February 16, 2014 00:00 By Agence France-Presse 5,368 Viewed
TALLINN - Irked by high bank fees on international money transfers, two Estonian IT whizzes who helped engineer Skype and Paypal have hatched Transferwise, a global Internet platform coordinating currency swaps between individuals.
"Hey, hidden fees. Your secret's out," taunts the site founded by Taavet Hinrikus, 32, and partner Kristo Kaarmann, 33.
Transferwise has been giving banks a run for their money since its 2011 launch, even attracting applause from tycoon Richard Branson, who sings its praises as a low cost business tool for start-ups.
"They are dramatically lowering the cost of transferring money overseas, by effectively matching people and companies in different countries who want the opposite currency," the Virgin billionaire said in a recent blog post.
The marriage of IT ingenuity and financial savvy also garnered a prestigious 2013 World Summit Award (WSA), a United Nations-backed prize for outstanding web-based business innovations.
Transferwise offers international money transfers for a fee of just one British pound (1.2 euros, $1.6) for all transfers under200 pounds and 0.5 percent for everything above -- a tenth of what banks typically charge.
At that price, business is booming with the company processing around 1 million pounds per day.
While European rules specify that euro to euro transfers must be free of charge, banks fees on international money transfers between currencies range between three and six percent with exchange rates that routinely favour banks.
The new platform boasts customers from across Europe and is most popular in Britain, France and Spain, mostly among working or retired expats plus small and medium-sized businesses looking to cut operating costs.
It's also eyeing expansion in Asia, Africa and the US, offering services for the Indian rupee, South African rand as well as US, Australian, Hong Kong and Singapore dollars.