TransferWise is on a mission to make international money transfer instant, or at the very least make transfer speed predictable in the extreme. But what actually determines the speed of an international money transfer?
It’s really pretty simple - here’s how it works:
The time each of these components contributes to the total depends on the currencies involved and how local payment systems operate. But, there are some other factors at play here too.
There are four main ways that our customers can fund transfers - by using a card or pay-in method like Apple Pay, by sending us a bank transfer, by allowing us to debit their bank account directly, or by paying out from their Borderless balance. Each of these options have different speeds, so by selecting a particular payment method, our users influence how long their transfer will take.
For example, when a customer pays by debit card, TransferWise is immediately notified of the successful payment and starts processing the transfer within seconds.
Alternatively, if a customer pays via a bank transfer, TransferWise has to wait for the amount to reflect in our bank account before completing the transfer - and this takes time.
The TransferWise engine is pretty fast. There are a few things we need to do before we can pay the transfer out:
- We’re a financial company, so we are required by law to run a few checks before we can process a transfer. We have to ask questions like - is this customer who they say they are, or are there any money laundering or fraud risks? These are checks that keep our customers’ money safe. Unless additional manual checks are required, these checks take only a few seconds.
- We allocate (or reserve) the money required in the recipient currency to pay the transfer out. Here, our treasury systems ensure that the required funds are available in the right account at the planned payout time. This is where a big part of the TransferWise magic happens.
- We actually execute the payout. Again, this takes just a few seconds.
After TransferWise pays out, it takes some time before the money reflects in recipient accounts. In some countries, payment systems are very fast (seconds), while in others it can take days to reflect. This comes down to the structure of each country’s payment system (there’s a nice explanation of this here)
When the payment system is not instant, the defining factors for when transfers will be paid out are usually clearing cycles or ‘cutoffs’. These are points in time each day (normally, only on working days) when all banks connected to the payment system exchange information on the payments they’ve made and received in the period preceding the cutoff. Following this, they settle the net amounts they owe amongst themselves and adjust the balances of individual bank accounts.
This is the reason that, for example, in the UK payments are delivered fast (via the instant FPS payment system), while elsewhere in Europe and across the globe payment delivery is slower.
Using some of the examples above, we can see that most payouts from a Borderless balance or a debit card would reach recipients in UK banks almost instantly. On the other hand, transfers to Canada funded via bank transfer are likely to take longer than 24 hours
With this in mind, there are a few things you can do to maximise the speed of your transfer.
First and foremost - choose a faster pay in method. The fastest and cheapest way to fund a transfer is typically via Borderless balance, so if speed is a priority, consider pre-loading your Borderless account. Second, proactively verify yourself! This way, if you need to make a transfer in a hurry, it will not be delayed by any checks. Third, align your payments with the cutoffs (or at least working hours) of the payment system of the currency you’re sending money to.
We’ll always take these and other factors into account when giving our customers an estimated arrival time, which is shown while setting up the transfer. And with time, we’re sure that each of these components will become not just faster, but more reliable and predictable too.
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