TransferWise

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TransferWise
Transferwise logo.png
Available in Multilingual
Headquarters London, England
Area served Global: Europe, US, Canada, Asia-Pacific, Latin-America
CEO Taavet Hinrikus
Key people Kristo Käärmann (Founder, Executive chairman)
Taavet Hinrikus (Founder, CEO)
Services Financial services
Employees 700 (2017)
Slogan(s) Money without borders
Website transferwise.com
Alexa rank 5,717[1]
Registration Yes
Launched 2011; 6 years ago (2011)
Current status Active

Launched in January 2011 by Kristo Käärmann and Taavet Hinrikus, TransferWise is one of the biggest London-based fintech start-ups[2]. In addition to London, it has nine offices around the world, including New York, Sydney, Singapore, Tokyo, Budapest, and Tallinn, Estonia.

History[edit]

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"[3] 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".[4][5]

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.[6] This arrangement led them to start developing a crowdsourced currency exchange service to offer a cheaper alternative to established institutions.[7]

In February 2012, their approval with the UK financial regulator was finalised.[8] In April 2013, they stopped letting users purchase Bitcoin, citing pressure from banking providers.[9] In its first year, transactions through TransferWise amounted to 10 million EUR.[10] In May 2017, the company announced its customers were sending over £1 billion every month using the service.[11]

In May 2016, TransferWise's claim "you save up to 90% against banks" has been considered as misleading by the Advertising Standards Authority (United Kingdom).[12] According to independent comparison site Monito.com, Transferwise was actually on average 83% cheaper than the big four UK banks on major currency "routes", but could be up to 90% cheaper in some occasions.[13] In April 2017, an internal memo from Santander showed how much the bank was making from its charges on international money transfer and how much it could lose to new entrants, specifically TransferWise.[14]

In April 2017, it announced its decision to move its European headquarters from London to the continent due to the Brexit.[15] The same month, the company announced its APAC hub in Singapore after becoming one of the first remittance companies to be allowed to offer online verification in Singapore.[16]

In May 2017, TransferWise launched a new service, the Borderless account. Initially the account is for businesses and freelancers with an account and card for consumers planned for later in the year. [17] The Borderless account was available in the UK, Europe and the US at launch.[18]

Also in May 2017, the company announced it had been operationally profitable since the beginning of the year.[19]

How it works[edit]

Regular money transfer versus peer-to-peer money transfer

TransferWise routes payments not by transferring the sender's money directly to the recipient, but by redirecting them 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 currency conversion and transfers crossing borders.[20]

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.[3]

TransferWise's system has been compared to the hawala money transfer system.[21][22][23][24]

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.[25] TransferWise also received investment after being named one of Seedcamp 2011's winners.[26] In May 2013 it was announced that TransferWise had secured a $6 million investment round led by Peter Thiel's Valar Ventures.[27] TransferWise raised a further $25 million in June 2014, adding Richard Branson as an investor.[28] In January 2015, it was announced that TransferWise had raised a $58 million Series C round, led by investors Andreessen Horowitz.[29] In May 2016, TransferWise secured a funding of $26 million, that raised company's valuation to $1.1 billion. As of May 2016, TransferWise has raised a total of $117 million in funding.[30]

Media attention[edit]

Named as one of "East London's 20 hottest tech startups" by The Guardian,[31] TransferWise has also been picked as a Wired UK Start Up of the Week[32] as well as being listed as number 12 in Startups.co.uk's list of the top 100 UK start-ups of 2012.[33] TransferWise was also named by TechCrunch as one of five "start-ups to watch" at Seedcamp's 2012 US Demo Day.[34]

In May 2015, Transferwise was ranked No. 8 on CNBC's 2015 Disruptor 50 list.[35]

In August 2015 the company was named a World Economic Forum Tech Pioneer.[36]

See also[edit]

References[edit]

