Transferwise, My real world experience

Money, Tools & Tech| Views: 63

This was originally posted on Reddit by Brian Burton. It is reposted here with permission. 

A few months ago I asked in a previous thread about the best way to save money receiving payments from international clients. My second highest operational expense after rent is Paypal fees. Someone said Transferwise and I was a little incredulous, but it’s turned into a huge savings and wanted to share some real world experience because there are some surprise fees.

I have two accounts at my Italian bank, one for USD and one for EUR and I can move money between at the actual exchange rates. Here are the results of two different transactions and what they cost me.

USD to USD

  1. Received $2,551.14 USD to Transferwise
  2. Transferred to my USD bank account with a $3.30 Transferwise fee
  3. Barclays, a bank in the middle of the transaction charged a surprise $25 fee
  4. I received $2,526.14 USD

Total Fees: $28.30

Equivalent PayPal Fees including 3.5% exchange rate fee: ~$184.30

USD to EUR

  1. Received $1020 USD to Transferwise
  2. Converted in Transferwise to €900.06 with a $6.08 fee at the actual exchange rate
  3. Withdrew to my EUR bank account and paid a €0.60 Transferwise fee
  4. I received €899.46

Total Fees: €0.60 + $6.08

Equivalent PayPal Fees including 3.5% exchange rate fee: ~$73.69

Conclusion

What that means is that withdrawing $4,050 or more it’s better to do a USD to USD withdrawal because I will have a fixed $28.30 fee. For anything under that amount, it’s better to convert to Euros within Transferwise.

The hardest part has been convincing clients to pay me by ACH transfer because it’s slightly complicated to set up so for most one-off clients I go with PayPal because it’s easier.

The surprise $25 fee from Barclays is because the transfer goes through the SWIFT network and you may or may not see that fee depending on your bank’s location. Could be more, could be less.

So Transferwise rocks but it takes some hand holding to get clients comfortable paying with this method. PayPal is currently costing me on average 7.2243% of every transaction, which is huge. Transferwise is between 0.6% or less depending on the size of the transaction.

Thanks again to Brian Burton for his contribution. Check out his YouTube channel for insights about life as an expat in Italy. 

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