For a long time, sending money across borders meant dealing with banks. This has changed considerably over the last two decades, mainly because of the widespread use of the Internet. Now, the international funds transfer market is going through a change in dynamics again, with some prominent FinTech companies leading the way.
An example in case is UK-based TransferWise, a billion dollar unicorn that turned profitable six years after launch. Having leveraged technology in the past by using a peer-to-peer platform, it recently launched its Borderless Account. Close on the heels of TransferWise is World First, another UK-based international money transfer service provider. It has started accepting pre-registrations for its World Account.
How These Accounts Work
The TransferWise Borderless Account and the World First World Account offer the same basic functionalities. You may register as a small or mid-sized enterprise, a sole trader, or an online seller. Freelancers can sign up for the Borderless Account, although it’s not clear if this will be the case with the World Account.
Once you register, you’ll get local bank account details from the U.S., the UK, and Europe. This will give you a very cost-efficient way to receive payments in currencies that match these accounts. Account holders may also receive payments and hold currencies in several other currencies. Making payments to overseas bank accounts is set to get easier and more affordable, given that you may transfer funds from specific currency accounts.
When you convert funds from one currency to another, you’ll benefit through competitive exchange rates provided by both companies.
Is Payoneer in the Firing Line?
Payoneer offers such a service already. Once you sign up, you’ll get details for receiving accounts for Euros, British pounds, Japanese yen, and Chinese yuan through the Global Payment Service. While a significant percentage of Payoneer’s clientele includes non-US Amazon Affiliates, the Amazon Affiliate platform forces you to enter American banking details, and it offers no option to add a unique bank reference line.
Besides, you can’t use the traditional international money transfer provider platform as it leverages a shared U.S. dollar account and your money is routed internally where your customer number serves as the interbank transfer reference code.
TransferWise will be heating things further by adding a multi-currency travel debit card to its Borderless Account, which, without doubt, will give competition to Payoneer’s prepaid Mastercard. While the Payoneer prepaid Mastercard comes with a daily withdrawal limit of $500, it is unclear if the TransferWise card will have any such limit. For now, it looks like the cost of the TransferWise multi-currency service may be less than what you’ll end up spending with Payoneer.
The Borderless Account, in a way, is still in its nascent stage, given that TransferWise is currently offering receiving accounts in more than three currencies, and there’s no official word on when this number might increase. With the WorldFirst World Account, much will come to light only after the actual launch of the service.
This technology driven sector has witnessed a sea of change since the late 1990s, and it appears that more disruptions are on the way. With FinTech companies such as TransferWise receiving the kind of investments they are, expecting even better services in the near future is not farfetched. For now, businesses, online sellers, and the likes can benefit by getting tailor-made services offered by some of the leading international money transfer companies.
Disclosure: This is a sponsored post