Wise Review: Is it the Best Solution For Multi-Currency Account and Money Transfer?

The app & web-based money transfer provider Wise has established itself as one the leading ways to send and receive international payments. Both Wise fees and Wise exchange rates are lower than the banks, and its no-hassle tech interface is fast and efficient.

In this Wise review, I will discuss how a Wise money transfer works, whether it is the best out there and also what are the benefits of opening a Wise account.

What is Wise?

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Wise is a London-based fin-tech company that specializes in international money transfers (although they do now offer other financial services). Wise was originally founded as Transferwise in 2011 by two Estonian businessmen who sought to offer a low-cost alternative to the high money transfer fees and charges levied by traditional banks.

They rebranded themselves as Wise in February 2021 to reflect the company's evolution and to emphasize that the range of services now offered far exceeded that of a simple money transfer provider.

How does Wise Work?

The reason Wise is able to offer such fast, low-cost international money transfers is that the funds are simply moved between Wise accounts.

Some financial experts have compared Wise’s operating model to the ancient hawala system, and while this is not entirely accurate, it is nevertheless a useful starting point. Basically, whenever a customer sends money using Wise, Wise does not rely on the SWIFT banking system and instead uses its own extensive payment network to move the money. This means they don't have to incur time and costs in changing currencies and don’t need to worry about paying fees to intermediaries or third-party banks.

Wise Fees and Wise Exchange Rates For Money Transfers

The success of Wise is based on its ability to undercut the world's banks and offer low-cost money transfers. Using Wise to send money will prove to be more cost-effective than using a bank in almost all conceivable cases.

However, it is important to understand that Wise’s transfer fees and exchange rates do vary depending on a number of variables. Specifically, these variables are; (1) the country in which the sender's Wise account is registered, (2) the country in which the recipient's Wise account is registered and (3) the currency pairs being exchanged.

Common “currency lanes” such as GBP to EUR or EUR to USD attract better currency exchange rates. Furthermore, destination countries with low-cost banking systems attract lower transaction fees.

For example, sending £1,000 from the UK to an account in Germany using Wise would cost £4.28 in fees.

The same transaction executed via HSBC would cost £2.75, but a staggering £17 using Lloyds Banking Group.

Additionally, the exchange rate currently offered for GBP to EUR transactions is €1.157, whereas UK banks are currently offering exchanges of around €1.14. On a transfer of £1,000, the difference adds up to around £20, and as such, this is where Wise really comes into its own and offers value.

Also see: Pay.com Review: An Ultimate Online Payments Solution for Businesses

Wise Account and its Functionality

Opening a Wise account is fairly easy. They have excellent tech interfaces, including user-friendly apps and web page options where prospective customers can apply to open accounts in minutes.

As Wise is regulated in the UK, they are obligated to comply with KYC protocol and applicants are required to submit ID verification.

However, as long as the documents are all in order, a Wise account can be approved and ready to use within 24 hours. Because Wise is regulated, this means that their accounts and service are reliable and dependable.

Furthermore, Wise safety is remarkable, which reduces the risk of fraud, and they also safeguard accounts so in the event that Wise went bust, their customer's money would be safe and sound in a separate account.

One useful feature of Wise is that they offer multi-currency accounts and allow account holders to hold balances in a number of different currencies. For example, a user could open an account with the main USD balance but then open a number of different sub-accounts (think of them as pots) with Euros, Pounds and/or Pesos.

This feature is especially useful for account holders who regularly send or receive payments in certain currencies. As such, multi-currency accounts are very popular with travelers, digital nomads and small businesses that trade globally.

Is Wise The Best Option?

All financial services providers have their own unique strengths and weaknesses and so trying to single out “the best” is difficult to say the least. However, Wise is certainly an excellent tool for small businesses, online sellers and regular travelers. Their transfer fees are low, the exchange rates very good, and the multi-currency account feature is a very useful addition. 

However, the currency exchange and money transfer space is a buoyant one and there is stiff competition out there. 

Any business with complex foreign currency requirements or any business that transfers high volume amounts ($20k+) may be better off seeking out a dedicated currency broker instead.

Currency brokers specialize in assisting larger businesses and high-net-worth clients. While they charge fees, they can help customers obtain the best exchange rates in the market and offer more complex foreign exchange hedging tools such as forward contracts.

In Summary: Wise Review