In Q3, our average fees dropped by 0.05% to 0.62%.
This means transactions have been cheaper for 1.7mil of customers.
We made several changes this quarter:
- We decreased fees when sending money FROM 12 of our currencies (USD, Japan, and more).
- We further decreased fees when you send money TO 25 of our currencies (to USD or Malaysia, South Korea and others)
- Unfortunately, we increased fees on 1 route, sending money to IDR is now more expensive.
- We also removed the fee on your first 50 GBP>GBP withdrawals from your Wise account, these transactions are now free of charge.
In new 0.62% average fee, we can also see some decreases in fees we made at the end of Q2 playing out for customers in Q3.
*Take rate doesn’t equal average price, average price eliminates route mix variance by tracking fees on fixed representative basket of transactions.
We were able to change our fees this quarter because we optimized cost, and when we do, we pass these savings back to customers.
We reduced our cost by
- i/ managing our foreign exchange risk better
- ii/ decreasing our partner fees
- iii/ more customers using Wise, which helps us scale cost
First, in Wise, when customer sets-up a transfer we offer a fixed currency conversion rate. This is convenient for customer, rate of your conversion is fixed until money arrives to Wise. However this creates cost for us - as FX rates are ever fluctuating, we do incur cost in the window between locking your fixed rate and receiving funds. This is also a reason why we offer you lower fees when you fund your transaction from money you already hold in Wise accounts - as we can access funds straight away, our FX cost is lower and we are passing the savings back to you.
Now, in past quarter not only markets stabilized and said fluctuations decreased, moreso we made improvements in our risk management systems that help us manage this risk better.
Second, some of our partner fees changed - when customers send money in and out of Wise this creates cost, over past quarters 2 things allowed us to decrease such fees we incur here - product teams building new partnerships with lower commercials and renegotiating commercials with existing partners.
Third, in short, the more customers use Wise, the better we scale our development cost! We as a company have teams developing and maintaining our product, this is what we call development teams + overheads. Now, the more customers send money via ‘rails’ we built in Wise, the cheaper it becomes to serve each unit of volume or customer. The economy of scale kicks in and we can pass these savings back onto customers.
In practice these changes resulted into fee decrease on individual routes, example of resulting change on £330 equivalent transaction from JPY >USD:
Unfortunately, additionally to decreases, we also needed to increase fees on IDR - cost of trading IDR increased for us. When customers send money to IDR we need to buy or trade the currency. Our low cost of trading allowed us to pass low prices to customers last year - now our fees have unfortunately increased.
Here are some of our reprices in numbers:
|Fixed fee reduction||Variable fee reduction||For example if you send...|
|Sending GBP Low cost to USD||- £0.32||.. sending £1k GBP Low cost to USD, you save £0.32, 7.7% decrease.|
|Sending GBP Low cost to MYR||-0.04%||.. sending £1k GBP Low cost to MYR, you save £0.6, 12.4% decrease.|
|Sending GBP Low cost to PLN||-0.06%||.. sending £1k GBP Low cost to PLN, you save £0.89, 17% decrease.|
|Sending USD Bank debit (ACH) to GHS||-$1.5||-0.16%||.. sending $1.2k USD Bank debit(ACH) to CAD you save $3.38, 21.3% decrease.|
|Sending GBP Low cost to KRW||- £0.10||-0.15%||.. sending £1k GBP Low cost to KRW, you save £1.58, 20.1% decrease.|
|Sending GBP Low cost to CZK||-0.11%||.. sending £1k GBP Low cost to CZK, you save £1.09, 21.8% decrease.|
|Sending GBP Low cost to HRK||- £0.48||-0.45%||.. sending £1k GBP Low cost to HRK, you save £4.92, 47.1% decrease.|
|Sending GBP Low cost to IDR||- £0.23||+0.12%||.. sending £1k GBP Low cost to IDR, your fee increases by £0.96, 26.5% increase.|
|Sending USD Bank debit (ACH) to CAD||-0.13%||.. sending $1.2k USD Bank debit(ACH) to CAD, you save £1.28, 16.1% decrease.|
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