How to Use Transferwise to Send Money Abroad
Many people use Transferwise to send money abroad because Transferwise is one of a small minority of money transfer and exchange companies that gives you the market rate. In fact, at the time of writing, the only other transfer and exchange company to offer a market rate is CurrencyFair. How do you use Transferwise? Is it a scam? Is it difficult to use? How does one transfer money abroad? How does one exchange one currency for another? A full example of how you use Transferwise to send money abroad is presented in this article.
A Sneak Peek At The Home Screen
This article shows you how to use Transferwise to send money abroad, and it includes a full example showing a step-by-step guide on how to set up your account and how to make an exchange and transfer. However, here is a quick sneaky peaky at the home screen.
The image above gives you a nice idea of what to expect. When I took the screenshot, I had not yet filled out all of my profile details. Also, even though there is a “Recipients” tab at the top, I had not yet added any recipients on to my account. You can create one-off recipients, or you can add recipients to your account so that future transfers are easier and quicker.
As you can see by the screenshot, most of what you have to deal with is intuitive. There is no need to download software, and it doesn’t work like an accounting program. It is easy to use, and most people will be able to figure out how to use it quickly and without fear of error.
Get A Quote In Real Time (Instantly) Without Having To Sign Up
One of the things we like about Transferwise is that they allow you to get a full quote for your money transfer or money exchange without having to sign up or give any details. There is a quoting tool on the website home page that shows you how much you are putting in and how much you are getting out.
If you are lucky enough, you are using a device that recognizes the widget below. If so, then you may see Transferwise’s quotation tool firsthand. It works just like the one on the website. You enter how much you wish to send at the top and you select the currency that you are starting with. You then see the fee, and you see the exchange rate, (which is the market rate), and you see how much the recipient will receive in the exchanged currency.
Here Is How You Use Transferwise to Send Money Abroad
You start by visiting the Transferwise home page where you may either sign up normally via the “Sign Up” button at the top right of the page, or you may start your first exchange and/or transfer and sign up while you do it.
You may sign up using the “Sign Up” button where you give your email address, they send you an email, and you click the email link to confirm your account. Or, you sign up after you create your first transfer/exchange, and you do that by entering the amounts you wish to exchange and clicking the “Get Started” button.
Our example takes you through the process of exchanging and transferring money. You start by entering the amount you wish to send at the top of the quotation tool. In the example below, we are sending 500 GBP.
We entered 500 into the quotation tool and selected “GBP” on the right. The widget on the right is a drop-down menu that shows you all the different currencies you can convert. We chose GBP for Great British Pounds. As you can see by the image above, a small Union Jack flag also appears on the widget.
The currency we wish to convert to is USD (United States Dollars). That is why we used the widget on the right of the quotation tool to select USD, and as you can see, a small USA flag is also present on the widget.
Take another look at the image above that shows the quotation tool, and you will see what we did:
- We entered £500 into the quotation tool
- 2.49 is the fee, which is included in your conversion
- 1.23235 is the market exchange rate
- $613.11 is the USD amount that your recipient will receive
- You can see that you will save 22.63 compared with your bank
- The money will arrive by tomorrow evening
Click “Continue” to move on. You will not be asked to give personal information or details until the end when you are sure you know what you want.
Is This A Business Transfer Or A Personal Transfer
The next page asks if you are making a business transfer or a personal transfer. You are probably making a personal transfer/exchange, so that is the one you need to pick. The “Business Transfer” option gives you the chance to add more notes, more information, and create a better administration and tax record.
Where Is Your Exchanged Money Going?
Transferwise would now like to know where you want your money to go. The money has not been exchanged yet. You have to choose as to if the money is going to you, going to somebody else, going to a charity or a business. On the image below, you can see that the letters “AG” are inside the circle that is labeled AG.
The circle has AG in it because the screenshot is from my account, and AG are my initials. If you are sending money to another person, then you have to give the other person’s details. The other person’s details include their bank details or their online account details (just like when you send a transfer using MoneyGram or Western Union). Transferwise allows you to send the money to their bank or other online wallet.
Sending Money To Others Via Transferwise Is Like A Wire Transfer
I mention this point because some people are going to use Transferwise to buy things such as bitcoin, and you need to know that it is the same as transferring via a wire transfer. This means that once the money is gone, then it is gone, so you need to trust the person you are sending the money to. It is not like sending an e-check or using PayPal because they offer protection and a chance of getting your money back, but sending via Transferwise is like sending a wire transfer, where there is no protection once the money has left your account.
What If I Pay Through Transferwise With A Credit Card? Am I protected?
In most cases, you are not protected if you use a credit card to fund your Transferwise exchange and transfer. The reason is that you are paying Transferwise, and they are converting your money, so your credit card would try to charge-back from Transferwise and not the merchant or recipient who ripped you off.
For example, you want to pay Jenny 600 Rupees for a glass slipper. You use your credit card to turn your US dollars into Rupees on Transferwise, and Transferwise sends the Rupees off to Jenny. A few days later, you discover that Jenny is actually Shelly-Nick-a-Penny, and she runs off with your money without giving you the glass slipper. You go back to your credit card company and try to initiate a charge back, but your credit card paid Transfewise, it didn’t pay Jenny/Shelly. Your credit card only dealt with Transferwise, and they are not going to take money back from Transferwise when it was Jenny/Shelly who was in the wrong.
