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Saturday, September 5, 2020

Forex fintech companies: Why TransferMate is losing out to TransferWise - and may have even more serious problems coming its way

With most mainstream banks embracing the internet now, even going mobile, one might wonder why one should bother with new financial services startup companies. There are at least two reasons I'd like to call out for the purpose of this piece.

First, the likes of Monzo and Revolut are digital and even mobile natives, meaning everything about them was designed for the internet/mobile experience from the moment you open your account to how you conduct your banking business about them. Traditional banks, on the other hand, when they embraced the internet/mobile did it (some still do) as an afterthought.

Second, when it comes to transferring funds from an account held in one currency to another held in a different currency, most traditional banks would charge you obscenely high fees and commissions for what is now a purely automated process. Hence, the arrival of fintech companies dedicated to this niche market: Painless, fast, reasonably priced wiring of funds from, say, a dollar-denominated bank account into a euro-denominated account.

Where these forex fintechs markedly differ from traditional banks is that where the latter provide forex (foreign exchange) transactions somewhat as an ancillary service and bleed you for the privilege, for forex fintechs it is their bread and butter. Because of that they developed everything about the way they work (technology, processes, manpower, location) to make the process as efficient as possible. 

Two of the best-known forex fintechs are TransferWise and TransferMate which I have been using for several years now for both my business and personal finances. As the following examples show I have found TransferWise better attuned to my business and personal needs, while TransferMate has gone from bad to worse.

The most shocking thing about TransferMate is how clunky and user-unfriendly the platform is. As an HR technologist I'm used to systems: It is therefore baffling that after so many years of using TransferMate every time I want to initiate a transaction I spend an inordinate amount of time trying to figure out where to enter the source account, the recipient account, the type of transaction and sundry required fields. Any combination that the capricious system is not happy about will result in your moving to the next screen with an abstruse error message. Try to move back to the previous screen and everything is gone, so you'll have to start all over again with no guarantee of what field/sequence of data needs to be corrected. 

Of course, you can always try to contact the support team but if  you happen to be launching this transaction in the evening or over the weekend it may well be a couple of days before anybody gets back to you (see below on quality of TransferMate support staff) which negates the whole purpose of a forex operation where you want to block the current rate on offer. Wait/waste an hour and the operation may no longer be worth your while. Wait a couple of days as TransferMate often does and if you carry on you may actually be losing money. 

Compare this maddening system with TransferWise (see below screenshot). On the landing page they start with the most important piece you need: How much you want to change in your currency and how much you get. From here you may decide if you want to proceed or not. Very efficient. Fat chance of getting that with TransferMate where you have to go through the whole rigmarole explained in the previous paragraph before getting a sense of whether the rate is interesting enough that you want to log in and book the trade. 

And then once you decide you want to book with TransferWise (which in most cases you'd want to because their rates are systematically better than TransferMate) the next screen is simplicity personified: Select the account you're sending funds from, the beneficiary account and click SUBMIT. Et voilà! In a couple of minutes and as many clicks your transfer is on its way. Nothing like the horror story that TransferMate can easily turn into. 

Some typical examples of TransferMate nightmares:

- If the amount is above a certain amount you need to contact them by phone. Meaning that as explained earlier forget about booking the rate you want.

- TransferMate may ask you to provide a proof of wire of the funds, which can become a completely absurd request when the request is made after the funds have arrived. If the funds have arrived in their account, they must have been wired in the first place, mustn't they? And if TransferMate wants to make sure that the funds have indeed been wired from your listed bank account, can't their bank tell them?

-Worse, I've seen cases where TransferMate would not even accept the standard wire notice document delivered by your bank because of some weird reason like the logo or color scheme or other fanciful reasons. Yes, you've read right, a small fintech like TransferMate would challenge the payment advice template delivered by a major bank like Société Générale or ING or Bank of America. Welcome to the looney bin known as TransferMate.

-Sometimes, it may catch TransferMate's fancy to require you to send them a screenshot of your bank account whereby they will see all your personal and confidential data. They will justify this in lieu of the payment advice request mentioned earlier on. Of course, this is not only a violation of your confidential data but you and I understand why they would do that: Get more information on your spending and income patterns to serve what can only be sinister aims.

-All of these tricks serve a single purpose: During all this time, the money you wire into their account is being used to shore up their cashflow for free. Something that I NEVER saw being done by TransferWise.

-Don't try to reason with TransferMate's staff: Their incompetence is so obvious at the first call (what do you expect from people paid peanuts?) that talking to them is akin to trying to have a chat with a brick wall. You'll go nowhere, which is exactly what TransferMate wants: Remember that during all this time YOUR money sits in THEIR bank account for free.

-For Spanish, French and other non-Dublin-based Europeans speaking a non-English language, TransferMate's sales practices are so questionable that they verge on the illegal in some jurisdictions. For one, their Terms and Conditions (T&Cs) are only available in English so to a French user, sure, the platform is in French so they can conduct the transaction in a familiar language, but as soon as they want to check some specific T&Cs, sorry, only English is available. In addition, their French-speaking support person will have in their email signature a French phone number to give French customers the impression s/he is based in France when s/he is based in Dublin, Ireland. Even the company's French office is an empty shell: It refers to InterPay (address: 18 rue Pasquier, 75008 Paris) but this company  was deregistered in...2019! Yes, you read right: In September 2020,  TransferMate is using as their French address a company whose legal existence was terminated more than a year ago. If you run into a legal issue with them, fat chance of getting redress through your country's court system.  

Misleading customers in such a way is more than borderline: Regulatory agencies in both Ireland and Europe are currently scrutinizing TransferMate's practices. Another Wirecard scandal in the offing


In summary, not only does TransferWise deliver superior user experience, but TransferMate's current legal situation prompted by its sales practices is scary: As the Wirecard scandal showed, your funds can be blocked overnight following an investigation by regulatory agencies. I don't know about you, but I am not willing to take that risk. 

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