Are you considering using Wise to accept/transfer funds internationally, to accept payments from NihaoPay, or for any other reason? Are you curious how you may be able to save money with Wise? Let’s review what exactly Wise is and can do for you!
Please note that I am not a financial expert. Everything here is for informational purposes only.
Wise Is NOT a Bank
Wise, formerly known as TransferWise, is a money services provider that specializes in holding and converting foreign currencies as well as making international bank transfers. They offer both personal and business accounts. Wise is also a popular choice that currently supports 40+ currencies and over 12.8 million users.
Since Wise is not a bank, it doesn’t offer all of the services that a bank traditionally offers such as checking/savings accounts, credit cards, loans, etc. The advantage of this is that Wise is able to keep their costs, and therefore the fees for their services, low. So if you work with or use foreign currencies regularly, Wise is a convenient and low cost option.
Ways to Send Money
It’s quick and easy to transfer funds from your Wise account to a recipient’s bank account, even if they don’t have a Wise account! The easiest way to do this is to enter the recipient’s bank account information. In my personal experience, the transfers completed within seconds!
Worried your recipient may be hesitant to give out their banking information? No worries! Wise even has the option to create a link to send to your recipient to claim the funds. You simply set up the transfer under this option, and share the unique link. When your recipient clicks the link, they will be prompted to enter their bank account information to claim the funds.
Wise Debit Card
Wise even offers a debit card for those based in certain countries. This can be incredibly convenient for digital nomads or those who travel a lot. For those who frequently accept foreign payments into their Wise account, having access to a debit card can reduce the need to transfer funds into a local traditional bank. That, in turn, means a reduction in money transfer fees. Don’t be too discouraged if Wise doesn’t currently offer a debit card for your country. They may offer it in the future as they gain popularity in your country!
I personally have used my physical Wise debit card while abroad at places where my US credit cards and US bank debit cards would not have been accepted. My Wise debit card already had the local currency on it, so there was no conversion necessary. This means that my Wise debit card functioned just like a local card. Even if the country in question is heavily reliant on cash, there are still times where it’s convenient to use a card or at least have a card as a payment option.
In select countries, Wise also has the option of generating up to three different digital cards. The digital cards have a different number from your physical card for added security. Wise cards are also compatible with Apple Pay, Google Pay, and other digital wallets.
Just like with other debit cards, Wise allows you the option to freeze and unfreeze your card at your convenience. Some banks may bury the option of freezing and unfreezing a debit card within their app. However, Wise makes it very easy to navigate to this option within the app. This means you aren’t left holing up a checkout if you forgot to unfreeze your card ahead of time.
Another Way to Pay
Paying with a QR code is another option for making payments. Some countries may not widely accept card payments. Therefore they may rely more heavily on customers scanning a QR code to pay. You can scan a QR code from within the Wise app or import a QR code from your phone gallery to pay directly from your Wise account.
At the time of writing, paying with a QR code is a bit limited with Wise, but they are actively working to support more types of QR codes as well as expand this service to customers in all regions.
Auto Conversions
Conversion rates between currencies are in a constant state of flux. If you’re wanting to hold out for a better conversion rate but don’t want to waste time constantly checking it, don’t worry. Wise has got your back! Setting up an auto conversion allows you to set your desired exchange rate and the amount of money in your account that you want converted. Wise will then automatically complete that scheduled conversion when your preferred rate (or better) is met in the market. This is an excellent option if you’ve gotten a good feel for the conversion rates between two supported currencies and you can wait for the exchange to take place.
Perks for USA Users
For those who are based in the US (or use a US address to register the Wise account), there’s currently the ability to opt in to earn interest on the USD, EUR, and GBP balances in your Wise account. The gist of the program is that you’re giving Wise permission to hold your funds in their Program Bank where Wise earns interest on those funds and then passes the majority of that earned interest on to you. Opting in is incredibly easy and straightforward, and your funds are still readily available to you any time.
Another perk is that this program protects USD, EUR, and GBP balances via passthrough FDIC insurance through Wise’s Program Bank. Wise doesn’t have FDIC insurance since they’re not a traditional bank. That makes this is an excellent option to get that security for your money anyway. As always, you should refer to Wise’s official website to see the full details of the program.
Perks for Those Receiving Foreign Currencies
It may be cheaper to accept foreign currency payments to a Wise account than directly to your bank account. If the sender is charging high international wire transfer fees, that may be a non-issue with Wise. Of course, this is dependent on the locations of both the sender and Wise as well as the currency being used.
Another thing to consider is that your local bank may charge fees for receiving a payment in a foreign currency. Then they’d still need to charge for the conversion into the local currency. As discussed above, it’s likely that Wise will have a better conversion rate and lower conversion fees.
Also, don’t forget that Wise has the option for auto conversions. That means you have the option to wait for a better conversion rate. Meanwhile, a traditional bank would likely force the conversion the same day that funds are received.
Perks for Using Wise to Accept Payouts from NihaoPay
NihaoPay has a limited number of currencies that they support. If they don’t support your preferred currency, then the cheapest option to receive payouts to a traditional bank would be to use USD. However, that comes with a hefty international wire transfer fee of $25.00 USD. Yikes! (You can read more about NihaoPay’s supported currencies and fees HERE. Don’t worry; the majority of their fees are low.)
You can dodge getting slammed with that international wire transfer fee by accepting USD payouts to a Wise business account instead. NihaoPay is able to transfer USD to Wise as an ACH transfer for just $0.30 USD since both companies have locations in the US. That’s $24.70 USD in savings, or 98.8%! This significant savings on the initial gross total may outweigh all of the other minor fees involved.
There will likely be a small fee to transfer funds from your Wise account to a local bank. However, you may still find this option to be cheaper than receiving USD directly to your local bank, especially since using Wise would eliminate that initial international wire transfer fee. Needless to say, it’s important to compare the fees between Wise your local bank.
When asked for your bank account details in the NihaoPay Merchant Application, you can use your Wise business account information. Just make sure to list Wise’s US address!
Comparing the Fees
Sure, it sounds good that Wise could increase savings by eliminating a hefty international wire transfer fee. But would that be enough to actually save money? Of course, each situation is unique. So the best answer to that question is to do a comparison between Wise and your traditional bank.
Be sure to check out this article where I organize the all of the fees and potential fees into an easy-to-read reference table. There I also show step-by-step how I used that table as a guide to compare Wise and two banks in South Africa. Doing a fee comparison doesn’t have to be daunting!
