The International Money Transfer Farce Must End

    Transferwise
    Source: Unity-and-diversity-world-council

    Here at Sanvada, we’re interested in the future of technology. We’re also interested in the future of business. One way business will change is with a massive increase in a trend that we’re already seeing: remote workers making their money online. 

    Companies want to find the best people to work for them, not just the best of the people who could travel to their offices for interview. Using international, remote workers gives companies more flexibility. Different time zones means they can have people working around the clock.

    There are obvious advantages for the remote workers too. Often referred to as freelancers, remote workers get to earn money wherever they may be. If they’re parents, they can work from home and take care of the kids at the same time. Maybe they’re moving around seeing the world, or maybe they would rather work in a coffee shop than sit in an office all day. 

    Whatever the motivation for freelancers or companies, there are multiple advantages to this phenomenon—which is effectively the 1099 economy or “gig economy” done on an international basis. However, the whole setup has one major downside. Banks and other financial organizations are creaming disproportionate amounts of money off the top.

    The problem doesn’t just affect freelancers, of course. It affects anyone who wants to send money abroad for any reason. To buy something, to pay a friend, to invest.

    How International Workers Lose Out

    International workers generally use a different currency than their employers pay in. If someone is a remote online worker living in France but doing freelance work for an American company, for example, the company will pay in dollars but the worker will want to change their money to euros. Every day of work they do and every wage payment they get is subject to the farce that it is the international money transfer system.

    The payment the freelancer receives is not what was agreed with their employer. It’s what was agreed, minus whatever fees they have to pay just to get their own money.

    Of course, companies that arrange international money transfers are businesses and need to be paid. They need to charge a fee. But the fee is not the problem. The big problem is the fact that these companies almost always set their own exchange rates. Most people know there will be a fee to be paid when they have to convert money to a different currency. But they don’t realize just how much money is lost due to arbitrary exchange rates. Most financial organizations, from major banks to PayPal, set exchange rates that land them a bigger chunk of change than seems proportionate for what is mostly an electronic transaction.

    Transferwise
    Source: Fuelle.jp

    Transferwise is Leading the Way Forward

    If all of these problems sound like they could be dismissed with the phrase “business is business,” consider the major, positive changes being implemented by a company called Transferwise

    Transferwise is doing something revolutionary simply by being open and up front. They convert and transfer money at the official exchange rate—the rate you see if you type any currency conversion into Google. They charge fees, which they clearly display, and they don’t do any currency conversions that would take extra money away from the user.

    This is in contrast to most organizations, who tell you how much money you’ll end up with after the conversion but never tell you how different that is to what you would have gotten with the official exchange rate (i.e. they never tell you how much they actually took, in total, after fees and conversion). 

    With most international banking companies, users end up paying for a service without knowing how much they actually paid, unless they want to do their own calculations by researching the official exchange rate. Most businesses would never be so unclear about what they are taking, but with international financial transactions no one seems to complain.

    Business is Business — Just Different 

    Transferwise is a business that needs to make money like any other. Yet they seem to be able to conduct their business in a transparent way by only taking clearly stated fees and doing no conversion. That proves the conversion farce that other organizations partake in goes beyond “business is business.” 

    Transferwise does have a moral crusader tinge to their marketing, but that’s probably deserved. A lot of companies these days see profitability in morality. But with Transferwise, their actions back up their words.

    Their stated mission is:

    1. Be radically transparent
    2. Charge as little as possible
    3. Make premium the new normal

    That approach has gained them six million customers and an impressive total of 5 billion euros (5.5 billion US dollars) transferred every month. Clearly, transparency works.

    Sanvada has no connection to Transferwise and we received no incentive to talk about the benefits of using their service. We simply believe that the future of business should include fairness and transparency, and we believe that Transferwise are one of the companies leading the way.

    SANVADA™ LLC is a BBB and VOSB Certified high-tech cloud consulting business that delivers products and services to consumers and businesses alike. Our products and services include: proprietary software solutions such as VPN and VPS capabilities, cyber security, and AWS Workspaces for developers. We offer data migration and automation as well as proof-of-concepts (PoC), and prototyping software development. We are the first and last when it comes to monitoring your data for any vulnerabilities or viruses. To learn more, visit us here!