Moving beyond simply sending money from one country to another, the company is launching its “Borderless” account, a new online banking account aimed at businesses, sole traders and freelancers who need to conduct business across borders and in multiple currencies, and who want to take advantage of TransferWise’s low exchange rate when doing so.
The new service is rolling out first in the U.K. and Europe, with a “global rollout” planned for later in 2017. There are also plans to launch a version for consumers later this year, and, unsurprisingly, a TransferWise debit card. The latter is a notable omission for any product that wants to provide the functionality of a business or consumer bank account, and even potentially replace it.
TransferWise’s main target here is undoubtedly the incumbent banks, and initially the rather neglected SME or sole trader market
With that said, let’s not get too distracted, too prematurely: TransferWise’s main target here is undoubtedly the incumbent banks, and initially the rather neglected SME or sole trader market, for which the need to receive and make payments in multiple currencies and to and from different countries is increasingly a requirement.
If you have ever tried to open a startup business bank account in the U.K. and requested a second currency account, such as one for Euros, you’ll know this pain-point all too well.
The TransferWise Borderless account offers account numbers for the U.K., Europe and the U.S., meaning that for most functionality it is just like having a local bank account in those supported countries. Not only should this increase the speed of receiving and making payments, since TransferWise is able to operate on local banking rails, but it significantly reduces the cost too.
That’s because if you receive money into your TransferWise country account in the matching currency, you’re not paying an exchange rate fee at all since no currency exchange takes place.
Meanwhile, if you move money from one TransferWise country account to another or any of the 15 internal currencies supported, or if you make an international money transfer, you will only ever be charged the standard TransferWise ‘mid-market’ exchange rate and commission, with no minimum fee, which works out much more competitive than incumbent banks.
There’s also a small charge to make external payments locally from your Borderless account so that TransferWise can cover its own costs, but this is inline with standard business banking charges. Notably, there are no set up fees or monthly charges and it costs nothing to receive payments.
As a freelancer with a U.S. contract, I’m exactly the type of customer TransferWise is gunning for. Whenever I get paid in Dollars to my U.K.-based Sterling account, I can attest that Barclays does a nice bit of business on the high exchange rate alone.
In a call with Joe Cross, General Manager USA at TransferWise, he told me that the company had been privately testing the new Borderless account with a few hundred customers in private beta.
Aside from freelancers or solo traders, he gave the example of a creative agency that has been using the new product. The U.K. business bills for some of its work in euros and also has contractors paid in euros, so it makes sense to hold a portion of its income in the same currency and to not convert it unnecessarily. When or if it is converted to Sterling, however, the agency can benefit from the TransferWise exchange rate and transparent charges.