We all love a good bargain, which has never been more true than in the trying economic times of 2022 when more of us are experiencing various strains of hardship. This has fueled an already buoyant mania for money off e-coupons. There are now countless different coupon-aggregator websites competing with another to help us find the best “money off” vouchers.
Therefore it seems logical that somebody somewhere might be wondering if there are even e-coupons to help save money on international transfer fees from companies like Wise (formerly known as Transferwise). After all, the fees for making foreign payments can be very expensive.
Well, the short answer is that No, Wise does not offer discount coupons for its services (sorry for the spoiler). However, this post will tell you precisely why this is and why Wise doesn’t even need to offer discount coupons.
Sending or Receiving Money Internationally
Let’s start with looking at how the international money transfer industry works in general and where Wise fits in.
Whenever we send money from one country to another, the monies are crossing through one country’s financial system and into another’s. More often than not, they are also changing from one currency into another along the way too.
Usually, the monies are moved using the bank’s SWIFT system. The SWIFT interbank messaging system was established in the 1970s to aid fast international telegraphic money transfers and rose to become the dominant global banking network. SWIFT now operates in pretty much every country on earth (except ‘sanctioned’ countries like Iran, Cuba, and now Russia) and membership is closely regulated.
For this reason, whenever we rely on our banks to handle international money transfers for us, they charge us a premium or transaction fee for using their SWIFT system. These transaction fees can range pretty drastically – in the US, the scale is between $2 – $15, and in the UK, it is between £2.75 – £20, with little rhyme or reason for the variations! Critics have long accused the banks of running SWIFT like a cartel, and of taking advantage of loyal customers by unfairly charging unconscionable fees but the banks are ultimately free to do as they please here.
As well as charging a transaction fee for the transfer, banks also get to control the exchange rates being used and also use this to their advantage. Remember that whenever we trade a currency, we effectively buy and sell one currency. As such, there is no “true” price, and the prevailing market rate is ultimately only ever a guide.
When we make an international payment using our bank, the banks “sells” us the foreign currency we need to send at a price that is usually 2% – 3% above the market rate. As of June 2022, the USD to the GBP exchange rate is around $1 – £0.81 but if I use my bank to make a GBP to USD transfer, they will use a rate of around $1 – £0.83 charging an extra £0.02 for every dollar I buy.
As you can hopefully see, this all soon adds up. If I send $100 from my British bank account to a friend in the US, the transaction will cost me a minimum of £85 instead of the £81 that it ‘should’ really cost.
Money Transfer Companies
Thankfully, there are alternative ways to send money abroad. Money transfer specialists are financial services providers who identified that the banks were vastly overcharging and basically sought to entice customers away from them by offering better rates.
Some money transfer specialists have access to the SWIFT system either in their own right or via partner companies. Still, others bypass it completely by relying on their own network of global offices. Note that money transfer companies that bypass SWIFT are typically unable to help send money to as many countries as those that do have SWIFT.
Regardless of the particular operating model, money transfer companies almost always offer much lower transaction fees than banks. For example, Wise (formerly Transferwise) charges a few cents to transfer money from the US to the UK as opposed to the $2 – $15 that the American banks charge.
Of course, money transfer specialists do need to make money, and they usually do this via the “mark up” on currency exchanges, but even this is usually offered at much better rates than the banks.
So Why No Wise Coupon?!
At the beginning of this piece, we asked the question of whether money transfer companies like Wise.com competitors offer discount coupons and, if not, why not.
Well, the fact is that money transfer companies like Wise are already offering a discount; their entire business model is built on offering discounts either by waiving SWIFT fees or by offering better deals on forex.
Furthermore, e-coupons do not really work in this niche area because the intricacies of each transfer are slightly different depending on amounts, currencies, origin, and destination, and as such, no two transactions are alike
At first glance, the international payment system seems complicated, and to be frank, banks play on this perception in order to help them make banks. However, by taking just a bit of time to get our heads around and understand it, we are able to see how it works and identify some alternatives.