Ben Todd | Jun 2, 2017 | 0
Transferwise Borderless Bank Account Review
Hey eCheck.org fans, since the Transferwise Borderless Bank Account is a very new idea and new type of bank account, I have spent quite a bit of time explaining it. If you are simply looking for our review of it (to see if we think it is tasty or not), then click this link to our
Transferwise Borderless Bank Account review further down the page. If you would like to know exactly what the Transferwise Borderless Bank Account is and why it is such a new idea, then read the sections just below before you get to the review itself.
Transferwise Started As A Transfer And Exchange Company
The company known as Transferwise has become famous for allowing people to convert their currency in a transparent and low-cost manner. They allow you to transfer and exchange your currency and they use the national conversion rate rather than their own rate. Another benefit is that you are able to see any fees in advance. Transferwise has added a new function to its currency conversion system. They call it the Transferwise Borderless Bank Account. In essence, it gives you an account that acts like a bank account in over 15 different countries. It allows you to conduct banking business in different countries without having to pay extra fees or suffer poor exchange rates.
What Does The Transferwise Borderless Bank Account Actually Do?
Let’s start with an example. Let’s say you currently have a bank account in your own country. Now, let’s say you want to do regular banking business in France, in that case, you would have to get a French bank account. You would have to get a British bank account to do similar in the UK, and get a Spanish bank account to do banking business in Spain. What if you could do banking business in all those countries and more with just one bank account?
That is what the Transferwise Borderless Bank Account offers. It is like having a bank account in those countries and many more, except that you have one account instead of many.
Transferwise Are On The Move
The company has already taken a large chunk of the international money transfer market through their simple-yet-effective peer market method. They use the national average exchange rate, which is the one you see on Google when you search for the current exchange rate. They then give you their fees in advance so you can see exactly how much you are putting in and exactly how much you are getting out.
The peer system simply supplies different people with different currencies based on who wants what and when. For example, let’s say that Barry in the US want 74 Euros, and Sally in Spain wants 82 US dollars. Transferwise runs their exchange so both get the national average exchange rate. Sally gets Barry’s dollars and Barry gets Sally’s Euros. Now, imagine there are thousands of people who want Euros and thousands who want dollars. In that situation, all that Transferwise has to do is allow users to swap currencies at the national-average rate while charging them a small fee for the privilege. It is like swapping currency with a friend overseas, except that you have thousands of friends in many different countries.
Transferwise have taken a large chunk of the international money transfer market using this system, and now they are looking at bank accounts with their Transferwise Borderless Bank Account.
It Is Primarily Aimed At Small Businesses, Sole Traders And Freelancers
Transferwise are targeting these customers because these people and businesses have the most to gain from the Transferwise Borderless Bank Account. Private citizens are less likely to require bank accounts in different countries, so they are not a primary target. Larger businesses usually have a series of bank accounts dotted around the world, so they are not a big target either.
Small businesses, freelancers and sole traders may desperately need bank accounts overseas, but instead have to deal with online accounts and online wallets that are charging them a fortune in fees and that are lacking in key tools and features that regular banks offer.
Do You Receive And Send Payments From And To Other Countries?
The sole trader market, small business market and freelancer market is rather neglected by mainstream banks because there is not as much money to be had out of them. That is why Transferwise are penetrating the market so well. Many businesses, freelancers and sole traders are using the Internet to conduct business with people all over the world. Receiving and sending payments in multiple currencies is somewhat difficult and expensive, but that is no longer the case with the Transferwise Borderless Bank Account.
Instead of having numerous online wallets, numerous transfer companies, numerous online accounts, and numerous exchange companies, you may use just one bank account. Your Transferwise Borderless Bank Account will receive numerous types of currency and keep them there. There is no need to exchange the currency to your local/home currency; it can sit in your account as it is.
Are They Giving Us What We Already Have?
Yes they are, but they are giving it to you in one package. You don’t have to pay your bank a subscription to keep a certain currency in your account, you don’t have to convert your money if you don’t want to, and you can give out just one set of bank details to almost all of your international customers.
Put All Your Currencies In Just One Account
As of the year 2017, there are currently 15 currencies that you may keep in your Transferwise Borderless Bank Account. You may keep them side-by-side without having to pay a subscription for a multi-currency account. The image below shows you the currencies that you are able to keep and manage in just one account. This list is accurate for the year 2017, but the company is promising to continue adding currencies to the system.
You get an online bank account that allows you to have all fifteen of these currencies sitting side by side. You are not forced to convert them, and you do not have to pay extra fees or subscriptions to have them sitting there. Some may say the same is true of PayPal because they allow you to keep numerous currencies side by side, but there are three big differences.
The first difference is that PayPal is not a bank account and it doesn’t have the banking features that the Transferwise Borderless Bank Account has. Secondly, if you want to withdraw your money into one of your local bank accounts, then you have to convert the money beforehand, and you have to use the PayPal currency conversion system prior to withdrawing. Thirdly, PayPal charges fees for receiving, and their exchange rate is often 3%-5% worse than the current national average.
