Transfer Wise

TransferWise is a UK-based peer-to-peer money transfer service launched in January 2011 by Kristo Käärmann and Taavet Hinrikus with headquarters in London. The commission charged is usually 0.5% and money is converted at the interbank rate, in contrast to the company setting a premium rate.

In its first year, transactions through TransferWise amounted to 10 million EUR. There is full support for 17 currencies and six more operate on a 'send only' basis.

In a peer-to-peer business model, money a user is sending from their own country is rather swapped with money someone else in the same country is receiving.

The creation of TransferWise was inspired by the personal experiences of Taavet Hinrikus, Skype's first employee, and financial consultant Kristo Käärmann. As Estonians working between their native country and the UK, they felt the "pain of international money transfer" due to bank charges on the amounts they needed to convert from euros to pounds and vice versa. In the words of Hinrikus, "I was losing five per cent of the money each time I moved it. At the same time my co-founder Kristo Käärmann (also from Estonia) was starting to get paid in the UK and was losing a lot of money transferring cash back home to pay for a mortgage there."

It inspired them to make a private arrangement, with Hinrikus – who was paid in euros – putting this currency directly into Käärmann's Estonian account so he could pay his mortgage without having to convert pounds to euros, while Käärmann returned the favour by putting pounds into Hinrkus' UK account. This inspired them to develop a crowdsourced currency exchange service to offer a cheaper alternative to established institutions.

The company debuted in Jan 2011 as CommonFX, supposed to represent 'common people' and 'foreign exchange.' The founders considered it to be well understood by their users, although the opposite was the case:

"But once we got to the group of people, who were female, blonde and good looking enough to have 5000 male friends on their facebook profile, then we only saw the depth of cosmos in their eyes when they heard the name CommonFX. They were not quite sure whether we have an electro band or design kitchen appliances."

'Transferwise' was then chosen to imply the 'wisdom' of using it. In Feb 2012, their approval with the UK financial regulator was finalised. In April 2013, they stopped letting users purchase Bitcoins, blaming pressure from other market players. In February 2014, 23 currencies were convertible with seventeen bothway. Some new countries had stricter rules - users in China are verified by phone, for example.