One of the apps I’ve recently come to like a lot is Transferwise.
I use it very often to move funds between my Indian, American and Canadian banks.
It’s convenient (transfers money within hours), cheap (charges way less than a bank) and very well solves the “pain of international transfer”.
I wondered how it operates in the back-end and learnt something cool.
It all started from a private arrangement between two friends.
T and K, both were friends from Estonia (currency: euro) who worked in UK (currency: pound). Every month, K used to send an international transfer to family back home (convert his pounds to euros) and lost 5% on fees in the process.
He thought there has to be a better way.
He asked T – “Yo T-dog, I’ll transfer my pounds to your UK account. Bless me with some euros in my Estonian account.”
That’s how K circumvented international transfer fees and Transferwise was born.
Transferwise is basically a crowdsourced currency exchange service that offers a cheaper alternative to established institutions.
Instead of using the inefficient SWIFT network, Transferwise routes payments by matching your transfer amount with other app users.