How Does Wise Work? How Do They Offer Unbeatable Rates?

Last Updated on July, 2024

Wise is an easy way to transfer money all across the globe. And the best part is that you won’t have to bear much cost either. 

It’s a better, fairer, and cheaper system for those who do business and transfer money across borders. 

But how does Wise (formerly TransferWise) work, we hear you ask? 

In this guide, we will dive deeper into the process and discover how you get a “fairer, cheaper” exchange rate (the ones that banks and corporations get).

So carry on reading to find out all about it. 

Quick Summary

Through a step-by-step guide, customers can easily create a free Wise account, check exchange rates and fees, choose a destination, and pay for their transfer.

Wise is a cost-effective and efficient way to transfer money internationally.

Wise offers transparent fees and a mid-market exchange rate, saving customers money compared to traditional banks and money transfer services.

How Does Wise Money Transfer Work? A Step-by-Step Guide

a screenshot of the wise homepage

Here are the steps that you need to follow when using Wise to send you money, 

Step 1 – Checking Wise Mid Market Exchange Rate and Fees

You can use the fee and exchange rate calculator on the Wise website homepage. Just enter the amount you want to send and the currency. 

You won’t have to log into your account to check their competitive exchange rates and fees upfront. It ensures that you always get the best deal with Wise. 

Wise uses the real exchange rate, which is the rate that you will get from independent resources, including XE, Yahoo Finance, and Google. These fees can be as low as 0.35 percent.

A price comparison tool is available for some currencies, enabling you to make an informed decision beforehand.

Step 2 – Creating a Wise Account Free

With Wise, you can create a free account without any extra charges. But the best part is that your recipient doesn’t need a Wise account to receive money internationally. 

You can add your business to Wise if you are a business owner. However, you can also sign up as an individual using your browser or Wise apps for both iOS and Android

Based on the country from where you’re sending money, Wise might have to verify your account. But this verification won’t take long (1 to 3 days).

Step 3 – Choosing Your Destination to Transfer Money Internationally:

Before you send your money, you will have to enter the destination where the money is going, along with the local bank details of your receiver. 

You can send money internationally to a business, someone else, or yourself based on the destination country. Your recipient will only need a bank account (you don’t need a Wise account to receive money; ain’t that cool!).

Step 4 – Paying for Your Local/International Money Transfers

You can pay using your debit or credit card or make a local bank transfer using a Wise account in your country. 

Moreover, you don’t need to link your bank account with your Wise (unless you’re in the US or Canada). 

You might also have other payment options based on your (sender’s) country.

Step 5 – All Done From Your Side

Wise’s smart technology links local bank accounts across the globe. Therefore, they can use money from a Wise user sending money overseas contrariwise. 

After sorting that out, they will estimate when your money will transfer to the recipient’s bank account. Usually, it’s much quicker than a bank transfer (more on that in a bit). 

If you enter the recipient’s email ID, Wise will notify the recipient via email that a transfer is coming, which will appear straight into their bank account. 

If you have any questions in this regard, visit their help center to get sorted out.

And if you want to know more about Wise, checkout this review.

Here’s a Bonus Tip

You can benefit from a Wise account if you invite your friends to this international money transfer service. When more people start using Wise to send their money, it will be more beneficial for all. 

How, you may ask? Well, there are cash rewards for each signup you bring in as soon as they get their first payment. 

With more signups from your side, you will earn more. Earning money doesn’t get simpler than that. So, what are you waiting for? Invite your friends here

Brokers and Banks Hide Their Fees

An image of fees and charges written on a paper

Banks and brokers tend to hide their fees on their foreign currency transactions. 

It means that when you make an international payment, the bank adds a hidden fee (under the guise of free or low or even competitive exchange rates). 

Such hidden charges are added to the stated charge marketed as “zero-percent commission” or “free-of-charge.” 

You don’t know how much you’ve paid to access your money. 

This is one area where Wise stands out, as it has no hidden charges. Wise is campaigning against the brokers and banks who hide their fees. 

How to Use Wise?

Here are the steps that you need to follow to use this international money transfer service to send money internationally:

  • Log into your Wise account, go to Home on their website, and select Send.
  • The next step is to select where you want to send money from and pick the transfer type that you want to make. 
  • After that, type in the amount that you want to send and select the currency for the amount. 
  • Now, enter the recipient’s bank details and review them to proceed with the transfer. 
  • In the end, you need to select how you want to pay for the transfer and that’s all. 

Wise Payment Methods

Wise has different ways that you can use to send money abroad. If you are in the US, you can choose from 4 different payout methods from Wise. Fees may vary depending on the method you select. 

Deposit/Direct Debit/ACH

This payout method is fast, and it can be one of the cheapest options available to make an international transfer. 

Bank Transfer

A bank transfer or wire transfer can take around a couple of days, but they can be pretty cost-effective. 

Debit Card

Usually, payments through debit cards only take a few hours, but they tend to cost a little more. 

Credit Card

These payments also tend to be quick, but they do have the highest Wise fees.