So, you go to Transferwise to ask them to charge back your account, but the money was wired from Transferwise to your recipient, so there is no way to reverse the transaction. However, since Jenny/Shelly failed to live up to a contract, you may have her arrested and sue her, and you will have your Transferwise records to prove that you paid her.
Next Step – Tell Transferwise About Yourself
Now you have decided how much you are sending and who you are sending the money to, it is time to start signing up. We like Transferwise because the sign-up part doesn’t come until the end. We have tested many other transfer and exchange companies where they make you sign up before they give you a quote, or they leave the add-on (processing) fees until after you have signed up. Transferwise tells you all you need to know before asking you to sign up, and they do not give you a nasty surprises.
The name, date of birth, and phone number portions are for security purposes so that it easier for Transferwise to recognize you, and to help ensure others do not try to set up a duplicate account in your name. Plus, there are money laundering rules that Transferwise has to follow. Enter your details and click to continue.
The Welcome Screen After Signing Up
Now that you have signed up, you are presented with the welcome screen. Since we started a transfer when we signed up, our welcome screen asks us to “Start Your Transfer,” but what it actually means is “Complete Your Transfer.”
If you have already set up your exchange or transfer, like we did in the examples above, then click on “Start Your Transfer,” enter your recipient’s details, and make your transfer. Alternatively, you can explore your account, play with the settings, and things of that nature.
Who Receives The Converted Money?
In our example, we chose to continue on with the exchange and transfer. You have to enter the recipient’s bank details and full name, or your own details if you are sending money to one of your own accounts.
You may save your recipient’s details to make future exchanges and transfers a little quicker. The details are stored in your account. The image above shows what your account will look like if you have more than one person’s details saved into your account.
Next Step – How Would You Like To Pay
You may pay with a bank card/debit card, or a credit card. You may send an Internet bank transfer, and some people may use SOFORT Banking. MasterCard and Visa are both supported.
If you choose the debit or credit card option, you are taken to a secure checkout where you may enter your details. If you choose bank transfer, then different options appear for different people in different countries. For example, you may be given the details so that you may go to your online banking platform and create the transfer from there. Some people are given the option of setting up a direct debit where Transferwise pulls the money from your bank account.
The Downsides Of Using A Credit Card With Exchange And Transfer Companies
Transferwise gives you the option of funding your transfer/exchange with a credit card, but you should try to avoid using your credit card unless you are really desperate. Paying for transfers and exchanges with a credit card, no matter which company you use, is going to generate a series of extra fees:
Extra Fee Number One – The credit card company is going to charge the transfer company an amount for using its service, and that amount will probably be a percent, so it climbs higher if you transfer/exchange more money. Most transfer/exchange companies are going to pass this fee on to you.
Extra Fee Number Two – The cash advance fees that your credit card charge will also apply. Many (but not all) credit card companies charge you for drawing money out of a cash machine because it is a cash advance, and a money transfer or money exchange is also labeled as a cash advance, which means your credit card company will charge you your standard cash-advance fee.
Extra Fee Number Three – The penalty fee for cash advances. Many (but not all) credit card companies charge you a higher interest rate for money you took out of your credit card as a cash advance. For example, your regular rate may be 18.25% APR, but your cash-advance penalty rate may be 24.95% APR. You will be paying this higher APR rate until your credit card balance is fully repaid.
Confirm, Pay And Transfer
You have created your quote, signed up, given your recipient’s details, and you have decided how you would like to fund the exchange and transfer. You now confirm what you have done and your transfer goes through.
The only time this sequence of events changes is if there is a long space of time between when you created your quote and when you confirm your transfer. Don’t forget that Transferwise uses the current market rate for its transfers, and the market rate is changing all the time. If there is a relatively big shift in the market rate between the time you create your quote and the time you confirm your transfer, then you will have to get a new quote prior to confirming. This sort of thing is rare, and there are times when it works to your advantage if the market rate shifts in your direction.
How Does Transferwise Work
If you are looking to use Transferwise to send money abroad, then the way it works is quite simple. You hand over your currency, Transferwise changes it for another currency, and Transferwise transfers it to whichever account you decide.
There is no exchange rate skimming or rate markup, so one may wonder how to company manages to make a profit when all it charges is a tiny fee. They do it by holding and swapping currency between members. If you want Euros and somebody in Euros wants dollars, then Transferwise gives you their Euros while they get your dollars. Here is an image showing the process in more detail.
The inner mechanics of how Transferwise works is not important unless you are trying to buy the company, but it is always a good idea to find out how a company is making its money. If you do not know how a company makes its money, then there may be a catch or hidden secret that leaves you at a disadvantage.
If you are interested in learning more about Transferwise, currency exchanges, and how you may transfer money cheaply, then try a few of these articles.
Ultimate Guide Wire Transfers
Transferwise Vs Currencyfair the Differences the Similarities and the Winner
Transferwise Review Best Way Transfer Money Abroad
Best Money Transfer Companies
The Cheapest Fastest and Best Ways to Send Money Online
Best Ways to Get Paid by a Client Overseas Online