TransferWise stops offering multi-currency accounts in the UAE
Customers wishing to make transfers now need to use debit or credit cards, which is more expensive
TransferWise, a UK-based fintech offering low-cost foreign exchange services, will no longer provide multi-currency accounts to customers with a UAE address.
Multi-currency accounts are bank accounts that allow their owners to hold funds, as well as send and receive payments, in different currencies. A TransferWise multi-currency account allows users to keep money in more than 50 currencies, and convert between them at a "mid-market" rate.
“A recent regulatory update required us to change the way we offer our multi-currency account to customers with a UAE address,” a TransferWise representative told The National. “At the moment, those with a UAE address are not able to hold multi-currency accounts with TransferWise.”
Founded in the UK in 2011, TransferWise offers over 1,600 currency routes and 49 currencies. The company has 14 global offices, 7 million customers worldwide and processes $5 billion in customer payments every month.
TransferWise received its licence from Abu Dhabi Global Market’s Financial Services Regulatory Authority in October 2019 and announced the launch of its service in the UAE in April 2020.
The platform allows people to send money online at the mid-market exchange rate and charges an upfront fee. The mid-market rate is the wholesale rate at which banks and foreign exchange houses trade currencies, before they add a "spread" between the prices at which they buy and sell to customers.
TransferWise also said it will no longer allow customers in the UAE to use their online bank accounts to make transfers to other jurisdictions.
Customers looking to use the company to transfer cash abroad will instead need to use a debit or credit card, which will incur higher charges.
“In November, TransferWise made changes to the way it processes money transfers from UAE dirhams and unfortunately this means our customers cannot currently pay via bank transfer,” the TransferWise representative said.
“People can still send money from [the UAE] with TransferWise, using their debit or credit card to fund a transfer via our website and mobile apps. Our team on the ground is working hard on a solution and we hope to bring bank transfers back soon.”
The company said the change to payment methods was not connected to the closure of multi-currency account services to those with a UAE address. It also said customers with an address outside the UAE can continue to use the service.
It said updates to Central Bank of the UAE regulations on stored value facilities, which are channels through which users can store money digitally and use it to pay for goods and services, had sparked the change. The new rules are aimed at making it easier for FinTechs and other non-bank payment providers to access markets while ensuring that customers' funds are still safe.
The shift away from bank transfers to debit or credit cards, even if temporary, will make transfers more expensive for customers, said Steve Cronin, founder of expat personal finance education website DeadSimpleSaving.com.
“Now you have to use your debit or credit card to fund the transfer with TransferWise, you have total fees of up to 4 per cent, which makes the transaction more costly than using local banks,” said Mr Cronin.
He said the TransferWise multi-currency account allowed people to have a US dollar-denominated account based in the US, which is ideal for customers using the likes of Interactive Brokers as an offshore brokerage for cheap access to markets through exchange-traded funds.
“You could add or withdraw funds easily using the TransferWise account in the US. Now, people have to close them by late February unless the company can find its way through new regulations,” Mr Cronin said.
Connor Murray, who has been using TransferWise in the UAE for eight months, said he could not transfer money through his bank account in November and had to use a card instead. However, going forward, he plans to use another provider for money transfers.
“When I previously transferred money with TransferWise using my online bank account, the fee was around Dh20 to Dh30. But remitting money using my credit/debit cards incurs a fee above Dh100. This can add up if you are doing money transfers every month,” he said.
Updated: December 31, 2020 08:03 PM