The world really is getting smaller, and business no longer recognises boundaries. Consumers and SMEs transfer $6.5 trillion to $13 trillion every year across international borders.
Individuals and small businesses increasingly need to make international money transfers, however, to date they have experienced barriers, most notably the considerable hidden costs. On average, people face between $60 and $85 of extra charge when transferring $1000 abroad, says Taavet Hinrikus, founder of TransferWise, an app that offers an alternative to the traditional vehicles of tranferring funds from one country to another.
TransferWise customers can transfer from a debit card to an overseas account and have the money transferred within minutes, another significant advantage of disruptive technology over the traditional system that often left recipients of transfers having to wait days before being able to access the funds.
TransferWise is currently available in 35 countries, and has helped people transfer $1.5 billion across international borders in the past 12 months. It is aimed fundamentally at SMEs paying overseas workers, contractors and suppliers.
Hinrikus says that the big four Australian banks have a stranglehold on transfer rates, making our jurisdiction ripe for disruption. The rise of the mobile internet and the fact that the millennials do not have the same legacy relationship with their banks as previous generations, allied to the propensity to early tech adoption in Australia, is contributing to a big shift in the way money is transferred in and out of this country.
TransferWise’s recent report The Future of Finance reveals that:
- 85% of Australians prefer to use an app for banking, and
- 47% now expect to use a tech provider for 50% of their financial needs.
The company’s early customers in Australia were wine makers and dairy producers, and it is also used by migrants, both those coming to work in Australia and Australians moving to work overseas.
From a regional perspective, New Zealand, Japan and Singapore are already integrated into the TransferWise network. Hong Kong looks set to join soon and Taiwan, South Korea and mainland China are on the company’s radar.
Inside Small Business
