Could exorbitant fees and bad exchange rates for international bank transfers soon be a thing of the past? TransferWise (transferwise.com/) and CurrencyFair (CurrencyFair.com/) are two internet-based money transfer services which openly compete with banks for the lucrative business of transferring money from one country to another.
The services are modeled on the technology that powers the disruptive p2p communications tool Skype, which made person-to-person communication over long distances easier and much cheaper, challenging the telecommunications monopoly. Now p2p money transfer applications are getting ready to take on another monopoly – that of international money transfer currently firmly in the hands of the banks.
How does it work? People transfer money all the time. Matching up payments from and to a country and compensating them against each other, hardly any money actually has to be moved across national frontiers. A brief piece on The Economist website, in the blog section, titled (Skyping dough) explains where the idea comes from and how it is done.
Bye Bye Banks. You’ve had your fun. – says TransferWise on its site.
Banks charge a lot for foreign-currency transfers. We don’t. We use real exchange rates to help expats, foreign students and businesses wire money securely, conveniently, and at a very low cost. Finally, a financial service built for people, not banks.
CurrencyFair has been around for a bit longer. Their site’s introductory blurb:
The New, Smart way to Send Money Home or Abroad
CurrencyFair is the best way to exchange currency and send funds to bank accounts worldwide. Our unique, new peer-to-peer marketplace ensures big savings on exchange rates and fees, and puts YOU back in control. There’s now an efficient and safe alternative to ridiculous bank and broker charges – sign up for free today and start saving!
Both are eager to take down yet another monopoly, and make a mint in the process.
Are the bankers trembling yet?