Lead Developer | TransferWise
Sean is a senior software developer at TransferWise with an extensive background in Web and mobile technology. He has a passion for creative and modern product development, working with small to medium-sized teams in an Agile environment. He is experienced in project and team management.
Sean Hodges on Running Remote Conference
So we’ve had some really good speeches so far, some good presentations.
Really exciting ones around productivity, communication. I thought, “What could I offer as exciting? “Well, payroll. So, yeach.
So, I’m here. I’m Sean Hodges. I’m anengineering leader TransferWise. I work on the business team and what we do is, effectively, we help businesses to send money internationally. TransferWise itself Hands up anybody who’s used TransferWise before. We’ve got a fair few people. I don’t need to say what TransferWise does then, but for those of you haven’t heard before TransferWise, the way it works is it does international money transfers but it does them in such a way that we can do very low cost, very easy, and very fast transfers. And the way we do it is we send the money into a domestic bank account within the country that you’re in and then at the other side we make an instruction to pay the money out to your recipient. And that’s basically how it works.
We’ve got about three million customers at this stage and that’s still growing. And we have about two billion… They’re sending about two billion pounds sterling through our system every month, which is pretty incredible. And what we find is that we’ve actually worked out that that’s about 2 million pounds worth of savings that are being made overall each month as well. So the teams I work with, we’re very distributed so we have offices around the world. We’ve got America, UK, Estonia, Singapore is in there. Australia. And so we are quite attuned to some of the challenges that many remote working companies have as well.
But, one of the things. So what I wanted to do was to just sort of explain where we were coming from cause for those people who have local bank account there so they operate locally and don’t have remote workers they actually find that their bank accounts are really actually weren’t really well they can they can send money very cheaply very fast it can often be almost instant because they have some faster payment style system in place but the problem is for remote working companies actually have some issues.
So when you need to send money to employees overseas, the banks often actually charge a fee for the process and you might not know it because the fee’s often hidden within the exchange rate. So what you find is that you’re actually paying a lot more than you should do but you’re not aware of it. The other issue that happens is that the speed of the transfer is a lot slower, very often a lot slower. It can take several days for the money to get its destination. And the other thing is you also have to deal with the exchange rate itself. So, when the employee … You intend to send the wages to the employee so they can pay their mortgage and what they actualle receive isn’t what you actually agreed because you have the exchange rate. It’s fluctuated and you haven’t taken that into account. Or you haven’t been able to.
So at TransferWise we have some features that we’ve been working on to sort of try and tackle some of these issues. One of the main things – I mentioned already – is that we focus on trying to make our payments as fast as possible. But, at the same time, we try to keep the balance of trying to keep the costs low. In fact, every time we manage to make any kind of savings on any of the currency routes that we support the we immediately passed that to the customer so we’re constantly trying to drive down our fees. I think just last week we actually announced that we’d reduced a whole bunch of fees down from 0.5 percent to 0.3. Thre’s some stuff on the Twitter account if you are interested. And we also were aware that whilst we can make the payments as fast as possible, it’s not always possible for every single type of route or payment type. So what we’re able to do is we have a tracking system that we use called our delivery estimator that actually measures the speed of these transfers we use that to then give back to the customer how long it will take or it should take for their payment to actually make its way to the destination.
We also have a feature that’s called pay to email. And what they use that for is when there are people overseas who want to receive money who want to be paid money, they’re able just give their name, email address a bare bit of information to the company and the company can then use our system with that email address. And they will receive an email from us they can basically use our system securely to just submit their bank details and receive the money themselves. And that’s really useful. It means that you don’t have to you know negotiate that process of like sending all your money ahead of time. A lot of people might have that already, but for those who don’t have it, this is quite a convenient feature.
Another one we have is fixed target payments. It’s a thing we call a feature that we have that allows you to set a guaranteed rate for the money that’s being sent. So, I mentioned earlier the fact that the exchange rate can fluctuate and that can cause issues with making sure, that the recipient actually gets the amount of money… that the employee gets the money. And this is a feature that really comes in useful for that because it it means that at the point of payment we can guarantee a rate and when you send the money the employee will actually receive the wages that you’d originally anticipated.
But, of course, many companies don’t just want to pay one employee as you grow you want to pay more and more workers and you’re going to need a solution that scales. So, we have a feature that we call batch payments and this is what we use for that sort of solution. So, it’s a very simple system that allows people to set up all of their payments – pay for them all in one go – and send them out. And they can do that month by month much more quickly than doing each individual transfer. And this works multi-currency as well and it also supports some of the other features I just mentioned. So you can use pay with email with batch payments.
