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TransferWise Review: Transfer Money Abroad With Lower Fees

What Is Transferwise?

Transferwise is a relatively new company that has revolutionized the way that money can be transferred abroad. They have created an easy and intuitive website that connects users around the world that are in need of exchanging currencies.

The software connects these people seamlessly and facilitates easy transfers, while allowing each user to get the current mid-market exchange rate for their currency.

Prior to Transferwise, you were options for transferring money were limited and you were often at the mercy of your bank. When transferring with a bank, you have no other choice but to agree to your banks disadvantageous pricing terms.

Transferwise Fees?

Although Transferwise makes transferring money abroad cheaper by giving a better exchange rate, compared to conventional currency exchanges; it still charges a percentage fee per transaction.

The fee percentage varies depending on the currencies that are being exchanged.  In addition, there is a “minimum fee” that is charged per transaction.

Let’s look at an example to better understand the fee structure.


In this example I am looking to exchange money from USD to VND (Vietnamese Currency). Based on the screenshot above, I will have to pay 1.5% +$0.o2 on the total amount that I transfer. Therefore, if I transfer $500 USD then I will have to pay (.015 +$0.02 x 500 = $7.52 USD).

Because of this pricing structure, I pay more money as the transnational amount increases. If I wanted to exchange $10,000 USD then I would pay (.015 + $0.02 X 10,000 =$150.02).

***It is important to note that there is a minimum fee of $4.17 USD.  So even if 1.5% of your total transfer amount is less than $4.17, you will still get charged that amount.

How Do I Calculate The Minimum Transfer Amount Total Based on The Minimum Charge Fee?

In this example, since the minimum fee is $4.17; you need to calculate, $4.17 is 1.5% of what amount.

To calculate this you must divide 4.17/.015 (transfer percentage) which is $278. Therefore, you are paying a higher cost by exchanging anything less than $278 USD in this particular example.***

Based on this example,  Transferwise appears to be a lot of money to pay to initiate this exchange; you must keep in mind that you will get the mid-market rate for this exchange.

Most traditional currency exchanges will say that they do not charge a fee but you end up paying more overall because you get a bad exchange rate.

What is a bad exchange rate?

This means that the exchange rate quote you get is less than the mid-market rate. The difference in the exchange rate of what you get in relation to the actual mid-market rate is how these institutions make money.

Exchange Rate Example:

Let’s say that I want to exchange money. Specifically, I want to exchange $1 USD to the equivalent amount in Vietnamese Currency (VND) at the mid-market rate. According to Google Finance, today Feb 17th 2017 at 4:20am GMT $1 USD is equivalent to 22,770 VND.


Now, let’s say that you go to a traditional currency exchange and ask for a quote at the very same time for the same two currencies and they give a quote of 21,770 VND per $1 USD.

This means that the currency exchange rate is 1,000 VND less (22,770 – 21,770 = 1,000) than the mid-market rate per dollar exchanged as quoted above. This can best be demonstrated as a percentage 22,770 / 21,770 = 1.046 or 4.6%.)

***Let’s not forget that Transferwise charges 1.5% for the same transaction and you get the mid-market rate at the time of the transaction.***

Therefore, if you used this currency exchange service provider and wanted to exchange $500 USD then you would get 500 x 21,700 = 10,850,000 VND. Compared to Transferwise which charges the mid-market rate, which today was 22,770.

As part of the transaction with Transferwise, I will have to pay 1.5% of the transaction as a fee. I will start by accounting for this cost in this calculation. $500 x 0.015  = $7.5 USD.

I will now subtract the fee as calculated above from the amount that I am exchanging ($500 – $7.50 = $492.50).  Therefore, $492.50 x 22,770 (mid-market exchange rate) = 11,214,225 VND .

Transferwise Vs Currency Exchange Summary

$500 USD Converted to VND

Currency Converter Service Provider Rate = 21,770 VND per Dollar

Transferwise Rate = Mid-Market Rate = 22,770 VND per Dollar

Additional Fees:

Currency Converter Service Provider = $0

Transferwise Fee = 1.5% + $0.02

Total VND Received For $500 USD

Currency Exchange = 10,850,000 VND

Transferwise = 11,214, 225 VND

Difference between currency exchange providers = 11,214,225 – 10,850,000 = 364,225 VND

364,225 (VND) x 22,770 (mid-market rate) = $15.99 USD


In conclusion, the currency exchange cost me $15.99 USD more than Transferwise.

