Got a pigeon problem? Time to break out the LASER!!!

[Pib]

Looks like Transferwise is straying from its goal to lower transfer fees to zero.  Got below email today from Transferwise.  It states if you are sending USD (e.g.,., funding a transfer with USD...like sending money to your Thai bank account) and funding it using a "debit or credit card" the fees are taking a very healthy jump.

 

The increased fee for a debit card use is probably the one that will bite a lot of people since a lot of people like to fund the transfer by using their debit card...the Transferwise fee increasing 5 fold from 0.15% to 0.75%.  Plus when using a debit card it usually speeds up the transfer time by 1 to 2 days. This means if you were say using your debit card to fund a USD to THB transfer the total fee will now be 0.75% plus the standard fee of 0.85% + $2 which works to to being almost 2% in total fees.  

 

Now the email does not say anything about a fee change for "ACH Debit" (i.e., pulling funding from your bank account via ACH transfer to fund the transfer...not to be confused with funding via Debit Card).  So, the ACH Debit fee remains 0.15% plus the standard fee of 0.85% + $2 fee which when the total fee dust settles that works out to a hair over 1% for most typical amounts transferred.

 

Emai Rec'd 18 Oct 18.

Quote

Hello  We have some unhappy news – on November 7, we’re raising our fees to use debit and credit cards to send USD or add it to your borderless balance. Right now we’re losing money on card transfers, because the costs are higher than we anticipated, and that’s not sustainable. The new fees will let us keep the cards option open, and keep costs fair for all of our customers. You can still get a lower fee by paying by bank debit. We started TransferWise to make international payments as cheap as possible, and that’s still our biggest priority. Sometimes that means we charge too little at first, and have to even it out later. We know this can be really frustrating for you and we’re so sorry for that. Thanks for bearing with us as we learn from our mistakes. Sincerely, The TransferWise Team

 

 

[USNret]

If you take them at their word that they are losing money on each card transaction, then their logic is clear... they must raise rates to cover their costs and continue to offer card services.  To me, this seems very reasonable.  Look at the schedule of fees for your own card (debit or credit) and see what they charge for "cash advance".  It is usually quite high, and you cannot expect TransferWise to absorb this charge on your behalf.

 

For myself, I will just plan ahead a few days & use ACH.  Although it takes a bit longer, it's free.  If I need more immediate access to my cash, I can always use my American ATM card in a Thai ATM.  I hate the fees, but it's instantaneous. 

[Pib]

The charges that Transferwise apply against your debit/credit card has nothing to do with the charges the card-issuing bank may still apply.   For example, if the credit card charges a cash advance fee, where 3% is typically charged, it will still be charged....and you still have the Transferwise charge of 3.4%...you are now up to 6.4% charge by using your credit card to fund the transfer.   The fee Transferwise charges is just partially or fully cover the interchange fee "they" incur; not any additional card fee you may incur as charged by your card-issuing bank.

 

Transferwise knew perfectly well the associated debit/credit card "interchange" fees when a card is used. The interchange fees are published by Visa/Mastercard and the contract that Transferwise signed with whatever bank they use to process/bill card transactions made Transferwise aware of the fees.    Heck, that's why many Thai merchants will only accept credit cards if you pay an extra 3% which is to cover the interchange fee.  If a Thai merchant...even mom & pop store type Thai merchant...knows the interchange fee, then Transferwise did also.

 

For example, go these Visa and Mastercard webpages to see their interchange fees.

https://usa.visa.com/support/small-business/regulations-fees.html

https://www.mastercard.us/en-us/merchants/get-support/merchant-interchange-rates.html

 

Transferwise was just low-balling their card fees to help break into the U.S. market/increase customer base....nothing wrong with that. 

 

But their notification makes it sound like they were surprised (i.e., higher than anticipated to use their words) by how much the interchange fees are.  So they need to now raise their fee.  They always knew exactly the interchange fees...Transferwise is just being disingenuous about the true reason for increased fees.   True reason is they were knowing low-balling the card fees until they built-up U.S. customer base and now they need to go to higher pricing....higher pricing they always knew they would need to shift to.

 

Transferwise webpage talking use of debit/credit cards to fund a transfer

https://transferwise.com/help/article/2340345/paying-by-card/paying-by-card#/Debit credit

Quote

Debit, Credit and Deferred Debit

It's generally recommended to use a regular debit card to pay for your transfer as credit cards incur a higher fee due to processing costs.

Additionally, depending on your card and issuing bank, payments via credit card (and very occasionally, debit card) can be interpreted by your bank as a 'cash withdrawal' and may carry additional bank fees.

Unfortunately we have no way to know this in advance, but your bank that issued the card should be able to provide more information.

Finally, if you have a 'deferred' debit card - this will also be treated as a credit card when you're paying for your transfer. This is because the banks treat them in the same way as credit cards and charge the same interchange fees for them.

 

[cookai]

Venmo, Square Cash and Apple Pay Cash are all taking funds from your Debit card for 0% fee.  Not too impressed with this move from Transferwise.  Also ACH is free everywhere else.. what's this "ACH Debit fee remains 0.15%". 

[jackdd]

7 hours ago, cookai said:

Apple Pay

Afaik Apple charges something like 20-30% fees from the seller, you just don't see it ????

[USNret]

38 minutes ago, jackdd said:

Afaik Apple charges something like 20-30% fees from the seller, you just don't see it ????

That is for sales via apps in the App Store.  For Apple Pay, their slice is very thin (probably around 0.15% like TransferWise).  It is charged to the vendor, not the customer, so like you said, you just don't see it.  Nobody moves money for free. 

[TallGuyJohninBKK]

10 hours ago, cookai said:

Venmo, Square Cash and Apple Pay Cash are all taking funds from your Debit card for 0% fee.  Not too impressed with this move from Transferwise.  Also ACH is free everywhere else.. what's this "ACH Debit fee remains 0.15%". 

 

Except, correct me if I'm wrong, AFAIK, neither Venmo nor Square Cash support U.S. to Thailand fund transfers???