If you’ve just heard about Wise and you can’t help wondering “Is Wise legit?” You may be interested to know the company is fully regulated by the F.C.A (Financial Conduct Authority). Users are verified for protection against money laundering and fraud in the same way as big banks and major financial institutions.
What is Wise?
Wise is an online money transfer service founded in Britain back in January 2011.
The company offers multi-currency accounts and over 750 currency routes GBP, USD, EUR, AUD, and CAD.
According to their annual report, the company has over 6 million customers that transfer approx. $4 billion every single month.
The idea is to match transfers with other people, keep commission rates low, and use the inter-bank mid-exchange rate (as found on Reuters or Google). This differs from traditional currency transfers which are usually done using the buy and sell rates (with the broker pocketing the difference between the two.)
Wise is available in the following languages: English, Polish, French, Spanish, Italian, Hungarian, Portuguese, Chinese, German, and Russian.
This new approach to transferring cash allows customers to send and receive money safely with much lower fees than the majority of high-street banks. In fact, in some cases, using this service can be up to eight times cheaper than using a regular bank.
The system works by bypassing expensive international payments by using two local transfers instead of one international transaction. For example, if you wanted to convert your pounds into dollars, you simply pay the dollars into Wise’s UK-based account and the equivalent amount is then sent from Wise’s dollar account to the recipient.
Is Wise legit and safe to use?
One of the hottest startups in the financial world at the moment, Wise is widely considered a market leader in the Fintech space with a valuation of around $3.5 Billion, making it the most valuable financial technology startup in Europe.
Wise has gone from strength to strength growing at a blistering pace since its inception back in 2010 and subsequent launch in 2011.
The company currently has 1900 employees that work from the headquarters in London, United Kingdom, and has 12 office locations in 11 different countries across 4 continents.
The award-winning Wise was conceived by two Estonian Fintech innovators named Taavet Hinrikus and Kristo Käärmann.
A huge leap in the company’s success can be attributed to the mega-investments of PayPal’s co-founder, Peter Thiel, and Virgin’s founder Richard Branson.
The company has a sound financial structure, is built on a solid business model, and is extremely transparent in all of its business dealings.
Wise is certainly not a scam, and we suggest that the excellent rates that are offered are sometimes viewed with suspicion but rest assured, TransferWise is one of the most credible companies in the fintech industry.
Wise pros and cons
- Excellent rates on transfers
- Low fees
- Easy to use with no hidden fees
- Very secure platform
- Keep accounts in multiple currencies free of charge
- Suitable for business and personal use
- Not available in every language (yet)
- Transfers take between 1 and 3 days
- No discount for high volumes
- No cheque services
- Lack of FX options
Are Wise accounts covered by a financial protection scheme?
Wise doesn’t protect your money in financial protection schemes like traditional banks because it isn’t a bank. As Wise does not operate as a bank, they don’t lend your money or get involved with making high-risk investments and as such, they don’t use a financial protection scheme.
Traditional banks must put their customers’ money in a financial protection scheme because they make their profits by lending out and subsequently and risking their customers’ money. In this case, they need insurance in the form of a financial protection scheme in the event that something goes wrong.
Instead, Wise uses a system called “safeguarding” to protect its customers’ funds. Safeguarding means that the monies held in customers’ accounts are separate from the accounts that the company uses to run its business. This means that if anything happened to the company, all of the customers’ money would be completely safe.
Where is the money kept?
Customers’ money is held by established financial institutions such as JP Morgan Chase and Barclays. The precise location will depend on the address of the account holder, for example, if you have a UK address, funds are held by Barclays Bank and/or other financial institutions in the EEA.
What would happen if Wise became bankrupt?
Because customers’ cash is kept separately from the accounts used to run the company, customers would get their money back.
But it should be noted that if one of the banks that Wise uses to keep the money (like Barclays or JP Morgan Chase), then customers’ funds wouldn’t be protected and as such, the funds would be lost.
Who is Wise regulated by?
Wise has a first-class reputation for following the strict rules set by regulators in each of the countries in which they operate. These regulators include the Financial Conduct Authority (FCA) in the UK / EEA, the Financial Crimes Enforcement Network (FinCEN) in the United States, and many other regulators around the world.
The address of the account holder determines the regulator each customer is covered by.
How to use Wise
Transferring money has never been so easy. Just go to the Wise website, input your details along with the recipient’s, and then just type in how much money you want to transfer.
You can use your debit card details or you can send the money to Wise from your bank account. Funds are then sent straight to the recipient’s bank account even if they don’t have their own Wise account.
A confirmation email is sent out as soon as the money has been received and another email goes out when the funds have been paid to the recipient.
Wise is very proud that most transfers are completed on the same day but it should be noted that most banks take 3-7 working days to complete an international payment.
To get a free international transfer of up to GBP500, click this link.
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What is the Wise Borderless Account and how does it work?
The Wise borderless account can hold your hard-earned money in over 40 currencies. You can make and receive payments very easily from the account and if you are a European personal user, you can apply for a free debit card so that you can spend your dough in any currency as you travel the world.
The borderless account is particularly attractive to people that regularly deal with different currencies. It has proved very popular with folks that travel regularly, live/work/study overseas, and also for ex-pats/retirees. The account is also a wise choice for freelancers/digital nomads that are paid in currencies other than their local currency.
Key benefits of the Wise account
- Cheap international money transfers (up to 8X cheaper than regular banks)
- Keep your money in 40+ currencies
- Receive payments in GBP, EUR, USD & AUD with zero receiving fees
- Local bank details for GBP, EUR, USD, and AUD without the need for proof of address in those countries
- A free contactless debit card that uses the real exchange rates as you can see on search engines
- Free to open
- The whole process is done online
- No minimum balance to apply for Wise debit Mastercard
- Transfer your funds between multiple currencies for a low fee (0.35pc – 2pc of the transaction amount)
- Mid-market exchange rates for all currency conversions
With incredibly low rates, transparent charges, and a great onboarding process, Wise has quickly become one of the biggest payment providers in the world.
This exciting money transfer service “startup” is already moving billions of dollars across the world and competing with financial goliaths such as Western Union and Moneycorp.
We hope that we have answered your concerns about whether wise is legit. If you would like to find out more, you can click this link to visit their site.
Thanks to EdMercer for the image on how the peer-to-peer money transfer work shared under CC BY-SA 4.0, Link.