Wise, Google Pay offer cheaper cross-border money transfers

By Jeff Domansky, May 11, 2021

A new partnership of Wise and Google Pay means US mobile wallet users can send money to friends and families across borders cheaper and faster.

The launch lets Google Pay users in the US send money to Google Pay users in India and Singapore initially and to more than 80 countries in Wise’s network by year-end.

“Providing people with a simple and seamless way to send money to friends and family safely is more important than ever – be it for everyday use or in times of need,” said Harsh Sinha, Chief Technology Officer at Wise. “Wise’s mission is money without borders – instant, convenient, transparent, and eventually, free. Through this collaboration, and with the integration of the Wise Platform, Google Pay customers can now send money internationally cheaper, faster, and easier.”

The Wise Platform API is now used by banks, businesses, and software companies in ten markets to replace the existing patchwork systems banks and other payment providers currently use to move money internationally.

Less expensive cross-border money transfers

Unlike most banks and payments companies, Wise uses the real exchange rate with no hidden fees or markups.

Wise charges an average fee of 0.69% and is up to eight times cheaper than other payment providers and banks, who often hide fees in an inflated exchange rate. Wise estimates it saves its customers over $1 billion a year.

During the global pandemic, particularly in hardest-hit countries like India, money transfers from friends and family abroad can be lifesaving.

“Cross-border payments are not just a lifeline for loved ones; they form the financial backbone for many economies,” said Josh Woodward, director of product management, Google Pay. “For many people with families abroad, sending money home is something they do as frequently as every month. By teaming up with Wise, we are providing a way for Google Pay users to send money quickly, safely, and reliably from the Google Pay app.”

Wise will make the first transfer free on amounts up to $500 until June 16. By the end of the year, US Google Pay users will be able to send money to 80 countries through Wise.

Remittances key in the global economy

According to the World Bank, remittances to lower- and middle-income countries (LMICs) reached a record $554 billion in 2019, overtaking direct foreign investments. In 2019, the top five remittance recipient countries were India ($83.1 billion), China ($68.4 billion), Mexico ($38.5 billion), the Philippines ($35.2 billion), and Egypt ($26.8 billion).

“In relative terms, the top five countries which received the highest remittances as a share of gross domestic product (GDP) in 2019 were: Tonga (37.6% of GDP), Haiti (37.1%), South Sudan (34.1%), the Kyrgyz Republic (29.2%), and Tajikistan (28.2%),” the World Bank reports.

Transfer fees and Beer without Borders

On its wonderfully tongue-in-cheek “Bieres sans Frontieres” (Beer without Borders) website, Wise calls for more transparency on bank remittance and cross-border fees. It notes banks and brokers charged people £30 billion ($42.5 billion) to send money from the UK, France, and Germany to loved ones abroad in the past ten years. That’s more than the annual foreign aid budgets of the three countries combined!

The average global cost of sending money abroad hovers around 7%, although some banks and financial service providers do their best to obscure actual costs.

Wise cheekily takes the call for transparency one step further by teaming up with the Cross Borders Scottish brewery to sell three beers branded with the alcohol content matching the exorbitant transfer fees. They include:

Bier Gegen Profitgier $€£ Hefeweizen (Beer Against Greed for Profit)- a wheat beer showing the average remittance fee charged by banks when sending beers abroad from Germany with an alcohol content of 7.3%
Liberté, Égalité, Pas de Frais Cachés! Saison (Freedom, Equality, No Hidden Costs!) – a fresh farmhouse ale highlighting the average remittance fee charged by banks when sending beers abroad from France with an ABV of 6.3%
What the FX! – a malt-forward Scotch ale produced to highlight the average remittance fee charged by banks when sending beers abroad from the UK with an ABV of 6.8%.

We note that even though the campaign is fun, Wise donates money raised from the project to the Choose Love refugee charity.

Google also announced that US Google Pay clients can send funds cross-border using Western Union, although US sender fees are 6%, substantially higher than using Wise. For those without internet connections, that’s often the only viable option. However, increased mobile adoption in developing countries is changing market dynamics and access quickly.

Ten million people and businesses now use Wise, which processes over £4.5 billion in cross-border transactions every month.

Needless to say, there are many more opportunities for disruptors like Wise and other fintechs working hard to lower financial costs and increase financial access around the world. It’s no wonder banks are getting nervous. Technology can do extraordinary things at times.