Pay Out In Different Currencies With Just One Account
There are over 50 countries that you may actually pay out to. Transferwise is a currency converter at heart, so even though you are only able to hold 15 currencies in your account, you may pay out to over 50 countries. This is made possible by simply running your chosen currency through the Transferwise currency converter when you send it outwards. In the image below, there is a list of currencies that you may send out from your account. You can send to over 50 countries, but there are fewer than fifty currencies on the list below because some countries use the same currency.
There are other companies that offer similar services to the Transferwise Borderless Bank Account, but the big selling point of the Transferwise Borderless Bank Account is that you get them all in one package. To better explain what this means, here are a few standout features that I found interesting.
You Are Not Forced To Exchange Your Money
When you receive money, there is no need to exchange it. So long as it is one of the currencies listed in the image above, you may keep it in your account without being forced to convert it into your local currency.
My Thoughts – I have enquired with my local bank about a multicurrency account, but they want to charge me a subscription for every currency I hold in my account. I do various snippets of business in different countries, from buying bonds in the UK to buying antique plates in Japan. With the Transferwise Borderless Bank Account, I could do a little consulting work for a Japanese country and be paid in Japanese Yen, I could then use what I am paid to buy antique plates that I ship over here, and I could do it all without ever having to convert any currency.
Save Different Types Of Currency In Your Single Account
You may save each currency in your account. You don’t have to convert, when means you may save your various currencies in your account. This means you may wait until the exchange rates turn more favorable, or you may keep different currencies in your account so you may use them later for buying or transferring out.
My Thoughts – My current bank wants me to pay a subscription for keeping different currencies in a single account, which is not acceptable for me because I don’t know what currency I will need this year and what I will need next year.
Money Is Paid Into Just One Account
Instead of having money from one customer paid into one account, and money paid from another customer in another account, you are paid into just one account. It doesn’t matter if Danish Darren wants to pay you or Canadian Carl does, you need only use one account when being paid by people in different countries.
My Thoughts – Most people have a bank account, but not everybody has an online wallet account. I have a PayPal account and Skrill account, and they allow me to keep different currencies side-by-side. However, some clients will only pay me into a bank account, especially the ones who are worried about US tax inspectors. The Transferwise Borderless Bank Account will lower my reliance on PayPal and Skrill, while also making being paid a little easier.
There Are No Fees For Having A Multi-Currency Account
Your bank may allow you to hold different currencies in your account, but there is almost always a catch. Usually, you are asked to pay for a subscription for a multi-currency account. Other banks will charge you a subscription for every currency you opt to receive, pay and hold in your account. Others will not charge you a subscription, but they will add a hefty fee whenever you are paid in a different country, and some will even not allow you to move the money without paying a fee. None of this will be an issue if you have a Transferwise Borderless Bank Account.
My Thoughts – I was reviewing a bank last year for eCheck.org, and they charge a subscription fee for each currency you held in your account, and they charged fees for wiring the money in and out of your account. As I recall, to hold 100 Euros in that US account, you had to pay the Euro subscription of $90 per year, plus pay a 5%+$4.99 fee to receive it and a 5%+$4.99 fee to send it out again. Suffice it to say that this particular bank didn’t make it into any of our best-list reviews.
You Can Hold 15 Currencies In Your Account
This fact alone is a great reason to have a Transferwise Borderless Bank Account, especially when you find out that your account may hold British pounds, Euros and dollars. Those three currencies are readily used by many different countries, especially the Euro, which is used by almost all European Union countries.
My Thoughts – I was very glad that they allowed you to keep currencies from Anglo Saxon countries. I am an English speaking person, which means most of my business is done with other English speakers in Anglo Saxon countries. Even receiving popular currencies such as Euros and Hong Kong dollars would have been useless to me if I could not also hold things such as Canadian dollars, Australian dollars, US dollars, and British Pounds.
Give Out Just One Set Of Bank Details To Your International Customers
Being able to give out just one set of bank details to your international customers is helpful in a number of ways. It makes doing your taxes a lot easier, and it allows you to manage your money from just one place. Having an account helps build your credibility when you give out bank details rather than a foreign exchange account or a PayPal account. It also means you may sign up for different services around the world where they ask for bank details and will not accept things such as Skrill, Payoneer, PayPal and so forth.
My Thoughts – It is my experience that clients and customers prefer to pay small businesses, freelancers and sole traders into their banks. It suggests that the person/company being paid is not a fly-by-night company or person. Plus, some clients or customers do not like paying into third party companies such as PayPal or online wallets such as Google Wallet because they worry that the recipient is tax dodging, and nobody wants to be associated with a tax dodger.
Speedier Transactions Are Almost Guaranteed
Transfers and payments from things such as credit cards and even from online wallets may take a while. Transfers and payments to and from banks tends to be a little quicker. Since the Borderless account is a bank account, you can expect speedier transfers and payments.
My Thoughts – In my personal experience, I do half agree with this. I agree with regards to the fact that I know some companies drag their feet when it comes to currency transfers and exchanges. I also disagree because I have tested the Transferwise currency transfer system, and it is only marginally faster than that, and is only marginally faster than PayPal. On the whole, I can’t say I was bowled over by the speed at which money moved, but maybe I have been spoilt in the past.
