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Sending money overseas can be an expensive business. So which is best — Bitcoin or TransferWise?
There are many reasons why expats needs to send money back and forth from the UK — rental incomes, receiving pensions, sending money to friends and relatives, buying a new home abroad, paying off loans or debts in the UK, giving money to help support children at university.
Whether these are one-off sums or regular payments it’s crucial that the money transfer service used is safe, fast, has a minimum amount of hidden fees, and offers an excellent exchange rate.
Let’s take a look at who wins in the battle of Bitcoin vs TransferWise…
Bitcoin For Sending Money Abroad
Bitcoin is a decentralized global digital currency and worldwide payment system.
As well as being a form of digital currency, Bitcoin allows users to send and receive real money across country borders without the need for an intermediary such as a bank or a money transfer operator which would otherwise take a percentage of the transaction as a fee.
How it Works
In order to use Bitcoin to transfer money overseas, it’s necessary to open a secure Bitcoin account (aka a Bitcoin wallet) which is installed on your mobile phone, PC, in the cloud, or as hardware — you’ll need a wallet for yourself and another where you want to send the money to.
Once your wallets are set up, you’ll need to transfer your physical money into Bitcoin.
The easiest way to do this is via the Coinbase service, which requires you to set up an online account with which you can purchase Bitcoin using your credit card — sending it directly to your Bitcoin wallet.
Once the Bitcoin is in your wallet, you can send it easily by opening the wallet software, selecting the amount and destination address and clicking send.
Once the transaction has gone through, the Bitcoin in the receiving Bitcoin wallet can be transferred to a verified bank account in the appropriate currency.
- It’s fast — There’s no need to wait several days for your money to reach its destination, payments are almost instant taking no longer than an hour maximum.
- Bitcoin is borderless and can be used to transfer money to any country in the world provided there is a Bitcoin wallet set up at the other end to receive the money
- It’s convenient – it’s possible to send money at any time day or night regardless of bank holidays or weekends.
- Fees are extremely low with no foreign transaction or exchange fees, and it’s possible to send any sum — large or small — without restrictions.
- It’s safe – Bitcoin transactions don’t contain personal or sensitive information, and every detail of the transaction is transparent and can be checked at any time, in real time.
Here’s a video summing up the pros of Bitcoin for international money transfers:
- Bitcoin can experience wild fluctuations in value, making it possible to lose money should you keep Bitcoin in your wallet for long periods of time
- It’s not widely used – Bitcoin is a great idea, but it doesn’t work unless the other party is already using Bitcoin too. This makes it incompatible with many businesses and services.
- Transactions are irreversible. Once the money is sent, it’s gone — so you’ve got to be 100% sure that it’s going to the correct destination.
TransferWise To Send Money Abroad
The TransferWise technology is based on a peer to peer system that keeps the money in it’s country of origin and searches for other TransferWise users who wants to convert their currency into your currency.
Rather than your sum of money leaving the country it’s in, it is simply redirected to the accounts of other TransferWise users in your country who need it — essentially making a secure swap in the same currency between the two accounts.
At the other end of the transaction, the money of other users in the destination country with the desired currency is rerouted into your account ready for you to use.
By working in this way, TransferWise avoids expensive fees incurred for currency exchange, with the end result being exchange fees up to 8 times less expensive than with traditional bank transfers.
How it Works
Much like conventional internet banking, TransferWise requires an online account, and transactions are easy to perform.
Simply enter the details for your intended recipient and the amount of money you wish to transfer.
Payments can be made either by debit card or directly from your personal online bank account.
Once the transaction is confirmed, an email confirmation is sent to you along with an estimated delivery time for the sum to arrive in the destination account.
The majority of transfers are completed quickly — often the same day — but it’s best to allow up to 4 working days in the event of bank holidays and weekends.
- Security – it’s very safe and secure to use.
- It’s honest – the service is completely transparent with no hidden fees, and exchange rates are always up to date.
- Intuitive – the online service is straightforward and easy to use, making the whole transaction process hassle free.
- Fees are reasonable – £0.80 flat fee for any sum, plus an additional percentage which changes depending on the currencies being converted (for example to convert Euros into GBP the rate is 0.5%).
- Relatively fast and efficient service with regular emails to keep you informed of what is happening throughout every step of the transaction – plus great customer service.
- It can be a little slow – transfers can be completed the same day, but are more likely to take a few days, depending on which currencies are being exchanged.
- Currencies are limited – TransferWise can currently send and receive money transfers to and from 22 different countries, with a further 24 or so being only able to send out and not receive transfers.
- Setting up your Transferwise account requires sending several documents, which can be a bit of a hassle.
Both Bitcoin and TransferWise have positive and negative points.
The cheapest way to send money overseas is Bitcoin, but it’s not as user friendly or straightforward to use as TransferWise, so is probably best left to the more tech savvy.
That said, it’s possible to send money anywhere in the world with Bitcoin without restriction, unlike TransferWise, so it would suit those living in countries not covered by TransferWise’s service.
Being a relatively new phenomenon, Bitcoin is constantly being developed and is not as sure and stable as TransferWise — and let’s not forget that once your money is en route to its destination it can’t be stopped., however it will get there quickly.
Overall, whilst Bitcoin offers a cheaper and faster service than TransferWise, TransferWise come out on top for people needing to make regular transfers with ease, in the knowledge that their money is safe every step of the way.
It’s a proven service for transferring money abroad with excellent customer service, and an excellent way to send money overseas.
Which do you think is the best way to send money overseas — Bitcoin or TransferWise?