The Main FinTech Disruptors of International Money Transfers


The international money transfer market has experienced significant changes since the turn of the last century, primarily because of the Internet’s widespread coverage and its evolving technology. FinTech companies have entered different markets, taking many a bulls by the horn, and the field of cross-border remittances is no different. While some of the older players such as Western Union have managed to stay afloat, relatively new entrants are making the most of technological advances.

Examples in case include TransferWise and WorldFirst, both UK-based FinTech companies that specialize in overseas money transfers. Both companies serve individuals and businesses. Both accept customers from different parts of the world.

Until earlier this year, TransferWise and WorldFirst were not very different from some of the other prominent FinTech companies in the field such as Australia-based OFX, UK-based Currencies Direct, or Ireland-based CurrencyFair. However, it looks like these two companies are the ones willing to innovate and disrupt the status quo, while the rest remain comfortable being personal and business currency exchange providers, at least for now.

WorldFirst launched its World Account for online sellers and businesses recently, and this came not long after the launch of the similar TransferWise Borderless Account. Both accounts work in the same basic manner, although there are some differences.

Receiving Accounts

When businesses and online sellers receive international payments, they tend to lose some money through currency exchange fees, and they may also have to deal with less than favorable exchange rates. TransferWise and WorldFirst, through their new accounts, give their clients details of receiving accounts for different currencies, giving them the ability to receive payments like local businesses.

A receiving account essentially functions as a bank account, so you end up getting unique local bank account details from different countries. Consider this – you receive payments from your customers in the U.S., the UK, or Australia, and you need to pay a currency exchange fee before the money gets to your bank account. With a receiving account in the U.S., you will receive payments directly into your American account. This way, you avoid paying currency conversion fees.

The WorldFirst World Account comes with receiving accounts from:

  • The UK (GBP)
  • The U.S. (USD)
  • Europe (EUR)
  • Canada (CAD)
  • China (CNY)
  • Japan (JPY)

If you opt for the TransferWise Borderless Account, you will get receiving accounts from:

  • The UK (GBP)
  • The U.S. (USD)
  • Europe (EUR)
  • Australia (AUD)

Hold Multiple Currencies

Both accounts give you the ability to hold and manage funds in multiple currencies. With the World Account, you may choose from any of the six receiving account currencies on offer. The TransferWise Borderless Account goes a step further, letting you hold funds in up to 28 currencies. By getting to hold funds in multiple currency balances, you get to decide when you want to convert your money into your local currency.

Making Payments

These accounts let you make payments too, so paying overseas suppliers and employees may get more cost-efficient, especially if you pay using matching currency balances. This also leads to avoiding currency exchange fees.

The Cost Factor

While the receiving accounts come for free, both accounts charge fees in different ways. For example, when you make a same currency transfer using the World Account, you will need to pay a fee. With the TransferWise Borderless Account, you will need to pay a fee when you withdraw funds to your local bank account, and converting money comes with fees as well. The good thing is both companies offer transparent pricing structures and fare reasonably better than the competition.

Conclusion

With the launch of their new accounts for businesses and online sellers, TransferWise and WorldFirst have made big ripples in the realm of international money transfers. Is it only a matter of time before the competition joins the bandwagon, or is it satisfied with where existing business stands? Wait and watch appears to be the mantra.


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