You know that vague feeling of dread you get when you have to transfer money abroad, the realisation that you need to start comparing exchange rates, transfer fees and time scales, and your brain starts to spin at just the thought of all that work and distraction from a host of things you’d rather be doing. Well, perhaps you need to go take a look at TransferGo. A group of Lithuanian entrepreneurs working in the UK who faced these problems and developed their own solution.Launched in 2012 the team behind TransferGo have created a web-based money transfer service that currently allows you to send and receive funds between 21 countries, these include all the Euro-based currency countries you’d expect to find and Poland, Latvia, Lithuania and the UK. They seem very driven and have plans to have expanded to cover the whole of Europe by the end of this year and are already in talks to open in Norway, Sweden and Russia. With further growth in USA, India and Latin America expected early next year.
They've worked to make their system as cheap and simple as possible. With a transfer fee of 3€ or £2.50 and a currency conversion charge of 1.5% made on the exchange rate, which goes down to 1.3% depending on the amount of money the user wishes to send. They’re looking to undercut the banks, PayPal, Western Union and pretty much everyone else in the game but they'll have to keep their eye on TransferWise, a competing company developed by an Estonian team with investment from two of PayPal's founders.
Their system works by having funds available in every country they allow transfers to and from. So when a user sends money into a TransferGo account in their sending country TransferGo makes a payment to the recipient from their account in the receiving country. This allows them to bypass the international waiting times set by banks and utilise the fast transfer times of local payment systems to provide a next business day guarantee, with many of their users reporting that funds had reached the receiving account within 6 hours. They are regulated by HM Revenue & Customs and the FCA in the UK, meaning they've passed all the required banking tests to operate in this field which should give some peace of mind to users that they've entrusted their money to a professional service.
To make their system even more attractive they've implemented a referral scheme, so if you invite a friend to use TransferGo, you receive 1% of all the transfers your referrals make within the first six months. I've been told that one very active user has made over £600 by introducing all his friends to the service and benefited from their subsequent use. The benefit for the friend being referred is that the transfer fee is waived for the first time, allowing them to save a little themselves.
TransferGo has also provided a service to businesses which they’re not really pushing yet but is even more aggressive than their consumer offering. For businesses, they have set the transfer fee at £1 and the exchange rate markup at 1% which I’d personally describe as ridiculous figures. When they begin marketing that offer I can see a lot of traffic coming their way.
So who uses TransferGo right now? Their website says they have 13,364 customers right now and the results of a recent survey showed that the majority of their user base is currently from Lithuania. Understandable since that is where the team is from, where they've received the most press coverage so far and that word of mouth that has been the driving force behind take up of their service. Their demographic skews quite young with the majority of users aged between 18 and 34 which tallies with the usage statistics as the survey results suggested that over 65% of TransferGo use was for family support and bill payments. Parents send money to their student children to cover rent and deposit costs in another country, then after graduating and finding employment grateful sons and daughters begin to send money back to their parents.
The low transfer fee encourages this sort of activity as they can send money on a regular basis, even small amounts, without feeling like they’re being ripped off by some of the charges that big banks set on international transfers.
We expect to see TransferGo continue to grow globally as they seek to provide their service to as many people as possible, however with TransferWise in the same playground they won't have all the toys to themselves.
Source: http://arcticstartup.com/moving-money-with-transfergo/Back to news