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TransferWise is targeting “expats, second homeowners, freelancers and more” with a new bank account that allows users to make transactions in 28 different currencies.
The account is free to set up, and does not charge a monthly fee, or a fee for receiving cash, either; although there will be a charge for converting across into different currencies, the FinTech “Unicorn” money transfer company says on its website.
Anyone opening a borderless account will instantaneously receive a British bank account number and sort code, a European IBAN, and an Australian account number and BSB code, whilst TransferWise say that they are working on offering US bank account details, but cannot do so yet due to “local regulations and partner requirements”.
The account lets users hold money in any one of the 28 currencies; useful when you are preparing to make a series of overseas payments; and it is also possible to send money to more than 50 different currencies, listed on the TransferWise site.
Fees for switching between major currencies are also quoted: 0.85% for USD to GBP, 1% for USD to EUR, 0.5% for EUR to USD, and 0.7% for AUD to USD. Money can be added to the borderless bank account either via bank transfer, which is free, or by credit or debit card, which incurs a small fee.
TransferWise says that security is provided by the Financial Crimes Enforcement Network (FinCEN), which covers Alabama and Alaska in the US, and that in all other states transactions are provided by its partner bank, Community Federal Savings Bank, which is supervised by the Office of the Comptroller of Currency.
The company hopes to capitalise on the fact that it can be a bureaucratic headache attempting to open a bank account in a foreign country, especially without a local address, and whilst multi-currency bank accounts are nothing new, the company believes that its cheaper fees and free services will give it the edge over its competitors, in much the same way as its core money transfer business has done.
Although, as fintech expert Trevor Clawson argues in a recent article, the borderless account may not attract casual users of overseas money transfer services, such as holidaymakers whose losses on exchange rate fluctuations are extremely minor, small businesses, owners of second homes and so-called “digital nomads”, modern day overseas workers, could benefit significantly from the savings permitted by the account.
They would have the opportunity to manage their overseas transfers ahead of time, switching between currencies whilst keeping track of their spending in one place, and hedge against future currency movements.
The competition is fierce, however, as Clawson also points out. The likes of Revolut, WorldFirst, and also MoneyCorp, are offering similar access to many different currencies within one bank account. According to WorldFirst, small and medium-sized companies carry out foreign-exchange trades to an average value of £76bn every month.
The size of the market will be very attractive to the emerging fintech firms TransferWise, Revolut, and others besides, such as World Remit, who are looking to find the next generation of services that will help them compete with major market players such as Ria Money Transfer, Western Union, and the big banks.
TransferWise says that currently, its platform helps move an average of $1.5 billion of international money transfers, every month.
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