International money transfers are becoming more expensive than meets the eye – even when banks and brokers claim there are ‘no fees’. This is because many of the banks take as much as between 2 and 5 percent of the money being sent.
More worrisome is the fact that receivers are also subjected to ridiculous exchange rate by the banks and brokers, a development that is making customers turn their eyes away from the banks’ products to some other foreign ones considered cheaper, BusinessDay investigations have shown.
“It’s one of the oldest tricks in the book – banks and bureau-de-change that offer ‘commission-free’ money transfers to attract customers. They make their money instead by over-inflating the actual exchange rate that the customer gets when the money is transferred”, John Coppock, financial journalist and investment writer for the Dutch Asset Management Group Robeco, said in an emailed response.
Consequently, Nigerians are now turning to technologically savvy alternatives to send money abroad. To them however, TransferWise, a United Kingdom based online peer to peer money transfer platform is the clever new alternative that allows people to transfer money abroad at a lower cost than ever before.
It uses technology developed by the people who built Skype and PayPal to remove all the fees the foreign exchange industry has kept hidden for decades. Infact it is believed that customers have transferred more than £3bn using the platform – an approach that has put over £135m back in their pockets.
Kingsley is a biomedical scientist from Lagos. Kingsley moved to London eight years ago with his wife and children, but goes back to Nigeria every year to visit his family. Kingsley sends money back to Nigeria to pay for his siblings’ university education, his parents are retired so he tries to help them out as much as he can. Kingsley came across TransferWise after a friend recommended the service. He soon found it was much faster and felt more secure than using the banks and brokers he’d been used to, not to mention TransferWise is up to 89 per cent cheaper, meaning his family back in Nigeria receive more Nigerian naira for his British pounds.
“I use TransferWise to send money to Nigeria; to my parents and to my brothers and sisters. It has really helped me a lot, saving time instead of transferring from a shop. Within a short time it’s all done and the money is there in my account”, Kingsley said.
Estonian friends Taavet and Kristo came up with the idea for building the platform when they first became experts in London and were confronted by the high fees banks charge to transfer money abroad.
Taavet had worked for Skype in Estonia, so was paid in euros, but lived in London. Kristo worked in London, but had a mortgage in euros back in Estonia.
They realised they each needed the currency the other had, so they devised a simple plan: every month Kristo put pounds in Taavet’s British bank account and Taavet put euros in Kristo’s euro account. They used the official mid-market rate exchange rate (that’s the one in the papers, not the one invented by the bank). They both received the right amount of money, and neither paid any bank fees.
Within a few months they’d saved thousands of pounds and realised there were probably millions of others that needed a system just like theirs. So they set to work – the rest is TransferWise.
TransferWise supports currency transfers between euro, British pound, Swiss franc, Polish zloty, Romania leu, Bulgarian lev, Georgian lari, Hungarian forint, Danish, Swedish, Czech, Norwegian krone, Canadian and US dollar. It also supports transfers from these currencies to Indian rupee, Malaysian ringgit, Philippine peso, Nigerian naira, Singaporean, Hong Kong, Australian and New Zealand dollar. Transfers from these currencies to all other supported currencies and many other routes are coming soon.
HOPE MOSES-ASHIKE
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