TransferWise

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TransferWise
Transferwise logo.png
Type Private company
Headquarters London, England
Area served Europe, US
Key people Kristo Käärmann (Founder, Executive chairman)
Taavet Hinrikus (Founder, CEO)
Services Money transfers
Employees 450+ (2015)
Slogan(s) "The clever new way to beat bank fees"
Website transferwise.com
Alexa rank 13,418[1]
Registration Yes
Available in Multilingual
Launched 2011; 5 years ago (2011)
Current status Active

TransferWise is an Estonian developed and UK-based peer-to-peer money transfer service launched in January 2011 by Kristo Käärmann and Taavet Hinrikus with headquarters in London and offices in Tallinn and New York.[2] More than £3 billion has been transferred through TransferWise.[3] TransferWise supports more than 300 currency routes across the world.[4]

History[edit]

The creation of TransferWise was inspired by the personal experiences of Taavet Hinrikus, Skype's first employee, and financial consultant Kristo Käärmann. As Estonians working between their native country and the UK, they had personal experience of the "pain of international money transfer"[5] due to bank charges on the amounts they needed to convert from euros to pounds and vice versa. In the words of Hinrikus, "I was losing five per cent of the money each time I moved it. At the same time my co-founder Kristo Käärmann (also from Estonia) was starting to get paid in the UK and was losing a lot of money transferring cash back home to pay for a mortgage there".[6][7]

It inspired them to make a private arrangement, with Hinrikus – who was paid in euros – putting this currency directly into Käärmann's Estonian account so he could pay his mortgage without having to convert pounds to euros, while Käärmann returned the favour by putting pounds into Hinrkus' UK account.[8] This arrangement led them to start developing a crowdsourced currency exchange service to offer a cheaper alternative to established institutions.[9]

In February 2012, their approval with the UK financial regulator was finalised.[10] In April 2013, they stopped letting users purchase Bitcoins, blaming pressure from other market players.[11] In its first year, transactions through TransferWise amounted to 10 million EUR.[12] In February 2015, more than 300 currency routes were supported.[13]

How it works[edit]

Usual money transfer services versus peer-to-peer money transfer

From the customer's point of view, money transfers with TransferWise are not so different from conventional money transfers: the customer chooses a recipient and a currency, the money to be transferred is taken from his or her account, the transferring company charges for the service, and some time later, the recipient receives the payment in the chosen currency.[14]

The difference lies in how TransferWise routes the payment. Instead of transferring the sender's money directly to the recipient, it is redirected to the recipient of an equivalent transfer going in the opposite direction. Likewise, the recipient of the transfer receives a payment not from the sender initiating the transfer, but from the sender of the equivalent transfer. This process avoids costly currency conversion and transfers crossing borders.[15]

In 2012, the company's charges were €1—in 2015 raised to €2, £2, $3 etc. (depending on the currency sent)—or 0.5%, whichever is larger, in or of an equivalent amount in the customer's currency.[16] Conventional money transfer using British banks usually charge considerably higher fees, or require minimum transfer sums and give less competitive rates.[17]

TransferWise's system has been compared to the hawala money transfer system.[18][19][20][21]

Investors[edit]

TransferWise received seed funding amounting to $1.3 million from a consortium including leading venture firms IA Ventures and Index Ventures, IJNR Ventures , NYPPE as well as individual investors such as PayPal co-founder Max Levchin, former Betfair CEO David Yu, and Wonga.com co-founder Errol Damelin.[22] TransferWise also received investment after being named one of Seedcamp 2011's winners.[23] In May 2013 it was announced that TransferWise had secured a $6 million investment round led by Peter Thiel's Valar Ventures.[24] TransferWise raised a further $25 million in June 2014, adding Richard Branson as an investor.[25] In January 2015, it was announced that TransferWise had raised a $58M Series C round, led by investors Andreessen Horowitz.[26] As of January 2015, TransferWise has raised a total of $91M in funding.[27]

TransferWise secured a funding of $26 million, that raised company's valuation to $1.1Billion.[28]

Media attention[edit]

Named as one of "East London's 20 hottest tech startups" by The Guardian,[29] TransferWise has also been picked as a Wired UK Start Up of the Week[30] as well as being listed as number 12 in Startups.co.uk's list of the top 100 UK start-ups of 2012.[31] TransferWise was also named by TechCrunch as one of five "start-ups to watch" at Seedcamp's 2012 US Demo Day.[32]

In May 2015, Transferwise was ranked No. 8 on CNBC's 2015 Disruptor 50 list.[33]

See also[edit]

Notes and References[edit]

