TransferWise announces $280M investment(techcrunch.com) |
TransferWise announces $280M investment(techcrunch.com) |
My guess is TransferWise captured the UK<> Poland corridor and expanded from there.
This problem is a great one to solve because the customers have a real pain and one can be very targeted about capturing high-value corridors.
I wish TW the best. Lower fee, Lower friction, Lesser time == Great for customers!
Anyone looking to build a startup in this domain should start here: http://www.worldbank.org/en/topic/migrationremittancesdiaspo...
(This data is useful to understand origin<>destination of remittance flows; Its a greater than $150B market and a lot of untapped/Uncaptured areas; lots still left to do!)
Close! They started with UK <> Estonia, both co-founders are Estonians. IIRC in the very very early days, the whole settlement was done by users themselves over a Skype group.
These days, I convert through my broker, because they only charge me 0.2% for FX conversions.
Isn't that supposed to be a bad idea, specially for software based companies.
[1] Transferwise model: https://en.wikipedia.org/wiki/TransferWise#/media/File:Trans...
[2] The company started back in 2011. And select quotes from the article:
> A source close to TransferWise, which has been profitable since early 2017, tells me the new funding values the seven-year old company at $1.6 billion.
and,
> The company now serves over two million customers and offers 750 currency routes, seeing customers transfer more than £1 billion every month.
Six years to get profitable is not really a remarkable period for a VC-funded company.
1: It means requiring lots of capital to get set up, eg. because you need to aquire expensive assets to run your business. Buying your own hardware is more capital intensive that running cloud, even if the latter is possibly more expensive in the long run.
I wonder if brexit doesn't fall through what will it do to their single leg business.
And even if brexit fails, these people will become less and less dependent of their home country. (moving close family to the uk, paying off mortgages)
So yeah, my point is these untapped areas can dry off quick. (I'm talking a decade maybe)
Or there are stupid investors who don't want to invest into this no-brainer goldmine. :)
Germany + France + Italy + Spain have _a lot_ of people sending money to non-euro countries.
EDIT: this could dry up quickly anyway though. My bank charges idiotic amounts to change and trasnfer money, I doubt there is any technical reason they must, they can get to TW level trivially, it seems, they just don't care enough.
If they gain inroads in the US Mexican/Central American community, the UK-Eastern Europe segment will pale in significance.
I'd be interested in more information on this; what kinds of things have they done?
The Transferwise website was horrible. It gave error messages and kept telling me to fill out some field that didn't exist. After sending screenshots to their support team, they just sent me back links that didn't work.
After several back-and-forths with support they eventually fixed that issue, but then on a later step the website told me to upload "the documents" and gave an upload control. I carefully read every piece of text on the website, and nowhere did it explain what documents it was asking me to upload. It wouldn't let me proceed until I uploaded "the documents". I sent screenshots of all this to the support team and they didn't know what documents I was supposed to upload either.
Eventually support helped me fix that, and I got to a later step, where it asked me for the username and password I use to log into my bank. I am not comfortable providing this to anyone, so I refused. This was the last straw that finally led to me giving up at using Transferwise.
On the business side, TransferWise tells an interesting story about peer-to-peer currency exchange, but I think that's a media play. In practice most transfers will not immediately match with reverse flow. TransferWise have to keep a buffer of each currency and trade on the open market, just like the banks do. That in turn exposes them to currency risks, and it wouldn't surprise me if they lost a lot of money on 24 June 2016. As a VC funded startup they could eat that as a learning cost.
Which is fine! It does exactly what it says on the tin.
I think you're right they would eat a fairly big loss to avoid the bad press this would generate, but there is ultimately a limit.
It bugs me this aspect of their business model is never cited, so most people assume they are selling the same product as the banks. They're not: banks take the risk; TransferWise leave it with the customer.
Although I'm wondering if jumping on a bitcoin exchange like GDAX to go from USD -> bitcoin -> GBP would be even cheaper these days?