Wise Money Transfer Speed

An image of transferring money from an account to another

Wise is determined to make international wire transfers swift or as foreseeable as possible. But what factors are behind the speed of money transfer? 

Let’s dig deeper, shall we?

Primarily, there are three different components involved in each of these transfers. 

Time for the money to reach Wise Internal processing time Time to deliver to the recipient

Time for Money to Reach Wise

You can fund your transfers in four different ways:

  • Via your debit or credit card, Google Pay, or Apple Pay.
  • Via sending a bank transfer.
  • By debiting the bank account directly.
  • Or by paying from the borderless Wise balance.

Each of these options has different transfer speeds. Therefore, you can pick the right option based on how quickly you want your payment to go through.

For instance, if you pay using your debit card, Wise will immediately get an alert about a successful payment and will begin processing the payment right away. 

If you are paying via SWIFT transfer, Wise will wait for the amount to appear in their bank account and then begin completing the transfer (so it will take longer). 

Internal Processing Time

Wise servers are fast, so the internal processing time is generally quick.

However, there are a few things that they have to verify:

  • Being a financial company, Wise has to run a few checks under the law before transferring anything. They must check the recipient to prevent fraud or money laundering risks. But these checks only take a few seconds. 
  • Wise reserves the required amount in the recipient’s currency to pay the transfer. Their treasury team ensures that the funds are available in the target account at the time of payout (this is where all the magic happens!). 
  • And the payout is actually executed, which only takes a few seconds. 

Time to Deliver to Recipient

Once the payout occurs, it only takes some time (mere seconds in some countries or days in others) to appear in the recipient’s account. 

Why is there such a huge difference in time? Well, it’s due to the difference in the payment system structure of each country. 

If the payment system is not quick or instant, cutoffs or clearing circles are the factors that will define when the payout occurs. 

These cutoffs are the points in time on working days. They refer to when all the connected banks on the payment system interchange information regarding these payments before the cutoff time. 

After this, these banks settle the net amounts they owe to one another and adjust the balances of each bank account. 

That is why UK payments are cleared fast, as they have the FPS or faster payment system. 

What Can You Do to Increase the Speed of Money Transfers? 

From the above examples, we can deduce that payouts using the Borderless balance in the UK will be completed instantly. Meanwhile, bank transfers to Canada can take over 24 hours. 

Keeping this in mind, there are a few things that you can do to speed up this entire money transfer process:

  • First, pick a fast payment method (in other words, Borderless balance). Therefore, preloading your Wise Borderless balance is necessary here (details in the following text). 
  • Make sure to proactively verify your account (more on this in a jiffy). Therefore, your quick transfer won’t be halted by any checks.
  • Be sure to align all your payments with cutoff periods or the working hours of your currency’s payment system when sending money. 

How to Receive Money on Wise?

For Personal Accounts

First of all, you don’t need a Wise account to receive money using Wise. You can have your payment from Wise into your bank account in the currency you choose. 

Otherwise, you can open a Wise account and start receiving your payments in 9 different currencies. You’ll only have to provide your sender with the details about your bank account and your name.

For Business Accounts

You will get a few more add-ons in addition to all the benefits of a Wise personal account when you have a Wise business account. 

For your business account, you will be able to get details of your local bank in nine different currencies, and you can get local transfers in 30 different currencies. 

You’ll only have to give your Wise account details to your sender (for the currency in which you’ll receive). You can find this on your Wise app and wait for the payment to be deposited by the sender.

The process here is the same as your personal Wise account: 

  • Just log into your account using the app or the browser.
  • Now click/tap on Balance and choose the currency. 
  • For your account details copy your account information for the currency in which you’re receiving.
  • Send these details to your sender to receive your funds. 

Required Documents to Get Verified on Wise

You’ve just read that you need to verify your account, right? But how can you do that? Well, there’s a simple way. 

Wise asks you to upload your ID and documents for verification. This is a way to keep their platform safe for their customers. 

It’s just like you submit your documents when opening a bank account. When you sign up for your Wise account, you will be asked about these documents. 

But you don’t have to be present in person and can submit all the documents online using your phone or laptop. 

Just be sure to take clear pictures of your documents and upload them when Wise asks.

Usually, you’ll need:

  • A valid ID document, including a national ID, driving license, or passport. 
  • A bank statement or utility bill in your name as proof of address. 

Is Wise Safe & Legit?

Verifying a Business Account on Wise

If you want to verify your business account on Wise, you might have to submit a few more documents. Again, you can do all this online using your laptop or phone. 

You’ll need:

  • Your documents (as the business owner), including your national ID and proof of address.
  • Details about the business, including its registration number and industry. 
  • Date of birth, names, and countries of residence of shareholders and directors who own 25 percent or more of your business.

Preloading Your Wise Account

You can preload (deposit money) your Wise account in 20 different currencies, including USD, GBP, EUR, AUD, NZD, etc.

You need to take the following steps to preload your Wise account:

  • Log into your account and choose your top-up currency.
  • No, tap on the “+” symbol and enter the amount.
  • Confirm the currency, and you’ll have a list of available payment options along with their fees.
  • From there, you’ll only need to follow the prompts and make your top-up.

