What is Wise? Your Complete Guide

Whether you run your own business, work freelance, or regularly travel overseas, there’s a good chance you may have come across Wise before. This popular online funds transfer service has gone through a little rebranding in the past year or so, and it’s well on its way to becoming the number one international currency manager online.

But what does Wise actually do, and how can it benefit you personally? Below, I’ll take you through what you need to know about the platform before signing up, and I’ll answer some of the more burning questions new users ask online.

How Does Wise Work?

Wise has fast become the freelancer’s go-to institution, and it appeals massively to people who travel and work regularly in various international locations. Formerly known to the public as TransferWise, the service offers both a free personal account and a business account option.

I personally use Wise and I love its ease of use and their ability to transfer money across countries, across currencies, and even within the country! It’s fast, quick, and super cheap.

Wise lets you set up international bank details for multiple different currencies – perfect if you work directly with clients and customers based in various territories all over the world.

Wise does charge currency exchange fees, however, so it’s well worth looking out for any charges that apply should you wish to change your money around within the account.

I like the fact that you can apply for physical cards from Wise, and that you can trade in up to 50 different currencies.

Is Wise a free service?

For the most part, Wise is free to use. You don’t have to pay to open an account, though sending money will incur fees that vary by currency. The main draw of using Wise for converting across currencies are there hyper competitive exchange rates.

Wise is renowned for having the lowest fees or add-on charges for FX conversion and this comes across when you use them. I personally use it extensively for making transfers in multiple currencies – EUR, USD, GBP, CAD – and it works well. If I had to make these exchanges through my bank, or credit card, or god forbid at a currency exchange counter, I would pay much more.

If you’re using the Wise debit card, you’ll have a specific limit as to how much you can withdraw each month before incurring costs (which will vary depending on where you’re based). There’s also a handful of conversion, account funding and ATM fees to consider, too.

The great news is, keeping money in Wise via more than 50 different currency accounts is free. There’s costs incurred for some international transfers, and if you move money from an international currency into a physical bank account – but they are all clearly signposted.

Why is Wise popular?

Wise is growing popular largely thanks to its ease and speed of transfers, as well as its competitive fee structure. It offers personal and business account services, too, which has opened up lots of opportunities for business owners and entrepreneurs to make and receive payments across borders.

The Wise debit card, too, also proves popular with people travelling regularly overseas – as they can simply use their physical cards to pay from multiple currencies via their Wise accounts.

Do I need to pay money into Wise?

If you’d like to make payments through Wise, you’ll need to verify your account, and top-up with a credit or debit card. There’s a small fee to pay into your Wise account(s) with cards, but once you’re topped up, you can then go ahead and make transfers.

You can top up your Wise account with your current bank account, too, if you’d like to avoid fees. Top-ups usually take seconds to process!

How do Wise money transfers work?

Wise acts as a middleman between you and your payee, much like a bank or e-wallet. To get started, all you have to do is sign up for an account, and then head to “send money” once logged in.

Warning – you’ll need to make sure you have credit in your preferred Wise account so you can make a transfer!

Then, you simply need to enter in how much you’d like to send. You can choose between international and same currency transfers. Wise automatically tells you the exchange rate if you’re paying internationally, based on their guarantee for the date of sending in question.

You’ll need to make sure your details are correct and up to date within Wise to send payments. Then, you’ll need to supply at least the name and email address of your recipient, or their bank details if you have them. If you don’t have these to hand, Wise will reach out to your recipient and ask for the information.

Then, choose your reason for sending money – is it payment for work, goods sold, for charity? This helps Wise to curb money laundering, so do be honest.

You’ll then get to confirm the transaction and the rate of conversion. Click or tap to confirm, and you’re done!

Does it take long to make Wise transfers?

Paying and transferring with Wise is usually very swift. Wise states that while your transactions start processing immediately, conversions can take up to two business days to process, and that international regulations will vary.

Do also remember that Wise may sometimes need to verify identity and address details with you, which can slow down the process. The time of day you pay, and the method(s) you use, too, can affect transfer speed.

Regulations

In most cases, Wise is regulated like a payments institution. This means that they can offer money transfer services and can move money between bank accounts. Wise is however itself not a bank – this is important to note. For that reason, they typically they cannot offer services such as savings, loans, etc. on their own. They must partner with local banks in each of the regions they operate in.

