Wise Review; the cheapest way to transfer money overseas?

Wise is a P2P currency exchange service allowing you to hold balances in different currencies. A Wise card can be used at ATMs and stores in some countries. Read on for the full Wise review, including pros and cons.

Verdict: The world of online money transfers is confusing and not very transparent. I use Wise to receive money and pay outsourcers in USD, as a cheaper alternative to PayPal, and find it great.

Introduction

Originally called TransferWise, Wise was founded in 2011 by two businessmen who were tired of paying so much money to banks for international money transfers. In 2021 it became a public company. It is available in more than 50 countries and deals with 21 currencies. The fees that Wise charge can be easily seen on the website or app. Wise have recently introduced a card that can be used in ATMs that accept Mastercard. Wise is one of the cheapest overseas money transfer services, but it’s worth making comparisons before you decide whether Wise is right for you.

CaptainFI is not a financial advisor and this article is not financial advice. This website is reader-supported, which means we may be paid when you visit links to partner or featured sites, or by advertising on the site. For more information please read my Privacy Policy, Terms of Use, and Financial Disclaimer.

What is Wise?

Wise, which used to be called TransferWise is a London based peer to peer (P2P) transfer service that matches people buying currency in one country with people in another country who are selling currency. It can be accessed through the Wise website or through an app available on either the App Store or Google Play.

Two Estonian businessmen, Taavet Hinrikus and Kristos Kaarmann, who was a financial consultant, created Wise in 2011. They were expats living in London and they were annoyed by how much it cost to make an international money transfer using the banking system. They believed that banks were overcharging them through hidden fees and foreign exchange markups. With Wise, customers know exactly how much they are being charged and currencies are not being marked up. In July 2021, Wise became a public company with a listing on the London Stock Exchange.

How does Wisetransfer work?

As a P2P transfer system, Wise uses a method that is very different from the one used by banks, who charge transfer fees as well as making money on the exchange rate. You can easily send money to other Wise accounts or to bank accounts. You need to register with Wise online before you can start transferring money. You can set up your transfer with Wise online or with the Wise app, depositing the agreed amount into your Wise account. Wise then sends that money to the bank in a foreign country through its own payment network bypassing the banking system.

Wise makes money through fees, but there is complete transparency and you can easily see how much it costs, unlike when you are using a bank. There are two kinds of fees that Wise charges:

1.     Fixed Fee – You will have to pay this fee every time you make a transaction, but the amount of the fee does not change. At present the fixed fee is always 0.66 AUD per transaction.

2.     Variable Fee – Wise has two variable fees. The first one is a fee of 0.45% on each currency exchange and you might be charged another variable fee if you send more than a certain amount of money per month.

Is it safe to use?

Wise is safe to use when transferring money overseas as it is fully licensed and regulated. In Australia, it is regulated by the Australian Securities and Investments Commission (ASIC). Wise Australia has an Australian Financial Services Licence and is authorised by the Australian Prudential Regulation Authority (APRA) as an Authorised Deposit-Taking Institution.

 Wise uses encryption to keep your personal data safe. It uses HTTPS encryption and two-factor authentication (2FA) in order to protect transactions. Every time you log in you have to use 2FA to verify your identity either by text message, fingerprint, or face recognition, depending on your device. To learn more about 2FA, read this article on Investopedia.

“Receive payments from anywhere, and convert them to 53 currencies. You’ll always get the real exchange rate, and the low fees we’re known for.”

wise.com/au

Which countries can use Wise?

Wise is available in more than 50 countries, and you might be able to send money to other countries if they have accounts in USD, EUR or GBP. You can add money to your account in 21 different currencies but you can keep 50+ currencies in your account by exchanging one of the currencies that are already in your account.

How much does it cost to transfer money using Wise?

It is not easy to say how much it costs to transfer money using Wise as different transfer types have different fees. According to the Wise website, the current fees are:

• fixed fee 0.66 AUD
• variable fee 0.45%
• another variable fee if you send more than 170,776 AUD in a month.

In addition to these fees, there may also be a Wise fee if you are sending currency to a bank outside of a country with that currency. This is because Wise will have to use the SWIFT system and there may be fees charged through this system. To learn more, read this article about the Swift Payment System

Is Wise cheaper than PayPal?

For international personal transactions, PayPal charges 5% with a minimum charge of 0.99 AUD and a maximum charge of 5.99 AUD. This fee will differ according to the amount of money you are sending. There is an additional 2.6% and a fixed fee if you are not converting currency. However, there are different fees if there is a currency conversion. PayPal charges 4% above the base exchange rate. For more details, see this information of fees at PayPal.