You can also use the local bank details that are associated with your Wise account and deposit money yourself or with someone else. 

Required Details From the Recipient

As mentioned, Wise recipients don’t need a Wise account to receive money through this platform. All Wise transfers are directly deposited into the recipient’s bank account. 

Therefore, as a recipient, you must give your sender your bank account details. But what is required to receive a payment through Wise depends upon the destination country.

But, generally, here’s what’s needed:

  • Full name of the recipient (as on their bank account).
  • IBAN or bank account number of the recipient. 
  • Recipient’s bank’s name.
  • Some additional information is based on countries (such as BSB for Australia or sort code for the UK). 

Transferring Money Wise-to-Wise

An image showing sending money from a Wise account to another Wise account

You can send money using your Wise multi currency account to another Wise account using your laptop or phone. 

Syncing your phone contacts with the Wise app will enable you to make your payments using an email address or a phone number.

Here are the steps that you need to carry out to transfer money Wise-to-Wise:

  • Open the Wise app on your phone or your browser on your laptop and sign into your account.
  • Be sure to open a balance in the currency you want to send/receive money. 
  • Tap “Recipients” and “Find friends on Wise,” and select “Sync contacts.”
  • The next step is to select your target recipient from the contact list and set up your transfer as you normally would. 

If your recipient has a balance in the transfer currency, the money will automatically appear in the balance. 

Otherwise, Wise will create the currency balance, and your tender will be added to that new balance. So it’s all hassle-free for the recipient!

How Much are Wise Fees?

There are no monthly fees or subscriptions. Wise will display all fees upfront without hidden fees, and you’ll only pay for what you use. 

Wise Registration Fee
Registering your wise accountFree of cost
Sending Money
Sending money (fees vary based on currencies)From 0.43 percent
Spend Money with Your Card
Withdraw money 2 times or less monthly GBP 200 per accountFree of cost
ATM fees over monthly GBP 200 per account (over 0.50 GBP a withdrawal)1.75 percent
All transactions for account funding2 percent
For Wise debit card7 GBP
Money conversion feeFrom 0.43 percent
Holding Money in the Account
Hold over 40 currenciesFree of cost
Invest using Wise (in global multinationals) 0.6 percent annually
Receiving Money
Getting accounts in ten currencies (USD, GBP, EUR, CAD, AUD, NZD, SGD, TRY, RON, and HUF).Free of cost
Receiving money in USD, GBP, EUR, CAD, AUD, NZD, SGD, TRY, RON, and HUF)Free of cost
Receiving a wire transfer in USDUSD 4.14 (fixed)
Receiving SWIFT payments in CADCAD 10 (fixed)

You can learn more about Wise fees here.

Wise Currency Conversion Fees

One thing that Wise does best is providing a transparent fee structure. 

Unlike conventional banks and other traditional exchange services, Wise uses the mid market exchange rate, plus the conversion fee is clearly visible to you when you make your payment. 

Many money transfer companies and banks may claim they aren’t charging conversion fees or commissions upfront. It means that they won’t charge anything for the transaction.

However, international wire transfer service providers still have to cover their costs. Hence, they go for hidden charges in the applied rates, resulting in a mid market rate with margin added. 

Such costs fall under different categories, mostly known as currency exchange spread, makeup, or margin.

Still, this additional fee can be around 3 percent. For one-of-payments, this cost might not seem like much. But over time, these costs accumulate; for instance, 

  • To send USD 1,000, the exchange rate margin will be around USD 30. 
  • To send USD 50,000, the exchange rate margin will be around USD 1,500.

Final Word

After learning “how does Wise money transfer work,” you need to decide if it is the best option for you or not. 

Wise transfer enables you to send money without any hidden charges. You can send money swiftly; the receiver doesn’t need a Wise multi currency account. 

Ensure you have a verified account, and your international transfers will be completed within a few minutes. 

To verify your account, you must provide Wise with your national ID documents and details regarding your bank accounts.

Once you’re done with that, you can make an international transfer within a few seconds. 

So, what’s holding you back? Send money now through Wise.

Frequently Asked Questions

No, having a bank account is not mandatory for using Wise. Users can send/receive payments using alternative methods like credit or debit cards through Wise multi-currency accounts.

No, you can’t deposit cash into your Wise account. But you can top-up your Wise account and manage your payments using alternative payment methods, including a debit card, a credit card, or bank transfer. 

The maximum transfer amount with Wise varies by currency, but limits are set high for customer convenience. (Learn more about Wise Limits here.)

Wise money transfers typically arrive instantly for over 50% of transactions and within 24 hours for over 90% of transactions.

International money transfers through Wise are typically fast, with over 50% being instant and over 90% completed within a day.

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Author
Allen Morning
I'm Allen Morning, with a background spanning over 15 years in international finance and education from Harvard and Stanford. I founded Currenciap with a vision to demystify and streamline global financial transactions. My journey in finance has fueled my commitment to creating a platform that is both user-friendly and efficient, making international finance accessible to everyone. You can find more about me here.

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