Here's How $1 Billion TransferWise Actually Works

London finance startup TransferWise has raised $US58 million in venture capital on a rumoured valuation of almost $US1 billion. The company promises to save you money when you send money overseas by using an innovative peer-to-peer transfer system — and turning a profit in the process.

But what’s it actually like to use?

First-time visitors to TransferWise’s site are greeted with this simple currency calculator.

Clicking through, you can choose from a range of currencies. The breakdown of the fees they do charge is carefully explained.

If it’s your first time using the service, you’ll then be prompted to fill in some personal details.

Next, you enter the recipient’s details.

There’s the option to send funds directly to their bank account, or by email if you don’t have their details. (You can also add a reference to the email.)

There’s two options for paying too — either entering your card details online, or by bank transfer.

If you opt for debit card payment, it’s as simple as buying anything else online. If you click bank transfer, it provides you with TransferWise’s account details so you can pay in the required amount.

And that’s it!

The company manages to offer its services so cheaply by matching up payments with those going the opposite direction using sophisticated software. So “your” money never actually leaves the country — it’s rerouted to someone who’s being sent a similar amount by someone overseas. Your foreign recipient, meanwhile, receives their funds from someone trying to send money out of their own country.

But TransferWise’s genius is that its customers never have to deal with this peer-to-peer complexity. It’s incredibly straightforward, and has built a devoted fanbase off this simplicity. If you study at a university in a foreign country, or have family abroad, it’s easy to see it’d be a lifesaver for managing finances.

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