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Trip Report Transferwise: My latest experience in currency exchange

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I am listing this as a trip report because if the topic comes up again, I can simply refer to my trip report to give my personal experience.

Over the years I’ve had to transfer money to France to pay for the cost of maintaining a house (repairs, taxes, utility bills). During that entire time, I used www.xe.com as a service, which was much cheaper than what Bank of America (my U.S. bank) would charge for an electronic transfer, and used my credit union account for the U.S. funds.

We sold the house and needed to transfer the considerable proceeds to the States. This is not as simple as sending from the States to Europe because the French bank (Crédit Agricole) said that it had to send the money on a bank to bank transfer and I could not do it myself as I did with the electronic transfers through xe.com (U.S. to Crédit Agricole worked fine). The result is that I would have to pay high fees because the French bank would charge fees, and the U.S. bank would also charge fees, or so I was told when I inquired.

Someone on this board mentioned www.Transferwise.com, and I decided to check it out. The whole system is different in that there is no actual transfer of money from one currency to the other. It took quite a few e-mails to figure out how I could do this, but essentially I requested a free transfer (there was a local charge of €3.80) of an given amount from my French bank to a bank in Estonia, and once that money was deposited in that bank, Transferwise had a deposit made in my local Credit Union account that did not involve an international transaction. I know this because I provided only local transfer, i.e. within the U.S., information from the credit union. There were limits to this type of transfer, which, at the going rate of exchange, was €30,000. For a higher amount I had to use a bank that did accept international transfers, but I did not want to use my American bank for that type of transaction, and I did not want the Crédit Agricole to initiate that type of transfer. The point was that a transfer within the Euro zone is done at no cost except the local charge.

I carried out a test transfer, discovered that it takes a while. First I made a request with Transferwise to transfer a certain amount. I then received instantly a notice from Transferwise that it was waiting for my deposit, and that notice included the banking information needed to make the deposit, which information I e-mailed to the Crédit Agricole, addressed À qui de droit because I had no name to use as a contact. The test transfer took more than a week, but then the agent at the local Crédit Agricole branch dealing with foreign customers established a direct contact and through her the process was reduced to a few days. Unlike xe.com where an electronic transfer takes place the same day, there is a lag time built in when using Transferwise; that is its one drawback. BTW Transferwise was extremely helpful in telling me how to establish this system; apparently it can be seamless when taking funds from the UK or Germany.

The cost: the exchange rate used is the daily one, plus or minus 3% but I have not seen such rapid changes between the euro and the dollar, and 1/2 a percent fee. Transferwise will give an estimate of how much one saves when using its system compared to normal bank transfers.

I do not know how secure one would consider the system when making a down payment on vacation housing. On the other hand, I transferred money directly into an account for my apartment rental in Amsterdam, feeling secure because it took several e-mails to get the proper bank information for a xe.com transaction. I would consider Transferwise to be as reliable and as secure. Where it would be definitely useful and secure would be in transferring money to pay for foreign traffic violations where it cannot be done with a credit card, or to transfer money as I was doing with xe.com, from my U.S. account to my French account or to a service provider such as the company that replaced my roof. My understanding is that Transferwise will accept a credit card payment from the U.S. My suspicion is that the Transferwise fee will be more than 0.5% when transferring money below a certain threshold, but that it still would be much less than what has been reported to be as doubling the cost when it comes to paying for traffic violations.

I used the example of U.S. dollars to euros because I am was involved with transfers between these two currencies, but Transferwise advertises that it deals with 17 different currencies.

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