Fees Warning Using Transferwise

[Pete]

I use Transferwise to send Euro payments to our favourite bullion dealers in Belgium and Germany.
The service, speed and exchange rates are very good and their fees amongst the lowest.
I recommend them and will continue to use.

However I was caught off-guard recently when I made a sterling payment to Transferwise using a credit card rather than a debit card.
I was provided the option of transferring a sterling amount using either debit card ( what I always used in the past ), credit card VISA or bank transfer.
Since the new legislation regarding merchants charging a fee for using a credit card was outlawed, I thought it made more sense to pay using a VISA card since there were no charges mentioned.

The transaction went ahead and everything seemed pretty good until I checked my Barclaycard statement.

Barclaycard had taken over £50 from my account as a monetary / cash transaction fee.
After calling Transferwise they stated that there should not be any charges but after calling Barclaycard they said exactly the opposite.

I honestly don't know who is correct so I thought I would make forum members aware that there is a risk of you incurring fees of around 3% using a credit card in these types of transactions which are free using debit cards.
 

 

[Martlet]

I dont think this is a Transferwise issue.  Its always been the case that credit card *cash transfers* have fees and that isn't changed by the legislation on credit cards.  Fees didnt get outlawed, they just forced them to be hidden, counter-intuitively.

Keep on using debit card is the answer.

[Pete]

16 minutes ago, Martlet said:

I dont think this is a Transferwise issue.  Its always been the case that credit card *cash transfers* have fees and that isn't changed by the legislation on credit cards.  Fees didnt get outlawed, they just forced them to be hidden, counter-intuitively.

Keep on using debit card is the answer.

It kind of is a Transferwise issue because they do not give any warning.
Worse than that they have written to me stating that banks should not charge transaction fees using their merchant number whilst at the same time saying "most banks" shouldn't charge. This is the reason they do not warn you, so pot luck with your credit card. Yes you can pay using a debit card but all I am adding is that you run a risk of a hefty unexpected fee from your credit card provider when you are not expecting any. Thought others might appreciate the warning so they too don't get stung.
 

[morezone]

Transactions which don't involve goods or services have always been classed as "cash advances" but there are a few (at least used to be) card issuers which didn't class it as such but probably long gone now.

Quote

When we talk about cash advances, we are primarily talking about making withdrawals at an ATM. But there are also other payments you can make on a credit card that may be considered a cash advance:

buying Traveller's Cheques
buying foreign currency
gambling and betting transactions
making an electronic cash transfer (such as transferring some money from your credit card to your current account to make sure you can pay a bill)

You also need to check that interest in not charged on the cash advance because I believe interested is occurred from day one unlike standard purchases which only incur charges after the statement payment due date.

Quote

Cash advances are usually charged a higher rate of interest. While the average interest rate for purchases is approximately 20% per year, credit card cash withdrawals will usually be charged at rates averaging 26%.
Cash advances tend to attract interest from day one. Normally, purchases you make on your card get an interest-free 'grace' period for you to pay – this can be anything from 45 to 60 days. However, no such breathing period exists for a cash advance.
As well as interest, cash advances attract a fee – this is typically 3% of the amount you withdraw, with a minimum fee of £3, although these charges can be higher. There are only a few providers who do not have this charge.

 

[Martlet]

25 minutes ago, Pete said:

It kind of is a Transferwise issue because they do not give any warning.
Worse than that they have written to me stating that banks should not charge transaction fees using their merchant number whilst at the same time saying "most banks" shouldn't charge. This is the reason they do not warn you, so pot luck with your credit card. Yes you can pay using a debit card but all I am adding is that you run a risk of a hefty unexpected fee from your credit card provider when you are not expecting any. Thought others might appreciate the warning so they too don't get stung.
 

Fair enough if that is what they've communicated to you, I dont recall anything from them about this.  Silly of them when they cannot control the fees banks charge.

[Pipers]

Morezone is the boy on these things,  

 

[sovereignsteve]

2 hours ago, Pete said:

It kind of is a Transferwise issue because they do not give any warning.

It's nothing to do with Transfer wise. The fees they quote are fees they charge you for the transaction. They have no control over the fees the CC company charge and there's no reason they would know these; they may well be different from card to card.

It's as @morezone states and has always been so to my knowledge.

[BackyardBullion]

@Pete I think you pay fee's with transferwise for debit card compared to doing a banks transfer. 

As you can see the cheapest for the £1000 is £4.29 from banks transfer or £6.28 from debit or credit card. 

I have always just done a banks transfer with them and never had issues or additional fee's from my bank

I do get your point about the charges on the credit card though - but to be honest I have always viewed (and always will view) credit cards as a tool for a bank to make money - not for our convenience.

[Jay2]

@Pete I had this exact issue a couple years ago. Paying Transferwise via Barclaycard.

I got stung with a "cash-like transaction fee" and then interest started on day 1.

I phoned Barclaycard, explained that Transferwise are providing a service specifically designed to avoid these kinds of fees, and not a recipient of cash or cash-like handlers. They said they understand the irony of charges on a charge-free service, and reversed all my fees and the interest that had accrued!

But they did warn me this was a one-off reversal and in future to be careful of small print on payments that will register as cash-like. I will definitely use Debit or Bank wire in future for Transferwise! Still a great service, mind you. I hope they grow and grow, to the point where other financial services see the folly in their fees.  

 

[Oystonousted]

Just out of interest if I bought some PM’s online from Auragentum or Goldsilverbe using my UK debit card - does it give you the option to select the currency either Euro or Pounds that you wish to be charged in?

I am aware that the selling price of coins advertised in £’s is a poorer exchange rate conversion than the euro conversion. 

Would still like to know whether you the buyer has a choice?

Cheers

[Pete]

I received a message from Transferwise confirming their fee is 0.35% + £0.80

Checking my many historic transactions it turns out I was actually paying almost twice this amount using a DEBIT card.
Once upon a time there must have been a good reason to use a debit card rather than a bank transfer - perhaps speed ? - who knows.
 

In summary, despite what Transferwise have told me, you will most likely get stung a significant charge using a credit card and more than likely you will incur a charge of a few pounds using a debit card. The only guaranteed way of paying their 0.35% + £0.80 and nothing extra is to use a bank transfer.

[Cornishfarmer]

15 minutes ago, Pete said:

I received a message from Transferwise confirming their fee is 0.35% + £0.80

Checking my many historic transactions it turns out I was actually paying almost twice this amount using a DEBIT card.
Once upon a time there must have been a good reason to use a debit card rather than a bank transfer - perhaps speed ? - who knows.
 

In summary, despite what Transferwise have told me, you will most likely get stung a significant charge using a credit card and more than likely you will incur a charge of a few pounds using a debit card. The only guaranteed way of paying their 0.35% + £0.80 and nothing extra is to use a bank transfer.

I used them first time for a year a couple weeks ago.    Had choice debit(£5.26 odd) or bank transfer (£3.50 odd).  Won’t for debit because thought might have extra insurance if anything went wrong.   But not sure if this is the case

[morezone]

52 minutes ago, Pete said:

Once upon a time there must have been a good reason to use a debit card rather than a bank transfer - perhaps speed ? - who knows.
 

Before the credit card/debit card rules changes, debit cards used to have a fixed fee for merchants.  For the sake of maybe 20p Transferwise used to allow you to make the transfer using debit cards upto £2k without any additional charge as it was more convenient/better service for the customer.  Since the change, the merchant fee is a % so they now have to pass this on.  It does mean that to avoid additional fees then you have to use bank transfer.