  1. ^ TransferWise global rank at Alexa website, 9 October 2014
  2. ^ Bryant, Martin. "Money may make the world go round, but at what cost?". BBC. Retrieved 1 April 2015. 
  3. ^ Bryant, Martin. "TransferWise valued at $1bn by top Silicon Valley venture capital fund". The Independent. Retrieved 1 April 2015. 
  4. ^ Bryant, Martin. "Money may make the world go round, but at what cost?". BBC. Retrieved 1 April 2015. 
  5. ^ Ajilore, Joseph. "Skype's first employee: How Taavet Hinrikus left Skype and founded TransferWise". YHP. Retrieved 1 October 2012. 
  6. ^ Lytton-Dickie, Tom. "How TransferWise is making international money transfers transparent?". Hot Topics. Retrieved 27 January 2015. 
  7. ^ Griffith, Gabriella. "Q&A: Taavet Hinrikus, co-founder of TransferWise which has landed $1.3 million funding". London Loves Business. Retrieved 1 October 2012. 
  8. ^ "TransferWise was born out of frustration". TransferWise. Retrieved 1 October 2012. 
  9. ^ "Meet the $1bn startup changing how we transfer money overseas". The Money Cloud Blog. Retrieved 5 May 2016. 
  10. ^ "Financial Services Authority approves TransferWise without limits". Retrieved 13 October 2014. 
  11. ^ "Notice to Bitcoin users – April 2013". Retrieved 13 October 2014. 
  12. ^ Bryant, Martin. "Peer-to-peer currency exchange service Transferwise handles $13.4m in its first year". Insider. Retrieved 1 October 2012. 
  13. ^ Bryant, Martin. "Money may make the world go round, but at what cost?". BBC. Retrieved 1 April 2015. 
  14. ^ de Ternay, Guerric. "FinTech Revolution: How Startups Are Changing Finance". BoostCompanies. Retrieved 26 July 2014. 
  15. ^ Price, Rob. "How TransferWise Works". Retrieved 24 February 2015. 
  16. ^ Ajilore, Joseph. "Skype's first employee: How Taavet Hinrikus left Skype and founded TransferWise". YHP. Retrieved 1 October 2012. 
  17. ^ Shannon, Laura. "How to cut the costs of sending money abroad". Retrieved 24 February 2015. 
  18. ^ ROB PRICE (27 January 2015). "London's $1 Billion Finance Startup TransferWise Is Just Like An Ancient Islamic Money Transfer System". Business Insider. Retrieved 19 October 2015. 
  19. ^ Marco della Cava (18 August 2014). "London's TransferWise aims to disrupt banking". USA TODAY. Retrieved 19 October 2015. 
  20. ^ Bennett Voyles (9 September 2015). "Online money transfers and the "Skype" of money". Forbes India. Retrieved 19 October 2015. 
  21. ^ Leander Bindewald (8 July 2015). "You need never use a bank again. Here's why". The Guardian. Retrieved 19 October 2015. 
  22. ^ Johnson, Bobbie. "Transferwise unveils Levchin, other superstar backers". Gigaoam. Retrieved 1 October 2012. 
  23. ^ "TransferWise". Seedcamp. Retrieved 1 October 2012. 
  24. ^ O'Hear, Steve. "P2P Currency Exchange TransferWise Raises $6M Led By Peter Thiel's Valar Ventures, With Participation From SV Angel, IJNR VENTURES , Nyppex Others". TechCrunchh. Retrieved 12 July 2013. 
  25. ^ O'Hear, Steve. "Now Backed By Sir Richard Branson, TransferWise Raises $25M For Cheaper Money Transfers". TechCrunch. Retrieved 9 June 2014. 
  26. ^ O'Hear, Steve. "Now Backed By Sir Richard Branson, TransferWise Raises $25M For Cheaper Money Transfers". BusinessInsider. Retrieved 31 March 2015. 
  27. ^ O'Hear, Steve. "Now Backed By Sir Richard Branson, TransferWise Raises $25M For Cheaper Money Transfers". WallStreetJournal. Retrieved 31 March 2015. 
  28. ^ O'Hear, Steve. "Money transfer company TransferWise raises further $26M at $1.1B valuation". TechCrunch. Retrieved 2016-05-25. 
  29. ^ Silver, James (8 July 2012). "East London's 20 hottest tech startups". The Guardian. 
  30. ^ "Startup of the Week: TransferWise". Wired. Retrieved 1 October 2012. 
  31. ^ "The 2012 Startups 100: revealed". Startups. Retrieved 1 October 2012. 
  32. ^ Taylor, Colleen. "5 Startups to Watch from Seedcamp's 2012 US Demo Day". TechCrunch. Retrieved 1 October 2012. 
  33. ^ "Meet the 2015 CNBC Disruptor 50 companies". CNBC. Retrieved 12 May 2015. 

See also[edit]

External links[edit]