The beginning of TransferWise cofounder Kristo Käärmann’s story will be familiar to many Canadians: after moving from Estonia to London, England around 10 years ago, he began working as a banking consultant and sending money back home – only to discover that every time he did so a significant amount would disappear thanks to the remittance fees charged by his bank.

“They would say there was only a 15 pound charge for international transfers, but they didn’t use the real exchange rate – they put another five per cent margin on top,” he says.

However, Käärmann had an advantage that many immigrants who send remittances back home do not: TransferWise cofounder Taavet Hinrikus, who was employed by Skype’s Estonia division and being paid in Euros, even though he lived in London and his living expenses were in pounds.

“So what we started doing was common sense,” Käärmann explains. “We looked at the exchange rate, and I put my pounds into his account in London, and he transferred the Euros from his bank account in Estonia to mine in Estonia.”

“Soon we had a group of friends on Skype chat, and whenever anyone needed pounds or Euros, we would post there and see if anyone wanted to do the exchange on the other side,” Käärmann continues. “It solved the problem very nicely.”

Portraits
Kristo Käärmann

In 2011 Käärmann and Hinrikus officially founded TransferWise, a business modeled after their peer-to-peer exchange concept that can now be used to swap between the currencies of some 500 countries – including, as of April 11, Canada.

“This is not a European problem, or a British problem, it’s a global problem,” Käärmann says.

As with Käärmann and Hinrikus’s initial idea, TransferWise users can log into the site (or the company’s mobile app) and view the amount and type of money held by others who have signed up, so that if, for example, the initial user wants to exchange Canadian dollars for American funds and enough users want the opposite, the company will conduct the transfer for a nominal fee – and guarantee a mid-market exchange rate.

“It doesn’t matter if you’re sending a million dollars, a thousand dollars, or five dollars, the fee is the same,” Käärmann says.

As for what made him bring TransferWise to Canada, Käärmann says that with 20 per cent of its population born outside the country – a number that climbs to nearly 50 per cent in Vancouver and Toronto – and 2.8 million Canadians living abroad, there was high demand for his company’s services in Canada.

“I think we had around 20,000 e-mails from people wanting us in Canada,” he says with a chuckle. “We couldn’t really say no.”

The company presently transfers approximately $750 million USD per month for its users, has more than one million customers worldwide – and, Käärmann says, puts approximately $1 million USD back into consumers’ pockets every day.

“A million dollars that otherwise would have gone into bankers’ bonuses, we’ve been putting into consumers’ pockets,” he says. “That’s something we’re very proud of.”

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