While it might seem complicated, the fact that they are regulated and that they are deeply intertwined with highly regulated banks means that the risk of keeping your money with Wise should be low.

Let’s take a look at some key jurisdictions.

How is Wise regulated in the US?

Within the US, Wise is regulated via FinCEN, the Financial Crimes Enforcement Network. It’s also a money transmitter under license through different regulators in applicable US states – Guam, Puerto Rico and the US Virgin Islands included. They are also regulated by the relevant authorities at a state level.

Wise works with partner institutions across the world, and it is the case in the US as well. As per Wise, their cash is actually deposited at one of the following banks: Goldman Sachs, JP Morgan, or Wells Fargo. Money transmission is handled money by their partner, the Community Federal Savings Bank, which is supervised by the Office of the Comptroller of Currency.

A lot of people these days are wondering Is Wise FDIC insured? The answer is Yes, but with conditions – only US customers with a SSN/EIN or a US business with an EIN will be covered. Additionally, these customers must opt to earn interest in their USD account with Wise. If you meet these conditions, your deposits are also insured by the FDIC to the tune of $250,000. In the wake of some major bank failures in 2023, it’s good to know that your interest-earning deposits with Wise are FDIC-insured and should the worst happen, you will get the full value of your cash.

The important takeaway here is that if you don’t meet those conditions, then your deposits are NOT insured. Even as a US resident/business, if you have a non-interest bearing account, your deposits are not insured. You should use your prudence and not carry overly large balances in non-insured accounts. For further clarity please refer to Wise’s disclosure on the topic.

How is Wise regulated in the UK?

Wise is regulated as an Electronic Money institution (EMI) by the UK Financial Conduct Authority.

As per the UK FCA’s EMI regulations, firms need to have in place “safeguarding” mechanisms to ensure that their clients’ money is safely held at their partner bank or financial institution. In a nutshell, safeguarding requires that funds must be held in segregated accounts (client and the firm’s money must be in separate accounts), so that if the firm were to go insolvent, client money still remains safe.

Wise Plc. is also listed on the London Stock Exchange and therefore is regulated again by the UK FCA with relations to its securities market activities.

There are a number of regulators in the UK and if you’re finding things to be a bit confusing, you can check out our article on how the PRA and the FCA function in the UK.

How is Wise regulated in Europe?

In the European Economic Area, Wise is regulated as a Payment Institution and authorized by the National Bank of Belgium. The National Bank of Belgium itself works within the ambit and coverage of the European Central Bank (ECB).

Is Wise Safe?

Yes, based on the fact that is well regulated in all its major jurisdictions, I believe Wise is secure and safe. Apart from being directly regulated, Wise works with banks that are regulated in their respective countries, which ensures that your odds of losing your money are low.

Traveling with the Wise debit card

We recently used our Wise debit card on a trip to Las Vegas and were able to seamlessly use it at payment terminals. The Wise debit card is designed for global use while you travel overseas. It links directly to your account, and you won’t have to pay interest, penalties, or advance costs.

Just remember that although the card has the Visa logo on it, it’s really a debit card, so you do need to have money in your account before using it. It’s easy enough to top up your chosen Wise account in the currency you wish to spend with via your smartphone. Just log in and top up the account you’d like to use with a credit card, debit card, bank account, or SWIFT transfer.

Alternatively, Wise has an ‘auto convert’ feature that allows you to exchange balances on the go. Fees apply, of course, but they’re highly competitive.

You can use the Wise App to manage your balance while you spend, and if you need to freeze your card, simply log in and do so whenever you want.

You can use a Wise debit card with a PIN that you activate before you travel. Once fully activated, you can either add your card to a mobile wallet or use it as a physical payment source, and it’ll only ever use funds deposited into your Wise account.

This makes it super-easy to make payments in currencies of countries you travel to on the go. If you’re on a tour of several countries, it’s all the easier to just open up your app, manage the money you’d like to spend, and – as Wise states – ‘spend money like a local’!

We never used the card to directly withdraw any cash as there was really no need to do so. Everywhere we went – from basic Taco places (Taco El Pastor was great!) to the fanciest bars – the card worked seamlessly.

FAQs