No longer will Malaysians sending money overseas be subjected to grossly inflated exchange rates and unnecessary bank charges following news that TransferWise has been granted a remittance licence by Bank Negara.
Foreign exchange specialist TransferWise has been granted a remittance licence in Malaysia, it has been announced.
Before the year is out, Europe’s most valuable fintech will be able to offer money transfer services to Malaysians and it is expected to launch additional services, including its multi-currency Borderless Account, once further authorization from Bank Negara has been secured.
TransferWise customers have, until now, been able to send money to Malaysia — Asia’s sixth richest country — but not from. Malaysia will join Singapore, Hong Kong and Japan to become the fourth Asian nation to offer the popular service.
Unlike banks, which tend to couple a transfer fee with a heavily padded exchange rate, TransferWise offers transfers at the “real” exchange rate — the interbank or “mid-market” rate — with only a small, transparent fee.
Though actual costs are unavailable at this early stage, BER expects TransferWise to slash 75 percent or more from the cost of sending Malaysian ringgits to the UK, Europe, the US, Australia and many other destinations. At present, banks are known to levy charges (advertised or hidden within the exchange rate) worth 4-7 percent on transfers of RM5,000 to these countries.
Other effective ways to send money from Malaysia include the OFX and InstaReM platforms. Other well-known remittance brands operating in the country, such as Western Union, are significantly more expensive.
Key to TransferWise’s access to the Malaysian market has been Bank Negara’s willingness to permit eKYC (electronic Know Your Customer) verification. Since TransferWise is a digital company with no branches or other physical outlets, customers open accounts speedily by submitting documents online or via their smartphones.
The buying power of the ringgit has dropped considerably in recent years — since 2013, MYR losses have averaged 20 percent against the US dollar, euro, rupee, Singapore dollar and Philippine peso — which has meant that goods bought by Malaysians from overseas have been expensive and that remitted earnings of foreign workers have bought less home currency than hoped for. This makes the arrival of cheap foreign transfer providers like TransferWise — firms that squeeze every ounce of value from currencies — a much needed and welcome entrant into Malaysia’s financial services landscape.