In 2000 I moved from Australia to the UK. Transferring money between AUD and GBP accounts was always a bit painful. The banks charged too much and took too long. I even signed up with a dedicated forex trading firm, but at the time they did not offer an online service, so there was still enough friction with phone/email to limit my use.
Three years ago I moved to Central Europe and acquired a EUR account. Soon after I discovered TransferWise and have used it regularly ever since. It works, it's cheap and it's fast.
They have no fees for transactions or currency changes (up to a quite high limit), as well with a lot more features (international prepaid MasterCard that charges no fees ever being my favourite one, and you can go to ATMs for free as well).
I've been a happy customer of them for quite some time and I have absolutely nothing bad to say about them, but the opposite.
TransferWise is literally saving me thousands of dollars per year. I can't thank them enough.
Because I'm an idiot, I'm still with RBC. They have a US subsidiary bank called "rbcbank" with no physical locations. Same terrible RBC service, but in America. They opened an account there for me. They offer very fast transfers between the US account and Canada account, but at the stupid rates they offer.
ALl my money transfers via TW now.
(disclaimer: I haven't used Revolut yet and thus can't vouch for them)
I've been trying to do a business (US) to business (EU) transfer using TransferWise for the last few days and it's been a nightmare. First they can't accept an ACH payment, then they cannot match the wire transfer to my business account, support doesn't answer, their automated "Action Required" emails have links to help topics that don't exist and their phone support can't do anything and asks you to email them instead, with the emails never receiving any kind of acknowledgement.
Maybe it works fine for sending your friend a fiver, for business use it's a total fail so far.
I've used transferwise to move dollars into euros the day before Brexit. They could not ship the money in time because of the overall transaction volume, and so they offered me the best of the rate I had locked in and the market rate after Brexit!
In my experience, Transferwise has been one of the most expensive ones if not the most expensive. Folks at remitly, ria almost always offer better rates compared to Transferwise (atleast on two occasions when I was sending it)
I would at some point want to give them a try though.
In comparison, transferwise makes it simpler and straight to your bank account.
The biggest issue with this remitters is they have hidden vetting processes and can't tell you why you don't meet their criteria because any smart fraudster would adapt accordingly. Unfortunately too many people get accidentally caught in those systems
The pain was figuring out the exact recipient bank account name in Japan but that's mainly Japan's fault.
I wonder if many people have had problems with TransferWise or think it's a bad product. I've never used it.
Their website says, give us your phone number and we'll send you a link to download the app. I'm thinking this is great, a direct APK download and no Google Play Store interference, they just want to protect the download link a bit. I enter my phone number.
I receive my SMS with the download link (http://revolut.com/get). Not being an https link is a bit shoddy from a financial service. I load this page in my phone's browser. It appears to just be the homepage again. I click the "Get the App" link again and........ I'm redirected to Google Play Store.
They've no chance of my custom now. N26 was the same. Why won't these organisations at least offer a direct APK download from their own infrastructure?
That's going to reduce the number of customers they get a lot more than a redirect to the Play Store.
happy customer of both to be honest and would recommend both happily
Really looking forward to trying them, but they're constraining their user base artificially at this time.
Result is it's very cheap to use abroad. :)
£200 free allowance per month, 3% charge for withdrawals thereafter everywhere outside the UK
From here: https://monzo.com/blog/2017/09/13/atm-fees-abroad/
I would have just transparently passed on whatever the ATM charges rather than this weird 3% fee.
Schwab's checking accounts are also great for this, the ATM card reimburses ATM fees and has no foreign transaction fee for pulling out cash.
In Europe, you have Revolut, N26 and Monzo which gives you a prepaid or debit MasterCard. Instead of the higher foreign transaction bank fees you will get either Mastercard’s or interbank rates, which is so much better than your traditional bank exchange rate.
I have tried to list some options here: https://globalmoneyapp.com
If 1% of all customers are fraudulent but 5% of customers with multi-country bank accounts are fraudulent, that might be enough to tip their risk/reward balance.
And I've dealt with this first hand. I have paypal accounts and legal bank accounts in multiple countries, and when I've tried to move money between them I get a call from customer service saying they blocked the transactions, and "you're not supposed to do that with paypal".
