Euro, Singaporean dollars, United States dollar, and Australian dollars, among others. To sum it up, the app allows the following:

  • International money transfer
  • Borderless multi-currency receiving accounts
  • Sending money via the email address
  • The app can be downloaded on Android and Apple smartphones.

For bank transfers, the financial institutions use international wire transfers or the so-called telegraphic transfers. Under this scheme, there are no other services or purposes other than transferring money.

Ease of Accomplishing Transactions

While choosing between Transferwise or Bank Transfer, you would consider, of course, which is more convenient for you. After all, you want to be able to send money right away and without delay, especially if it is really urgent.

Transferwise was designed to allow users to register their account easily and quickly. In fact, identification verification in some countries is almost instant. In addition, the speed of transferring money is quick, even instantaneous for some locations. It has also a wide range of payment options.

In bank transfers, the situation differs depending on the relationship between the banks involved in the transaction.

Should the banks have a direct partnership, the following scenarios can happen:

  1. The bank of the sender will debit the money transfer from the said party’s account.
  2. The bank of the sender will credit the amount transmitted to the bank account of the recipient.
  3. The bank of the recipient will then transfer the funds to the said party’s account.

If the banks do not have a direct relationship, the processing of the transaction will go as follows:

  1. The bank of the sender will debit the money transfer from the said party’s account.
  2. The sender’s banks will transmit the money to the recipient bank’s account via an intermediary bank.
  3. The intermediary bank will then process the fund transfer from the bank of the sender to the bank of the receiving party with a cost.

The bank of the recipient will then credit the amount to the said party’s account.

With this, the process of money transfer can take five to seven business days, and even more.Transferwise or Bank Transfer: Which is More Effective?

Looking at Fees and Exchange Rates

Whether you are using Transferwise or bank transfer, you should opt to check their fees and exchange rates.

For Transferwise’ part, it offers a real-time exchange rate at the time you make your transaction. Because of this, you can already know the fees on top of the amount to be transferred. The way Transferwise sets up its fee structure is a little complex because the amount depends on the currencies you are sending to and from. The following is the breakdown of its fee structure:

  • Simple international money transfer – 0.4 percent to 2 percent, depending on the currency and payment type
  • Adding to Transferwise borderless account – 0.4 percent to 0.5 percent
  • Converting between Borderless accounts – 0.3 percent to 0.6 percent
  • Transferring money out of Borderless account – less than 0.1 percent on average

Meanwhile, bank transfers are considered more expensive because the usual markup on exchange rates is at 5 percent. Apart from this, they charge service fees of $10 to $25.

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