TransferWise, the UK-based foreign exchange platform, has announced that it will issue a debit card for international use. The company hopes that its low-fee model will generate a wide user base in a short time.
The globalized economy has made moving money internationally a critical issue. For businesses and individuals, the cost of international transfers can be a major hurdle. The new offering from TransferWise is a step toward a solution.
The main selling point for TransferWise is the low fees it is able to offer. By keeping rates low, the company is able to draw in a large client base anxious to save money. The trade-off is the lack of physical branches — but the company feels the tech age has replaced that necessity. Rates are as low as 10 percent of traditional legacy banking fees and 30 percent of other payment platforms like PayPal. The reduced rates point out just how profitable international transfers are for banks.
Debit card fees are no different, often just 10 percent of what legacy banks are charging. The services are available at any ATM — a far better solution than the sometimes limited services offered by banks.
Many have suggested that Bitcoin and other international non-governmental currencies solve this very problem better. Because these solutions connect users together on a peer-to-peer (P2P) level, they would effectively eliminate the need for such systems.
Furthermore, fees for most cryptocurrency transactions are generally less than the TransferWise fees.
Of course, the difficulty exists in moving from cryptocurrency into local fiat currency. Fees are often charged by exchanges, and, when combined with transaction fees, could exceed the TransferWise costs. Either solution would be less than legacy banks, however.
Do you think Bitcoin is a better solution than TransferWise, or will international regulations eventually make cryptocurrencies obsolete? Let us know in the comments below!