The way it works is pretty simple. So you can download a spreadsheet from our site. Fill it in with Excel – some people might be aware of or familiar with this sort of format. When you’ve filled in all the payment details, you then just upload when you’re ready to pay through our websity. And you can pay using your bank account or you can use our bord erless feature wich I’ll come back to in a minute. Once you’ve uploaded and paid, we then have a tracking system so you can track how payment’s getting on and when it’s completed.
I wanted to touch a bit on the people who are actually being paid because that’s important, too. If you’re employing people remotely, they need to be able to receive money. And if they’ve moved abroad recently or if they’ve traveled quite a lot then they can have trouble actually opening up a bank account, actually having this ability to actually receive the money from the employer. And we realized this quite early on in the process, but we found that we needed a new kind of feature for this so we invented the borderless account for ourselves. And what this allows you to do is the employee can actually open one of these and they can use it to receive money from the employers. And actually the way it works is it uses all the same processes that we use for our standard transfers but the user effectively has an account that they can receive the money in and they can transfer it between currencies at their leisure and then they can spend on it.
We also, back in April, we released our debit card. This makes it much easier – it completes the whole cycle. So a recipient can actually, an employee can actually receive the debit card. They can use borderless to receive the money from, say, batch payments and they can then use that debit card anywhere. I think we have local bank account details that we support in four different currencies and then there’s, I think, another 36 currencies that you can hold money in. We also, much more recently, we started looking at releasing the business debit card. So that’s something that’s coming fairly soon and that will allow employers as well to be able to use the card for their borderless accounts.
So, I wanted to talk a bit about some of the remote working companies that we work with. But I thought that a good story to start with would be actually how we came about. Some of you may have heard the story already, but for those of you who hadn’t, this is Taavet and Kristo. They were both…So effectively, they both had a problem. Taavet was based in London where he was receiving euros and he needed sterling. Kristo, on the other hand, he was receiving sterling but he needed to pay his mortgage in Estonia in euros. So they worked out an arrangement between each other that they could just exchange… they could just work out the mid-market rate, the exchange rate, and effectively negotiate between themselves that they’ll pay into each other’s accounts. And they realized that this is something that a lot of other people can actually use. They thought millions of people will be able to make use of this. So they thought, “We’re going to need to do something a bit more than a spreadsheet.” So they started to build TransferWise.
So, Hotjar is one of the remote working companies that is a customer of ours. And they’re completely remote working. They work on analytics and optimization tools for websites. And their CEO, David, he had an idea that he wanted to create a lifestyle for people who worked for him, including himself, so that they would be able to work wherever they wanted and they wouldn’t have all the hassle of having to work in an office. They hit a few problems straightaway. There were operational things that they had to deal with.
But one of the major ones that they had was that they had to actually pay these employees that they were hiring. And they started doing this using their bank and then they actually got blocked by their banking motor because they were sending all this money to different countries and it looked very different from their normal operation. So they hit this problem. They also found that even before that they were having trouble with actually negotiating all of this and they had somebody working in finance who was spending an entire day just trying to get all this money sent to the appropriate people for payroll. So they actually started using our batch payment system and they said they’ve saved thousands of euros just using TransferWise, just using the batch payment system for all of this. And they’ve actually saved nearly an entire day for this person in finance.
I want to just touch a bit on the touch points we have for moving money through our platform. So effectively, I mean, I mentioned how Hotjar had trouble with their bank and motorand we obviously have to try to manage that within our own system where you have a lot of automated processes that we have to put in place. So, of course, we have the on boarding, the actual getting people signed up and verified on our system. So that’s an important starting point. And then we have the website. We also have an API and a mobile app and that allow people to make the payments also to request the transfers. We have to validate that the transfer can actually be made. So we tried to do that up front to make sure that it’s actually feasible. We then go through a linking process. So this is where your payment will come into our bank. Your bank account will pay into our domestic bank account or you might choose to use borderless instead and we make a link between that and the instruction. We then have to deal with any anti – money laundering, the fraud and sanction side of things. So we have systems in place, we have quite an advanced fraud and AML system that we have built our selves that handles a lot of that. We also have people who focus on, specializein in that as well. So the automation is always being checked by people as well.
