Written by: Andrew Allen
Edited by: Lillian Guevara-Castro
In a Nutshell: International money transfers allow individuals and businesses to move funds from one country to another. Wise stands out among its competitors by offering affordable international transfers and transparently communicating transfer fees. The company provides solutions to consumers and businesses. Wise’s brand presence is growing as the company seeks to expand its reach.
Entrepreneurs find inspiration to start their businesses from a myriad of sources. Some entrepreneurs start a company based on their desire to share something they are passionate about with the world. Others are motivated by the idea of running a business and being their own boss.
Entrepreneurs who’ve solved a problem they’ve encountered may be inspired to share their solution with the world in the form of a new business venture. Wise is a company founded by two men who discovered their options were limited when they sought to transfer money internationally. The men also noticed they incurred substantial fees for international money transfers.
We spoke with Ankita D’Mello, Wise’s Principal Product Manager, to learn how the company helps individuals and businesses complete money transfers affordably and efficiently.
D’Mello said banks charge fees for exchange rates that don’t align with market rates, which means a recipient of an international money transfer may receive less money from a transfer than expected. She said money transfers can go through multiple banks before reaching their destination, and each bank may impose a fee.
“Every time a transaction goes to a different bank, each bank can take a cut of the transfer,” D’Mello said. “So, the amount someone ultimately receives on the other side of a transfer could be a smidge of what you originally tried to transact. The model that our founders came up with aimed to allow people to send money between two currencies without having to do a traditional international transfer.”
Building the World’s Best Payment Infrastructure
D’Mello said Wise is a cross-border payments company, but none of the payments it facilitates actually cross borders. She said the company can align its customers’ transfers so they can move their money from one country to another without incurring international transfer fees.
For example, if a customer in the U.S. wants to transfer money to someone in the UK, and a customer in the UK wants to transfer money to someone in the U.S., Wise can enable both parties to accomplish their goal by linking their transactions.
“What we’re essentially trying to do is connect every single domestic rail possible in the middle,” D’Mello said. “We understand what rail a transfer is going to go through, and we ensure that we have enough money on the other side so we can pay out the transfer.”
D’Mello said Wise used to hold transfers until it could locate matching transfers in other countries, but it has evolved. She said the company uses an internal tool to monitor how much money it has in each of its global accounts, and Wise moves money when necessary to facilitate transactions.
“In some countries, such as India, the cash inflow is much larger than the cash outflow,” D’Mello said. “For that reason, we always have to fund our accounts in India, which means purchasing local Indian Rupees. And that does come at a cost. So, in countries where we don’t have a matching transfer, we purchase the liquidity.”
D’Mello said companies seeking to provide services similar to those offered by Wise have a long journey ahead of them. She said it could take an organization years to obtain the proper licenses and build its processes to connect to payment networks in countries worldwide.
“If you’re a startup entering this space, you’re not going to be able to set up your operations fully in six months or a year,” D’Mello said. “The ultimate goal for us is building the world’s best payment infrastructure by connecting all these systems together.”
Serving the Needs of Consumers and Businesses
D’Mello said Wise’s transparency differentiates it from its competitors. She said some of Wise’s competitors advertise their money transfer service as free but hide their transfer fees within the exchange rate. D’Mello said other competitors may offer customers one free transfer before charging them astronomical fees for subsequent transfers.
Wise doesn’t employ a subscription model or offer promotional pricing. D’Mello said Wise charges customers the mid-market exchange rate, and the company transparently communicates its fees. Wise details how much customers will pay for a transfer and how much the transfer’s recipient will receive.
“Our transparency gives our customers confidence,” D’Mello said. “We’ll tell them how long the transfer will take to complete and how much money will be available on the other side. And we hold ourselves accountable to that. We’re really fair and super consistent on the quality we provide to our customers, and I think that’s one of the things they respect us for.”
D’Mello said Wise charges customers less than the industry average for transfers. The company’s fees vary across the regions where it offers its services. D’Mello said Wise may charge less in areas where it is more established and slightly more in locations where the company has recently launched its services.
Wise has customers in many markets around the world. D’Mello said the company serves approximately 7 million active customers and works with personal and business customers. She said Wise’s typical consumer customers are individuals who work in one country and send money to their family in their home country. She said she used Wise’s services when she relocated to the U.S. from Singapore to help her establish her life in a new country.
D’Mello said Wise’s solutions help businesses reach their goals.
“We offer services that suit the needs of small and medium-sized businesses and allow them to hold and manage money in up to 40 currencies,” D’Mello said. “Rather than maintaining bank accounts in different countries, businesses can use Wise as a sort of intersection between wherever they offer their services and where they are based.”
Growing a Brand Presence in New Markets
D’Mello said customers use Wise’s tools more in areas where the company enjoys significant brand recognition, such as Europe, Australia, New Zealand, and Singapore. She said the company uses different strategies to build its brand presence in countries where Wise isn’t well known. Even long-standing international companies such as McDonald’s employ unique techniques to appeal to customers in distinct markets, D’Mello said.
“As a global company, we listen to customer feedback, utilize our market expertise, and localize our offerings so they fit better within our different markets,” D’Mello said.
D’Mello said Wise spends significant time working on policy in the U.S. Wise engages with U.S. regulators and advocates on a range of topics, including fee transparency and direct access to local payment rails, which is currently reserved for banks only. For example, there’s been recent guidance from the CFPB seeking to prevent financial institutions for advertising “no fee” or “fee-free” services when they include a markup on the exchange rate, which is something Wise advocated for in its Junk Fees campaign.
Though Wise began as a company to help people efficiently transfer money at an affordable price, D’Mello said it now offers its customers the ability to hold and manage multiple currencies through its global account, and spend internationally using a Wise debit card.
“Depending on your use case, Wise offers something to everyone,” D’Mello said.