I think you are assuming that paypal operates on reason, but it rarely does.
So the question is if the margins are so low that they need a billion dollars to make a profit, what kind of scale do they need to be worth a billion dollars.
And it somehow it makes me question their business model as well. Sooner or later they will be tempted to raise fees and get more profitability.
A shipping company is evaluated on its ability to move containers, and nobody cares (well, the insurer does) if the containers are filled with iPhones or cardboard, as long as the customer pays the shipping fee.
Well, if we're assuming P/E=20 then they need to be heading for 50 million dollars in profit. Let's guess their "gross margin" from their spread is 2%, so they're currently at top-line revenue of 2 million dollars (and the same in costs). So if their costs were completely flat they'd need to grow to be processing 25 billion dollars of transfers to justify the valuation; in practice growth won't be completely free of costs so we're talking about a bit more, maybe 50 billion dollars. Does that sound vaguely plausible?
> And it somehow it makes me question their business model as well. Sooner or later they will be tempted to raise fees and get more profitability.
I doubt it; there are a lot of competitors in the same space. At the moment TransferWise has the name recognition, but that won't let them raise costs a lot.
And yes, they might increase their fees when they get bigger, still, if it's smaller than what the banks charge, it's a win
(However, since money movements are not balanced they still need to "move back" some of it so they can settle their accounts - but I guess they already have some bulk currency buyng/selling bank to do that)
If they start charging 1% tomorrow, up from 0.5%, I'm pretty sure I would reconsider if I were using them (and I have used them in the past, in the early days -- they're great).
But I started routing currency conversions through an account at my broker (Interactive Brokers), and I'm currently getting market rate + 0.2%. These 0.3%s add up fast if you're converting meaningful amounts of money and in comparison Transferwise seems expensive again. But of course it's still a long way from the 2.5-5% banks are charging.
It's also rather ridiculous that these services are accessible/usable/activated only via an installed app on my phone or tablet. Just make the service available via my web browser and the issue is resolved.
In the end I just don't bother with these services - N26, Monzo and now Revolut. I'll just stick with TransferWise.
You can open up a brokerage account at Interactive Brokers with a few thousand and use it to exchange FX. It's pretty accessible.
You never know when your credit cards might stop working.. (I've had my main card blocked randomly while travelling and it frankly was a pain)
Perhaps someone in the US using IB could check?
Can anyone comment on how Revolut compares? One pain point is that I always get asked if I want to pay in GBP or EUR, or even the cashier selects without asking me, in which case I get massively ripped off if they select GBP. With Revolut will the card look like a EUR card whilst travelling in the Eurozone?
Monzo (After 18th December): £200/month, 3% thereafter (https://monzo.com/blog/2017/10/17/atm-limits-announcement/)
Revolut: £200/month (£400 with Premium), 2% thereafter
Starling: No charge
Not sure about any of the other challenger banks, I've only used Monzo on a regular basis.
You're also allowed to withdraw roughly £200/month worth of cash (any supported currency) without any fees. Beyond that there is a charge, I can't remember how much offhand but it's not too crazy.
The one problem I had with the card was at their petrol stations. Most are self-service and require the card to be pre-authed before the fuel will start being pumped. Revolut doesn't support this so I had to use another card or find stations where I could pay in store.
There are plenty of cards in the UK that do not have a foreign transaction charge on purchases (nationwide, lloyds avios, for example).
It got to a point I had to open local bank accounts and do wire transfers from my UK bank account to local bank accounts and use the local debit card. I just couldn't get my TSB/Lloyds card to work anywhere except high end western shops like Apple Store.
Was your experience all within the inner city?
For sure many coffee shops and convenience stores accept card, but I definitely find myself having to pay cash quite often (just for instance, the laksa place on Hunter street).
It's even possible to get cards that doesn't charge a fee and gives you spot FX, even for cash withdrawal (Halifax Clarity in the UK is one). That leaves any fee the ATM might charge you, but if you can find one that doesn't, this is a supremely efficient way of getting cash abroad.