Then we have to go through the conversion process and this is where we use our peer-to-peer process of paying money into one account and then paying out the other. Now, of course, sometimes money will flow in one direction but it might not flow the other way so quickly, so for those times, when we have an imbalance, we have liquidity operations that allow us to keep balances in check between different accounts. And then finally, we do the payout routing. And all of this is handled by our customer support system which has our customer support people handling all the questions that come in. We have dedicated customer support. We also have different channels that people can use for all of that which is pretty important. It’s one of the big things that people say about us is that we have a very quick response for customer support.
Veylinx is another customer that thought I’d mention. So, Veylinx is a Dutch startup. They do… they’re basically an online auctioning platform but they have a bit of a twist, so effectively what they do is they allow bidders to do sealed bids and they use that to measure the market demand for products and then they feed that back to the people who are selling these products.Veylinx, their troubles were really about price. They were using their bank to begin with and they found it was really expensive. They’ve got remote workers in Switzerland, Morocco, the UK, and they were finding it very difficult to pay them in an affordable way. And so they then looked at other providers and they considered using PayPal, but then they found that that wasn’t ideal either. They were still paying this huge markup on the fees – sorry – on the exchange rate in order to actually pay their employees.
And I could give a little example of this one – I’ll just touch on it. So, this is actually a bit of market research their consumer – what’s it called now – consumer insights -don’tquote me on that – actually put together. We have this on our site as well so you can check it out for yourself. Effectively what it is is we compare two different types of payments. So, with PayPal, we looked at the … so in both cases of TransferWise and PayPal, we compared the markup price on the exchange rate versus the upfront fee. Now, of course, PayPal, in this case, I believe this wasn’t a business account that was used. If it’s a business account then you have your monthly fee that you pay. But this had no upfront sender fee. But we had a £ 7.77 fee for TransferWise. But then with the exchange rate, you can see thatPayPal wascharging effectively £82.49.But you can see that with us we didn’t have any markup on the exchange rate. So you can see the difference is quite vast between them. The total cost was actually much higher for PayPal than it was for TransferWise. Now, these figures, obviously, they scale up, so if you’re paying lots of employees this sort of sums then you’re paying a lot of money.
So, I wanted to summarize by just touching on like what we see as the future when it comes to paying remote workers. We have, at TransferWise, some product pillars that we use as part of our part of our overreaching mission and I thought that this adapted quite well over to remote working and the sort of challenges, the sort of things thatwere important to that. So one of them is actually price. So, I mentioned before about, you know, when you’re looking at different providers, it’s not always easy to look at themand work out exactly how much you’re going to pay quite often because the fee is actually hidden in the exchange rate. So you need to kind of consider that and see just how expensive is it going to be when youstart scaling up and start sending all this money.
Convenience. You need to make sure that when you’re sending money that it’s not going to take someone like days and days to send all this money. It’s going to be very costly to do that. So you need to process this straightforward and simple, something like batch payments that will allow you to do it in a very optimal way.
Trust. So trust could be seen as the trust between the employer and the employee, for example. So for somebody who’s taking on a job, they want to make sure that, you know, they’re definitely going to get paid by their employer. They may never have metthat employer, so there’s that element of trust that needs to be overcome. Having some sort of platform that allows that kind of commitment side of it,that’s making sure that people, a recognized brand, gives them that level of trust that compared to if you say I was just going to send straight to your bank account.
Coverage. So, when you’re hiring people you don’t really want to be bound to which countries you can send money to. You want to be able to hire talent anywhere in the world wherever you find it. And,of course, that comes with itschallenges when it comes to coverage because you’re always going to have limits on what the routes are. I mean, at TransferWise, we have 750 different routes. That’s not every single route. So you have to consider that there are always going to be limitations there but look at the providers and see which are offering the appropriate sort of coverage for what you need to do.
And finally, speed. So, speed is, I mean when we talk about the speed of TransferWise, we talk about the speed of a transfer, how fast is it going to take for the money to actually go across. I think in this case, it’d be better to look at speed as being a commitment that the money is actually going to be received by the employee efficiently, on time, and without fail so that they can then pay their mortgages or buy old video games, whatever it is that they want to use their money for.
So, I think at TransferWise, we’re a very distributed company. We have autonomous… our teams all work autonomously across all the different offices that we have. We work very closely with our customers and we’re really like proud of the fact that we talk a lot with our customers. We try to find out exactly what they need. And I think we are very attuned towhat a lot of remote working companies need to do like we find that we have to move very fast, we have to be able to hire talent wherever we can, we have the advantage that we also need to have offices in various different countries. So we’re able to kind of do that quite easily for ourselves. But I think the key thing here is just when you’re looking at different providers, just have a look at these sort of considerations and just make sure that your solution scales.