TransferWise introduces peer to peer money transfer options to Australians
London based foreign exchange company TransferWise has just launched “peer to peer” (P2P) international money transfers for Australians with a promise of low fees to rival the big banks.
This jump into the Aussie market could potentially make a splash, as industry researcher TNS calculated that the fees charged by TransferWise are around one-tenth of traditional bank transfer fees. For example, a Commonwealth Bank customer would fork out around AU$66 to transfer $1000 to the United States. In comparison, TransferWise would only charge $6.50.
But it might take Australians a bit of coaxing, as surveys and research conducted by VISA showed the country is a little slow on the uptake, dubbing P2P services a “largely untapped opportunity”.
As a recent report released by VISA said, market analysts at Ovum cited lack of awareness as one of the major factors that impacted on customers not using P2P services.
TransferWise’s entrance into the Australian market could be the next game changer because of its cost efficiency. What makes this peer to peer service by TransferWise so affordable, is that the funds being “transferred” never actually leave the country of origin.
TransferWise explained how its peer to peer system worked by using a hypothetical scenario: An Australian customer wishing to send funds to the US will place an order, and rather than transferring the money, TransferWise will find the money from a client in the US to complete the order. An exchange currency rate is used for the calculation, and no markup is applied except for a small transaction fee.
Co-founder of the company, Taavet Hinrikus said in a statement that TransferWise had plenty of liquidity to complete most orders. But on less busy routes, TransferWise partnered up with the Macquarie Bank to supply transactions.
Transferwise will offer 50 routes to customers in Australia initially, with the intention of tapping into the Pacific and China.
Do you need to send money overseas? Head over to our international money transfers hub where we compare a range of service providers including peer-to-peer company TransferWise.