You Get The Functionality Of A Local Bank But In A Foreign Country
Your Transferwise Borderless Bank Account will function like a bank account in your own country, and in numerous other countries too. It is really that simple. You may have online wallets and you may use payment systems such as PayPal, but they don’t offer you the same functions as a local bank account in the way that the Transferwise Borderless Bank Account does.
My Thoughts – Yet again, this feature makes doing your taxes a little easier, and moving money becomes a lot less expensive because there is less need to move your money as often.
The Transferwise Borderless Bank Account Can Reduces Costs
Moving money can be expensive, especially if you are doing it in different currencies. If you manage your money correctly and you think in the long-term rather than the immediate short term, then the Transferwise Borderless Bank Account may save you money. It is not as handy for very small businesses that are unable to keep money resting in accounts (and in different currencies) for extended periods of time. If you do decide that you want to convert your money, then you get to use the mid-market rate that Transferwise offers for currency conversion customers.
My Thoughts – It only reduces costs if you do business either overseas or with non-domestic currency. For example, if you are living in the US, and trading exclusively with people in the US, and you are only using US dollars, then the Transferwise Borderless Bank Account is useless to you. If you do business with more than one currency, or if you do business with people/companies from another country, then I agree that the Transferwise Borderless Bank Account can save you money.
Transferwise Borderless Bank Account Selling Points
Below, I have listed a bunch of selling points that I feel make the Transferwise Borderless Bank Account stand out from regular bank accounts and online wallets. Don’t forget that your Transferwise Borderless Bank Account is the same as a bank account, so transferring to your borderless account is the same as transferring from one bank account to another. This is also true when transferring from international bank accounts, which also means you are not charged a fee when an international bank pays into your Transferwise Borderless Bank Account.
- No monthly or annual fees
- You only pay when you convert across currencies
- You are not forced to convert when you receive money
- There are no setup or application costs
- Top up your account via free bank transfers
- No extra fees or costs for adding new currencies to your account
- You are not charged fees when you receive money internationally
- You receive the amount you expect without deductions
- There is no extra fee to get your local branch details
- There are 15 currencies you may hold in your account
- GBP, USD and EUR currencies are used in numerous countries
- There are no maintenance fees at all
Are There Any Downsides?
At this moment in time, the only downside is that the service is not completely free. Transferwise is a business, so they have to make money some way. They do it by charging fees. Their fees are comparatively low and very transparent. Here are the main fees you will be charged when you use your Transferwise Borderless Bank Account.
The usual Transferwise currency conversion fee applies
Withdrawing to a local bank
They charge a small fee for withdrawing to other bank accounts with your name on
Sending money to a bank account with a different currency
They charge a Transferwise conversion fee and a small extra fee for doing this
The currency conversion fees are fixed. Here is a link to their page showing their currency conversion fees. That page will also show you the currency limits, as there are limits to how much money you are able to receive in your account.
If you pay by card, then there are fees for that too. Here is a link to the card fees page. In many cases, there is no fee at all for using your debit card, unless you are running a business and using a business card. However, there is almost always a fee for using a credit card.
Conclusion – Everybody Will Be Doing It Soon
There was a time when PayPal was the king of online money management and payments, but companies such as Skrill, Google Wallet, Apple Wallet, etc., soon caught on and started offering similar services. The Transferwise Borderless Bank Account is one of the first to offer a wide number of international banking services in one package, but it won’t be long before others catch on and start doing the same.
If Transferwise are as successful with their Borderless account as they are with their currency conversion account, then they are going to be the reigning champion of international banking for a long time (or at least, they are going to reign supreme for small businesses, freelancers and sole traders).
Should you get a Transferwise Borderless Bank Account? If you deal with more than one currency, or you have clients/customers in other countries, then there is no harm in getting an account with Transferwise. They do not charge maintenance fees or any sort of monthly/yearly fee, so there is no nothing to lose in getting a Transferwise Borderless Bank Account. It takes a little longer to open than I would have liked because they want photo ID and all that jazz, but I am just nit picking at this point. The Transferwise Borderless Bank Account is a new service in 2017, so I am eager to hear what other people think of the service and look forwards to reading other users’ online reviews about the new Borderless account.
Article Update – June 24th 2017
The Transferwise Borderless bank account does not have FDIC or FSCS insurance at the moment. This means that if the bank goes bust, then people with money in their accounts may lose their money. The reasons why Transferwise haven’t got this insurance and why they do not need it is threefold.
The first reason is because it would force them to raise their fees. Reason number two is because the company is profitable and booming to the point where it is not likely to go bust in the way that traditional banks or money companies may go bust.
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Reason number three is because the Transferwise borderless account doesn’t lend money or offer interest on customer balances. Most banks or money companies go bust because they offer lending facilities, but the Borderless account doesn’t offer any form of loan. Your money is safe because it stays in your account and is not handed out to other people in the form of loans, credit cards or things of that nature. The Borderless bank will not go bust because of a change in interest rates, a global depression or because of silly lending policies, ergo there is “currently” very little need for them to apply for FDIC or FSCS insurance. However, this may change in the future if the company decides to start lending or investing money in one form or another.