Wise offers better exchange rates than other money transfer providers, including PayPal because of the 4% that PayPal adds to the exchange rate.

Wise and PayPal both charge fees for their services, but it is difficult to say which one is cheaper since Wise has fees that vary depending on:

·        how much you are sending

·        how you are sending the money

·        where you are sending money from

·        whether you want a fast transfer or a cheaper transfer

For a more detailed comparison of PayPal and Wise, read this article at MoneyTransfers.com.

Is it the cheapest way to send money?

There are a number of different methods for sending money overseas. Bank transfers are probably the most expensive since they usually have high fees and do not give good exchange rates. Wise is definitely cheaper than using a bank.

There are also services with cash pick-up like Western Union and MoneyGram. They are fast, but their fees are quite high compared with Wise. The exchange rates that they use are not always good. Wise is cheaper than these services too.

You could use a money transfer specialist such as xe. These companies often have the best rates, but the speed of the transaction and the fees will change depending on whether you are using a debit card, credit card, or bank transfer to send money.

Wise is a Peer to Peer (P2P) transfer service. Currently, there are only two peer to peer transfer companies in Australia. The other one is called CurrencyFair. CurrencyFair gives a markup on the exchange rate, whereas Wise has variable fees which are based on the destination. Wise offers good exchange rates but has additional fees, so it is one of the cheapest ways to send money, but it is hard to say whether it is the cheapest.

Finder has more details about ways to send money overseas which you can read about here – Finder.

Choice also has an article regarding the cheapest ways to transfer money overseas, which you can read HERE.

Advantages of using Wise

• Sending money with Wise is fast as long as you hold the currency in your Wise account.
• You can hold a multi currency account with Wise, allowing you to take advantage of fluctuations in exchange rates.
• You can get a Wise card and use it instead of your ATM card when you travel, so that you don’t have to pay additional bank charges. It can be used at any ATM that accepts Mastercard. The Wise card can be added to Apple Pay and Google Pay just like any other ATM card.

Disadvantages of using Wise

• There are some countries where you can’t use your Wise card.
• Only about 50 currencies are supported by Wise.
• Some reviewers who have had problems have said that the customer service team are slow to respond and they are not very supportive.
• You may need to maintain a bank account to top up your Wise account.
• Wise does not offer interest on your currency balances.
• When you are using the Wise card, there are daily and monthly limits as well as a maximum single payment amount.

“If you’re shopping online, always choose to pay in the currency of the country you’re buying from. If you don’t have it in your account, the card will automatically convert to it from the account that’s cheapest for you. You’ll avoid Dynamic Currency Conversion fees.”

wise.com/au

FAQs about Wise:

Who owns Wise?

Wise has been a public company since 2021, but it was founded in 2011 by Taavet Hinrikus, who is now the Chairman, and Kristo Kaarmann who is the CEO. Its headquarters are in Shoreditch, England.

Is there a minimum and maximum money amount that can be transferred?

While Wise does not have maximum amounts that you can send, your bank may limit how much money you can send to your Wise account. The Wise card does have spending limits, and the Wise Help Centre has a number of useful articles including one that answers the question, What are my spending limits?

Can I transfer money from Wise to my bank account?

It is easy to withdraw money from Wise to your bank account, but you may find that your bank charges fees. You should check with your bank to find out how to minimise the fees.

How I use Wise

I use Wise as an alternative to PayPal for receiving commissions earned in USD from my website portfolio, as well as if I need to pay an outsourcer in USD. If I am just paying contractors within Australia, I just use my business bank account, PayPal, or pay contractors within UpWork or Freelancer.

Conclusion

Transferring different currencies is easy with Wise. Not only can you easily transfer currencies, but you can also hold a number of currencies in your Wise account and access them whenever you like. Wise is great for travellers and for digital nomads who receive money in different currencies. You can also get a Wise card which you can use in some stores and in ATMs that accept Mastercard. Wise is not a replacement for a regular bank account as you cannot deposit money with your Wise card and it does not offer interest on currency balances. If you deal with foreign currencies a lot, it is worth considering a Wise account.

You can check out some of my bank reviews here: CBA, ANZ, NAB, Westpac, ING, ME bank, UpBank, HSBC, UBank.

CaptainFI is not a financial advisor and this article is not financial advice. This website is reader-supported, which means we may be paid when you visit links to partner or featured sites, or by advertising on the site. For more information please read my Privacy Policy, Terms of Use, and Financial Disclaimer.