TransferWise

TransferWise
Available in Multilingual
Headquarters London, England
Area served Global: Europe, US, Canada, Asia-Pacific
CEO Taavet Hinrikus
Key people Kristo Käärmann (Founder, Executive chairman)
Taavet Hinrikus (Founder, CEO)
Services International money transfer
Employees 600 (2016)
Slogan(s) Money without borders
Website transferwise.com
Alexa rank 5,717[1]
Registration Yes
Launched 2011 (2011)
Current status Active

TransferWise is a peer-to-peer money transfer service launched in January 2011 by two Estonians Kristo Käärmann and Taavet Hinrikus. It is headquartered in London and has eight offices around the world, including New York, Sydney, Singapore and Tallinn, Estonia. TransferWise has over 1 million customers, sending more than £800m using the platform every month.[2] Today TransferWise supports more than 645 currency "routes" across the world.[3]

History

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"[4] 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".[5][6]

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.[7] This arrangement led them to start developing a crowdsourced currency exchange service to offer a cheaper alternative to established institutions.[8]

In February 2012, their approval with the UK financial regulator was finalised.[9] In April 2013, they stopped letting users purchase Bitcoins, blaming pressure from other market players.[10] In its first year, transactions through TransferWise amounted to 10 million EUR.[11] In September 2016,the company announced its customers were sending over £800m per month using the service, saving over £1m a day compared to if they had done the same transaction with their bank.[3]

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]

How it works

Regular money transfer 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.[4] Conventional money transfer using British banks usually charge considerably higher fees, or require minimum transfer sums and give less competitive rates.[16]

TransferWise's system has been compared to the hawala money transfer system.[17][18][19][20]

Investors

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.[21] TransferWise also received investment after being named one of Seedcamp 2011's winners.[22] In May 2013 it was announced that TransferWise had secured a $6 million investment round led by Peter Thiel's Valar Ventures.[23] TransferWise raised a further $25 million in June 2014, adding Richard Branson as an investor.[24] In January 2015, it was announced that TransferWise had raised a $58 million Series C round, led by investors Andreessen Horowitz.[25] 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.[26]

Media attention

Named as one of "East London's 20 hottest tech startups" by The Guardian,[27] TransferWise has also been picked as a Wired UK Start Up of the Week[28] as well as being listed as number 12 in Startups.co.uk's list of the top 100 UK start-ups of 2012.[29] TransferWise was also named by TechCrunch as one of five "start-ups to watch" at Seedcamp's 2012 US Demo Day.[30]

In May 2015, Transferwise was ranked No. 8 on CNBC's 2015 Disruptor 50 list.[31]

In August 2015 the company was named a World Economic Forum Tech Pioneer.[32]

The TW team are not shy of media attention but have fallen foul of the UK regulator[33]

In Sep 2016, one of the Founders appeared on BBC radio 4 Today programme.[34]

See also

References

  1. TransferWise global rank at Alexa website, 13 November 2016
  2. Kahn, Jeremy (May 25, 2016). "TransferWise Raises Another $26 Million for International Growth". Bloomberg. Retrieved November 13, 2016.
  3. 1 2 Cancian, Dan (September 5, 2016). "Transferwise's revenue trebles as transaction volume hits £800m a month". Yahoo! News. Retrieved November 13, 2016.
  4. 1 2 Ajilore, Joseph. "Skype's first employee: How Taavet Hinrikus left Skype and founded TransferWise". YHP. Retrieved 1 October 2012.
  5. Lytton-Dickie, Tom. "How TransferWise is making international money transfers transparent?". Hot Topics. Retrieved 27 January 2015.
  6. Griffith, Gabriella. "Q&A: Taavet Hinrikus, co-founder of TransferWise which has landed $1.3 million funding". London Loves Business. Retrieved 1 October 2012.
  7. "TransferWise was born out of frustration". TransferWise. Retrieved 1 October 2012.
  8. "Meet the $1bn startup changing how we transfer money overseas". The Money Cloud Blog. Retrieved 5 May 2016.
  9. "Financial Services Authority approves TransferWise without limits". Retrieved 13 October 2014.
  10. "Notice to Bitcoin users – April 2013". Retrieved 13 October 2014.
  11. Bryant, Martin. "Peer-to-peer currency exchange service Transferwise handles $13.4m in its first year". Insider. Retrieved 1 October 2012.
  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. 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. Shannon, Laura. "How to cut the costs of sending money abroad". Retrieved 24 February 2015.
  17. 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.
  18. Marco della Cava (18 August 2014). "London's TransferWise aims to disrupt banking". USA TODAY. Retrieved 19 October 2015.
  19. Bennett Voyles (9 September 2015). "Online money transfers and the "Skype" of money". Forbes India. Retrieved 19 October 2015.
  20. Leander Bindewald (8 July 2015). "You need never use a bank again. Here's why". The Guardian. Retrieved 19 October 2015.
  21. Johnson, Bobbie. "Transferwise unveils Levchin, other superstar backers". Gigaoam. Retrieved 1 October 2012.
  22. "TransferWise". Seedcamp. Retrieved 1 October 2012.
  23. 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.
  24. O'Hear, Steve. "Now Backed By Sir Richard Branson, TransferWise Raises $25M For Cheaper Money Transfers". TechCrunch. Retrieved 9 June 2014.
  25. Price, Rob. "London Cash Startup TransferWise Is Now Worth $1 Billion". BusinessInsider. Retrieved 31 March 2015.
  26. O'Hear, Steve. "Money transfer company TransferWise raises further $26M at $1.1B valuation". TechCrunch. Retrieved 2016-05-25.
  27. Silver, James (8 July 2012). "East London's 20 hottest tech startups". The Guardian.
  28. "Startup of the Week: TransferWise". Wired. Retrieved 1 October 2012.
  29. "The 2012 Startups 100: revealed". Startups. Retrieved 1 October 2012.
  30. Taylor, Colleen. "5 Startups to Watch from Seedcamp's 2012 US Demo Day". TechCrunch. Retrieved 1 October 2012.
  31. "Meet the 2015 CNBC Disruptor 50 companies". CNBC. Retrieved 12 May 2015.
  32. Barber, Lynsey (2015-08-05). "Four UK firms named tech pioneers by WEF". Retrieved 2016-11-13.
  33. http://ftalphaville.ft.com/2016/05/04/2160817/transferwise-gets-slammed-for-those-ads/
  34. https://transferwise.com/gb/blog/transferwise-users-move-500-million-a-month-globally
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