Transferwise and Bitcoin: Two P2P payment platforms that can save business owners money


The rise of the peer-to-peer (P2P) app economy (sometimes called the “sharing economy”) has revolutionized a lot of the way we transact business. Apps like Airbnb, Etsy and TaskRabbit now allow buyers and sellers to connect via an online marketplace for a nominal fee, greatly reducing the costs of selling via intermediaries. We’re now seeing this same model applied within the finance industry—P2P payment platforms that allow people and businesses to pay and accept money without incurring the typically hefty costs of banks and payment processors. 

Two P2P payment platforms in particular have recently received a lot of fanfare: Transferwise, an international money transfer platform, and Bitcoin, a digital currency that operates independently of a central bank. In both cases, small- and medium-sized businesses, particularly those that work with global suppliers or have international customers, can benefit greatly from the reduced fees that come with using the platforms. Here’s a look at how that works: 

Transferwise: For paying international vendors and contractors

For many businesses or freelancers that work across different countries and currencies, transferring money from one bank to another is often slow and expensive. Money needs to be wired from bank to bank, which can take 4-7 business days, and bank fees and unfavorable exchange rates can often take a huge portion of the transfer. This can be especially burdensome when having to make regular payments to vendors or contractors as opposed to one lump sum payment. 

Transferwise, a relatively new P2P international money transfer platform, not only cuts the transfer time to 1-4 working days, but also offers a fair fee and cheaper, more transparent exchange rate than most banks. 


How does it work? The concept started with the founders of Transferwise, Taavet Hinrikus and Kristo Käärmann, two Estonian friends working in London. Hinrikus, who worked for Skype in Estonia but lived in the UK, was paid in euros into an Estonian account. Käärmann received British pounds from his work, but needed pay a mortgage in Estonia. Tired of paying bank fees every month for every transfer, the two devised a simple solution: Hinrikus would transfer euros each month to Käärmann’s account in Estonia, and Käärmann would put an equivalent amount in pounds in Hinrikus’ British account. Because currencies don't cross country borders, these transactions aren't subject to volatile exchange rates. 

Transferwise is simply a platform that can match and process these types of exchanges at a grander scale. Since it started five years ago, it has processed more than $1 billion in payments and currently supports 37 currencies in 50 countries. 

In its early years, the platform primarily processed remittance payments and transfers to family and friends in other countries. But now that Transferwise supports business accounts, it has become a way for small businesses to make international payments to suppliers, freelancers, and employees at a much cheaper cost.

Unfortunately, U.S. businesses will still need to pay SWIFT bank fees to send international payments, but they can still take advantage of Transferwise’s cheaper exchange rates. Opening a business account with Transferwise is free, and they do have a handy tool that allows you see exactly how much is sent and received before you make a transfer (a process often obscured by banks). The platform also allows you to set alerts to take advantage of more favorable exchange rates. 

Bitcoin: For accepting customer payments

When Bitcoin first began in 2009, its early days were beset by uncertainty about how this cryptocurrency could be used. News about the volatility of the currency, as well as warnings about hacking and fraud kept many away. But as things have settled down and more secure platforms have been created to accommodate Bitcoin transactions, more and more individuals and businesses have begun to accept Bitcoin—and for good reason.


To preface, businesses aren’t accepting Bitcoin in and of itself. It is still too volatile to hold onto as a currency; it’s value could drastically increase or decrease from day to day. But now popular Bitcoin platforms such as Coinbase and Bitpay have created tools that allow businesses to accept payments in Bitcoin and instantly exchange it into dollars (or whatever the local currency is) so that merchants are guaranteed to get the exact value they charged.

As a merchant, one of the biggest benefits of running payments through Bitcoin is lower credit and debit card transaction fees. Small businesses often pay 2-4% per transaction, oftentimes with minimum fees and monthly fees. Bitcoin can bring these processing fees down to 1% or less. Coinbase, for example, charges nothing for the first $1 million in bitcoin payments and then 1% after. Bitpay charges 1% with unlimited transactions. 

All Bitcoin purchases are final, so merchants also don’t have to deal with chargebacks. Credit card chargeback fees can cost between $5-15, and when they are due to fraud, the merchant could also lose the cost of the product. For refunds, customers will have deal directly with merchants instead of filing a complaint with the bank. Payouts are also much quicker than typical payment processors, taking only a few business days to transfer into a merchant’s bank account. 

Currently an estimated 100,000 businesses around the world accept Bitcoin, including major companies such as Expedia, Overstock, and Microsoft. This number is expected to grow further as other business platforms begin to integrate with Bitcoin—Shopify recently integrated its platform with Coinbase, enabling thousands of smaller e-retailers to accept Bitcoin via their online shops. 

It should be noted that Bitcoin is not the only cryptocurrency on the market; a whole sub-genre of "altcoin" options include such players as Litecoin, Dogecoin, and Peercoin. Although chances are slim they will achieve the same level of popularity as Bitcoin, some of the cryptocurrencies have distinct advantages in terms of the blockchain technology they are built on. Inevitably, we may see some of these cryptocurrencies merge to share resources—in fact, some predict that the future of cryptocurrency is not as a currency but as a standard protocol for online money exchange

Banking from the cloud

The growing popularity of Transferwise and Bitcoin, along with other new P2P payment platforms such as Venmo, Square Cash, and Google Wallet, all signal toward a larger trend of moving financial services into cloud. As we become more comfortable with conducting important business and personal transactions online and off-paper, we may start to see even more innovations arise. Already we’re seeing new ideas such as Uphold, a cloud banking platform that allows you to hold and move money between various currencies, including Bitcoin and gold/silver; as well as financial chatbots like Penny, which uses artificial intelligence to provide on-demand answers to questions you have about your bank account and spending habits.

We’re excited to see what they dream up next. In the meantime, if you’re interested in learning more about any of the financial platforms mentioned in the article, and find out whether they could help your business, please contact us at