In the past, the only or best way to get paid or pay a freelancer or digital nomad was PayPal; it’s easy and it’s ubiquitous, but the fees are not cheap. If you are paying your staff, banks charge huge hidden fees when you send money abroad.
Thankfully since the introduction of TransferWise, there is now another alternative to PayPal.
Started in 2011, the United Kingdom-based company has become highly popular among digital nomads and freelancers as it combines low overall costs with a convenient web experience for sending money between your bank account and another in a different country. In addition, its foreign exchange rates tend to be among the best available.
Pros of using TransferWise
Better exchange rate
Here’s where TransferWise shines. As it doesn’t mark up its exchange rates the way other non-bank providers and banks do, it is one of the cheapest money transfer providers, allowing you to send more foreign currency per dollar than you can with other services.
One of my favorite things about TransferWise is how easy it is to send money and calculate fees with its cost calculator. I know exactly how much I need to send in order to cover the fees.
Signing up for a TransferWise account is also easy; I could either sign up with an email address or by connecting a Google or Facebook account.
I can also cancel transfers before money gets paid out as well as lock my transfer’s exchange rate until the next business day. A locked rate means that drops in exchange rates won’t cost me money.
Low sending fee
The sending fee varies by currency and transfer amount. The majority of supported countries (especially in Europe) are priced as follows:
Sending less than $300: $3
Sending between $300 and $5,000: 1% of transfer amount
Sending more than $5,000: 1% for first $5,000 + 0.7% for the amount above that
Pricing for the other countries, including Mexico, India and China, follows a similar structure, but with slightly different flat and percentage fees.
TransferWise has an exchange rate notification service that brings you live information so you can keep track of the REAL exchange rate. This lets you stay ahead of sneaky hidden exchange rate mark ups.
Cons of using TransferWise
Limited supported countries
TransferWise currently does not cover much of Africa or Latin America. This means you are unable to use TransferWise if your bank is an African or Latin American bank, or if you are transferring to someone in these regions.
Unable to pay with debit or credit card
Using a debit or credit card to transfer money means a faster transfer speed. TransferWise generally takes several business days for the wire to go through, depending on destination, payment method, bank hours and the speed of TransferWise’s verification process (if required for transfer).
If you are looking for cheap transfers, TransferWise is a great option when your destination and delivery speed needs match up with its service. But if you need to send money in person, deliver cash or transfer to a country outside TransferWise’s scope, you’ll need to consider other ways to send money.