Whether or not you’re working from home these days, if you’re earning income in more than one currency, Wise may be a way to streamline how you manage it all.
Wise used to be known as TransferWise, and despite the name change, the company’s basic tenets are still the same. It started out as a currency conversion service that cut out the banks and middlemen who tack on points on the exchange to lower your overall take with each transaction. Sticking closer to mid-market rates, Wise endeavours to undercut the banks and save you money each time you convert currency.
The other side of the coin is what’s called a “borderless account”. It lets you earn income in select currencies as if you had a bank account in that country. That way, you could convert it to your local currency at a better rate, and then transfer it over to your local bank account wherever you live or work.
Sound simple enough? There are a lot of moving parts to how this works, which I’ll get into, but the gist is that you’re able to avoid hassles in how you get paid from whomever is paying you in a foreign land.
It’s worth pointing out that Wise works on both computers and mobile devices. On a computer, you can just do everything from the website. On iOS or Android, you simply download the Wise app and take it from there.
It’s free to sign up for an account, with no annual fees for accessing the service in any way. Wise makes its money by taking a percentage out of each currency conversion or money transfer, only cheaper than banks. Though banks may be far more competitive if you’re talking about converting tens of thousands of dollars or more, Wise applies to both small-time and bigger money users since the fees don’t change based on how much you’re looking to convert or transfer.
As its name implies, a Wise account is like having accounts in multiple countries all at once. You can receive funds in up to nine different currencies by direct deposit, much like a local in that country. That means if you do any work for a company or client in one of those countries, they can pay you in their local currency. It should, in theory, make getting paid easier for everyone involved.
The accounts you set up through Wise aren’t actual brick-and-mortar banks, but rather electronic ones with addresses to enable you to receive money. If that sounds shady, don’t worry, it’s totally legitimate, thanks to regulators who keep a watchful eye on it all. If you live in Canada, but earn money from work you do in the United States, Britain, Australia or any of the other account-holder countries, you don’t need to have them wire transfer the funds over, or cut you a cheque. Direct deposit, and it’s there the next business day.
Wise addresses the security side of things here, and for large transfers, Wise may ask for photo ID for confirmation. But in any case, these accounts do nothing else but hold cash, though you can set up direct debits to pay bills, including if they’re in different countries. That’s great if you’re a landlord and have to cover certain bills for a rental property abroad, for instance.
However, you have no overdraft, nor any ability to take out a loan. And in Canada at least, you can’t make use of the Wise debit Mastercard, which supports contactless payments and ATM withdrawals in up to 40 different currencies. It’s a handy card to have when travelling abroad, even if the $250 no-fee ATM monthly withdrawal limit is a bit low, incurring charges beyond that.
That means, at least as a Canadian living in Canada with a Canadian address, you can’t use the money in your Wise account to purchase something, either online or in-store. You’d have to convert (if necessary) and transfer it to your local bank to access it via debit or ATM.
It’s a shame because the card would be super convenient. And despite Wise’s assertions that it’s trying to bring it to Canada, that was also the story three years ago, so it may take a while.
Let’s start with an example. If you’re converting $5,000 USD through a borderless account, you’d be looking at a fee in the $22 range. That rate would almost certainly be better than what the bank offers. Wise even tries to approximate it by noting how much you save in the transaction. It would then cost pennies to transfer that to a local bank account. Multiply that by the various conversions you might make in any given period, and it could add up.
Choose to either convert funds from one Wise currency account to another, or send it directly to your local bank. Wise converts it en route, and the fees don’t change, so it’s up to you.
Altogether, you can hold and convert money in up to 56 currencies, and send it to over 70 of them. And if we were talking about sending money to family or friends, there would be other methods to do so. WorldRemit is one, which has a pretty broad approach as well.
Alternatively, you could transfer USD to a U.S. account at a Canadian bank and avoid the wire transfer fee. You could also do the reverse and send money from the USD account over to your Wise USD to take advantage of the better rates. The only catch is that you would pay a wire transfer fee in that case. If you were to visit another country, you could send the money to a relative to deposit in their local account, which you could then pull out after you arrive.
PayPal has long been a popular alternative for quickly paying someone or sending money, and now that it’s back to independence from eBay, it’s doing its own thing again. But not a whole lot has changed because the fees are still the same. To convert currency, you’re not only looking at 2.5% to start, but also a marked-up exchange rate.
While PayPal is no doubt convenient for holding multiple currencies, it’s the fees that lead to issues. Wise outlines how to connect a PayPal business account with a Wise one to avoid the extra fees. Because Wise has banking details, you could add one to your PayPal account. That effectively lets you transfer money over to your Wise account in the same currency. No conversion, no big fees.
But it doesn’t always work because PayPal will randomly delete it, or make it difficult to set up. In Canada, this kind of integration matters given PayPal doesn’t like USD accounts at Canadian banks. That leaves a Wise USD account as the next best option, and it’s great when you set it up.
Unfortunately, PayPal also cut Canada off from its own debit Mastercard, including those grandfathered in from previous years in 2018. So, if you have funds in different currencies, you’re forced to convert and transfer them to use on the ground. On the flip side, you could still purchase items online with the currency of your choice.
The short answer is yes. Wise has upended some of the archaic fee-based nonsense that goes on with converting currency. The fact there are both personal and business accounts also means it can apply to employees, freelancers, contract workers, artisans, business owners, and newcomers to the country.
It lays out what’s actually coming out of your pocket succinctly, which is important. Everyone can appreciate some transparency wherever money is involved, after all. And this is a two-way street that works well, given Wise is equal parts currency converter and electro-bank for receiving funds from almost anywhere.