***Keep in mind that this is just an example and actually cost differences will vary.***

How Do I Calculate The Mid-Market Exchange Rate?

There are many resources that can help you calculate the mid-market exchange including Google Finance and XE. XE also has a host of applications that can work on different devices for easy reference.

Transferwise Vs Paypal

While researching this post, I found that this was a common question that was being searched for in search engines such as Google. It is hard to make a comparison because each company has different service offerings, although there is currency exchange transactions that occur on each platform.

Transferwise’s core service is to: build a better way of transferring money internationally

They do this by connecting people globally that want to exchange currencies. Furthermore, they help facilitate those transactions while offering users the mid-market currency exchange rate and charging a relatively small fee.

Whereas Paypal’s core mission is: PayPal is an online payment service that enables businesses of all sizes, as well as individuals, to accept bank or credit card payments for the items they sell. When a customer pays for his or her purchases, PayPal processes the payment and transfers the funds to the seller’s PayPal account.

Even though each company has a different business mission statement, their business monetization model is the same, they take a percentage of every transaction.

Paypal Fees

This section will only cover Paypal fees in relation to currency exchange, as there would be too much to cover otherwise. Paypal is commonly used to pay for services or goods and to receive payments.

The information I am about to present is quoted from Paypal’s User Agreement. Please refer to this agreement for any questions that you may have regarding Paypal as it may change at any time.

Normally, your Paypal balance will all be in a default currency. But it is possible to hold different currencies in your account.

Paypals User Agreement States:

Your PayPal balance may be held in any of the currencies supported by PayPal, and you may hold a PayPal balance in more than one of these currencies at the same time.  You are responsible for all risks associated with maintaining a PayPal balance in multiple currencies.  You may not manage multiple currencies for speculative trading purposes.

Paypal Currency Conversion:

If PayPal converts the currency, we will use an exchange rate set by our bank (adjusted from time to time based on market conditions) to perform the conversion, and you’ll be charged an additional 2.5% of the amount of the transaction as a currency conversion “spread.”

$500 USD to Euro Conversion Test

I tested the currency conversion cost in Paypal and Transferwise comparatively. I checked to see how many euros I would get for $500 USD.

If I converted with Paypal then I would get 455.75 Euros whereas with Transferwise I would receive 465.07 Euros. Therefore, Transferwise came out as the clear winner, by a difference of 11.32 additional euros in my pocket.


How To Transfer Money With Transferwise?

Step 1) Create An Account

Start by going to and click, “Sign-Up.”


Step 2)

Create Login Information, you will be prompted for an email account and password similarly to most other web based software applications. After you enter your information, you will need to confirm your account by clicking a confirmation link in your email.



Step 3)

Now that you have confirmed your email, you can start sending and receiving money!


Want To Send More Than The Equivalent Of 1,000 Euros?

If you want to send over 1,000 Euros, then you will first need to verify your account. You can do this after you have created your account and login to your Transferwise dashboard. At the bottom, there is a “Start I.D. Check” button. Click that to start verification.




Transferwise works with a 3rd party provider called, NetVerify, to verify who you are. You will first need to indicate which country you are from and following which forms of identification you can use. As an American, they accept either a Passport, Identity Card or Driver’s License.




Take a picture of your I.D. now so you can upload it to confirm your identity. It takes 1-2 days to complete this process so I would suggest that you do it as soon as you open an account so that you do not delay the transfer of money in the future.


Since its inception, Tranferwise has been revolutionizing the banking industry. Making money transfers easier than ever! I have been happy while using their service and I am sure that you will too!


Nathan currently lives abroad as an American expat and is based in Hanoi, Vietnam. He enjoys learning new languages, meeting new people and exploring new places. Nathan has been living abroad since 2014 and likes to stay busy plotting his next trip.

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