At my job at a web development company, we frequently need to make currency exchange transfers to pay contractors and accept payments from international clients. This most often involves transfers in both directions between Canada (CAD) and the United States of America (USD), but sometimes between Canada and Europe (EUR) and between Canada and Australia (AUD) as well. At the beginning, we used our bank (RBC Royal Bank of Canada) but quickly discovered that we were losing a lot of money on currency exchange and wire transfer fees even after we were put in touch with their preferred rate currency exchange business solution. If you need to transfer currency internationally or even between 2 different currency accounts in Canada, it is a no-brainer to consider using a company or service other than your bank. We use a combination of Wise (formerly TransferWise) and OFX (formerly CanadianForex). What I’ve learned in using Wise and OFX can apply to both business and personal transactions.
Wise advertises that they provide you with the mid-market rate, which is true. But they charge you a percentage fee on top. OFX, on the other hand, gives you a rate worse than the mid-market rate (but still much better than you’d get at a bank), and charges a $15 flat fee for smaller transfer amounts (below $10,000 Canadian dollars) and no fees for amounts above $10,000 CAD. (September 16 update: OFX has given me this referral link that waives the $15 fee for new accounts.)
Generally, I have found OFX to be cheaper except for transfers of only a few hundred dollars, where the $15 flat fee is a larger percentage. In terms of pure dollars, OFX is the clear winner for me for larger transfers: for example, for a recent transfer of $23,000 USD to CAD, OFX provided a rate of 1.3109 and no fees, for a total amount received of $30,150.70 CAD. Wise provided a much better rate at 1.3159, but charged fees of $138.17 USD, for a total amount received of $30,083.88.
(It’s important to note, though, that when I first looked into OFX, I had to call them to get the preferred rate that’s currently on my account. This is probably not difficult to get from them, but it does require you to call them. On the other hand, Wise offers the same rate for everybody.)
But the story is not that simple once you dig into the details. First of all, you need to consider whether you’re sending money or receiving money.
If you’re receiving money, do you have a USD bank account in Canada or just a CAD account? It can be convenient to have a USD bank account in Canada to deposit cheques, receive wire transfers, transfer money to CAD at a time that’s right for you, or maybe not even transfer all of the money back to CAD if you need to then pay out some of that money in USD again (thus saving transfer costs x 2). But cheques are slow and require your time to receive and deposit them, and sometimes inconvenient for clients to produce (and mail to you!). If you receive a wire transfer, there is a fee to receive it ($17 at RBC), a fee for your client to send it, and sometimes an additional fee that gets charge in transit — for some transfers I notice that we’ve lost another $18.50 by the time it arrives in our account.
Having a US dollar account in the USA can save you and your clients money. But it also requires setup and additional management. Wise has a killer feature for receiving payments: the borderless account. The borderless account gives you account numbers within Australia, England, Europe, and the USA so that clients can send money to an account local to their country or within the EU. This is incredibly convenient and helps you receive the money much faster, with a much lower or no transaction cost for your clients. I have found the borderless account to be very useful and easy to set up. Although I still default to using OFX to transfer incoming money from USD to CAD, the convenience of Wise sometimes wins out.
For sending money (from a CAD account to contractors’ international accounts), OFX is the winner in my case, although Wise might soon become more competitive. The main issue is that Wise has more limited and costly options for getting the money to them. Wise is currently only a bill payment option for the Bank of Montreal, National Bank of Canada, Central 1 credit unions, and Tangerine Bank. Wise does not support pre-authorized debits for business accounts, whereas OFX does. This means that with OFX you can incur minimal or no additional fees (on top of their exchange rate spread) to send the money. Wise charges quite a meaningful additional fee for sending money using a debit card or a credit card. I actually found Wise’s fees for funding a payment with a credit card to be cheaper than with a debit card, but then I was hit with a surprise cash advance and interest fee on our Scotiabank credit card (which they later did a one-time refund for). Wise claims that the additional Scotiabank charges were the result of a mis-classification of the transaction on the part of Scotiabank that does not happen with all credit cards, although I have not verified this.
In general, I am quite pleased with both Wise and OFX. I can fully recommend them as being convenient, reliable, and much cheaper than using my bank for transfers between Canadian dollars and at least US dollars, Euros, and Australian dollars. There are several factors to consider beyond the rates and fees that Wise and OFX charge, thus it could be worth it for you to be a customer of both of them!
