Tuesday, February 18, 2014

robin hood of currency exchange

Any consumer app tends to have customers ask for speedier transactions at lesser costs. TransferWise claims to provide just that.

At 0.5% cost, TransferWise claims to charge no hidden fees and provides an interesting service. This is the precise reason why it is being touted as the robin hood of currency exchange and even Peter Thiel is supporting it.

Its direct competitors would be the likes of xoom.com. However, it plans to take head on with Paypal as it has a much broader scope of transfers. In that context, yes, it is providing an interesting service at 0.5%.

Currently, the service offers only the main currencies available in the FX trading world. The concept is to show a willing buyer and a willing seller the market rates from the FX exchange and if they both agree to the quote then they exchange in a P2P fashion.

This disruptive model attributes its low cost of service provisioning to:

- new infrastructure of TransferWise vis-a-vis legacy infrastructure of the banks ( as a side note, I guess ..more layoffs to come in the backoffice IT and business jobs for wire transfer departments to follow as this disruptive model gets adopted)

- scaling facility that the Internet offers when compared to traditional banking and marketing

The company was launched by Taavet Hinrikus, who also launched Skype from idea to first several hundred million users. He has a good network in the tech space to secure further rounds of funding and also, to spread the word for the product to become popular.

Overall, it looks like a promising offering to bet on.