  1. ^ TransferWise global rank at Alexa website, 13 November 2016
  2. ^ "TransferWise Steps Toward Banking With Multicurrency Account". Bloomberg.com. 2017-05-23. Retrieved 2017-05-31. 
  3. ^ a b Ajilore, Joseph. "Skype's first employee: How Taavet Hinrikus left Skype and founded TransferWise". YHP. Retrieved 1 October 2012. 
  4. ^ Lytton-Dickie, Tom. "How TransferWise is making international money transfers transparent?". Hot Topics. Retrieved 27 January 2015. 
  5. ^ Griffith, Gabriella. "Q&A: Taavet Hinrikus, co-founder of TransferWise which has landed $1.3 million funding". London Loves Business. Retrieved 1 October 2012. 
  6. ^ "TransferWise was born out of frustration". TransferWise. Retrieved 1 October 2012. 
  7. ^ "Can TransferWise transform money transfers". Mindful Money. Retrieved 1 October 2012. 
  8. ^ "Financial Services Authority approves TransferWise without limits". Retrieved 13 October 2014. 
  9. ^ "Bitcoin | TransferWise Support & FAQ - International Money Transfer". transferwise.com. Retrieved 2017-05-31. 
  10. ^ Bryant, Martin. "Peer-to-peer currency exchange service Transferwise handles $13.4m in its first year". Insider. Retrieved 1 October 2012. 
  11. ^ CNBC.com, Neil Ainger, Writer at (2017-05-17). "Fintech unicorn Transferwise achieves first profit". CNBC. Retrieved 2017-05-31. 
  12. ^ "ASA Ruling on TransferWise Ltd". 04.05.2016. Retrieved 21.11.2016.  Check date values in: |access-date=, |date= (help)
  13. ^ "TransferWise – Are they that cheap or is it just (inaccurate) advertising?". www.monito.com. Monito. 26.05.2016. Retrieved 21.11.2016.  Check date values in: |access-date=, |date= (help)
  14. ^ Collinson, Patrick (2017-04-08). "Revealed: the huge profits earned by big banks on overseas money transfers". The Guardian. ISSN 0261-3077. Retrieved 2017-05-31. 
  15. ^ Kelly, Jemima (12 April 2017). Brexit prompts Transferwise to move Europe headquarter from UK to continent. Reuters. Retrieved 30 April 2017
  16. ^ Russell, Jon. "TransferWise moves into Asia Pacific with opening of regional HQ in Singapore | TechCrunch". Retrieved 2017-05-31. 
  17. ^ O'Hear, Steve. "TransferWise launches ‘Borderless’ account for businesses, sole traders and freelancers | TechCrunch". Retrieved 2017-05-31. 
  18. ^ Groenfeldt, Tom. "FinTechs Are Surpassing Banks On Cross-Border Payments". Forbes. Retrieved 2017-05-31. 
  19. ^ "TransferWise becomes profitable six years after being founded". BBC News. 2017-05-17. Retrieved 2017-05-31. 
  20. ^ Price, Rob. "How TransferWise Works". Retrieved 24 February 2015. 
  21. ^ Price, Rob (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. 
  22. ^ Marco della Cava (18 August 2014). "London's TransferWise aims to disrupt banking". USA Today. Retrieved 19 October 2015. 
  23. ^ Bennett Voyles (9 September 2015). "Online money transfers and the "Skype" of money". Forbes India. Retrieved 19 October 2015. 
  24. ^ Leander Bindewald (8 July 2015). "You need never use a bank again. Here's why". The Guardian. Retrieved 19 October 2015. 
  25. ^ Johnson, Bobbie. "Transferwise unveils Levchin, other superstar backers". Gigaoam. Retrieved 1 October 2012. 
  26. ^ "TransferWise". Seedcamp. Retrieved 1 October 2012. 
  27. ^ O'Hear, Steve. "P2P Currency Exchange TransferWise Raises $6M Led By Peter Thiel’s Valar Ventures, With Participation From SV Angel, Others". TechCrunch. Retrieved 12 July 2013. 
  28. ^ O'Hear, Steve. "Now Backed By Sir Richard Branson, TransferWise Raises $25M For Cheaper Money Transfers". TechCrunch. Retrieved 9 June 2014. 
  29. ^ Price, Rob. "London Cash Startup TransferWise Is Now Worth $1 Billion". BusinessInsider. Retrieved 31 March 2015. 
  30. ^ O'Hear, Steve. "Money transfer company TransferWise raises further $26M at $1.1B valuation". TechCrunch. Retrieved 2016-05-25. 
  31. ^ Silver, James (8 July 2012). "East London's 20 hottest tech startups". The Guardian. 
  32. ^ "Startup of the Week: TransferWise". Wired. Retrieved 1 October 2012. 
  33. ^ "The 2012 Startups 100: revealed". Startups. Retrieved 1 October 2012. 
  34. ^ Taylor, Colleen. "5 Startups to Watch from Seedcamp's 2012 US Demo Day". TechCrunch. Retrieved 1 October 2012. 
  35. ^ "Meet the 2015 CNBC Disruptor 50 companies". CNBC. Retrieved 12 May 2015. 
  36. ^ Barber, Lynsey (2015-08-05). "Four UK firms named tech pioneers by WEF". Retrieved 2016-11-13. 

External links[edit]