UK-based TransferWise began operations in 2011 and has given people an easy and cost-effective way to make international fund transfers since. It became one of London’s first fintech unicorns, attracting investments from Sir Richard Branson, Peter Thiel, and Baille Gifford, to name a few. In January 2016, the company switched its license with the UK Financial Conduct Authority (FCA) from a PSD license that allowed it to operate as an international remittance provider to a more comprehensive e-money license. This shows it had other plans even back then.
TransferWise launched the Borderless account in 2017, targeting mainly small and mid-sized businesses, online retailers, and freelancers. Taavet Hinrikus, in an interview with Business Insider, said that the move came about because, “For us, it was about using the infrastructure in a different way to solve another pain point for these people.”
How Does the Borderless Account Work?
You get to open a TransferWise Borderless account for free and you’ll pay no ongoing account keeping fees. The company provides you with local bank details from the US, the UK, and the European Union, giving you easy means to receive payments in US dollars, British pounds, and euros. When you receive money in a currency that matches its country-specific account, you’ll pay no currency exchange fees.
The Borderless accounts lets you hold funds and transact in more than 25 currencies, some of which include US dollars, Canadian dollars, Australian dollars, British pounds, Mexican pesos, Japanese yen, South African rand, and Israeli shekel. In addition, you may transfer funds from your Borderless account to more than 50 countries in local currencies.
What Does This Account Mean for Travelers?
Consider this – you’re travelling from the US to India for a couple of weeks. You miscalculate how much money you’ll need and run out of cash within the first week. To get more money, you have the option of using your debit or credit card. In both cases, you may need to pay extra in the form of foreign transaction fees and ATM withdrawal fees. With a credit card, you’ll need to start paying interest from the day of the transaction. These typically high costs can be a thing of the past with the Borderless account.
The TransferWise Borderless account also comes with a multi-currency card. This gives people the ability to access funds from their own TransferWise accounts from just about anywhere, removing the need to transfer money between countries and bank accounts. This feature, without doubt, will reduce costs usually associated with getting travel money. Account holders will get mid-market rates offered by TransferWise and they’ll benefit by paying nominal fees.
What is the TransferWise Mid-Market Rate?
When you’re travelling internationally, you may need to exchange currencies at some point. However, the exchange rate you get might leave room for improvement, especially when using the services of hotels or large stores. Most banks and some international fund transfer companies provide unfavorable exchange rates too. TransferWise, on the other hand, uses the mid-market rate independently provided by Reuters, and you don’t need to worry about any markup.
The TransferWise Borderless account has been a good alternative for businesses, online sellers, and freelancers dealing with international clients. After the launch of the eagerly awaited multi-currency card, it has worked as a boon for international travelers too.