TransferWise founders clearly indicated that they have never used cheques before. Kristo Käärmann and Taavet Hinrikus said that they have never written a single cheque before the internet age. “I can’t recall ever using a cheque,” says Käärmann, who is 35 years old. He further says that “For nine years that I have been in London, I have received several chequebooks during accounts opening. I wasn’t aware what to do with the chequebooks since we hardly used them in Estonia.”
Fellow Estonian Hinrikus and Käärmann, co-founders of TransferWise’ electronic foreign exchange system, have similar experiences. Hinrikus say that “The banks didn’t provide any chequebook, and I’m glad that I never touched one.”
The two were shocked to find that in their mission of preparing the launch of their foreign exchange system in the US at the beginning of this year, cheques remain operational and actively used in the US.
“Americans use cheques a lot,” says Käärmann. “The US financial system uses cheques on a weekly or monthly basis. Americans use banks differently from us. Apart from working hard to meet licensing requirements, there is a need to adjust our product to the American market. ”
This is one of the escalating pains of TransferWire that began as an easy technique of Hinrikus and Käärmann of avoiding foreign exchange bank rates when they arrived in London for work in 2007.
They exchanged between £2,000-£3,000 cash a month. They decided to bank the money in each other’s bank accounts so that they can calculate the exchange rates of British banks. Some other friends joined them and in two years together they had saved banking fee of approximately £10,000-£20,000, which gave them the idea of launching the TransferWire peer-to-peer currency exchange as an online platform in early 2011.
Currently, the business is operating in the same way. It runs some bank accounts all over the world, collects money in one currency from customers and gives counterparties in other currency, pays each country from its accounts.
According to Käärmann, the model has progressed but hasn’t changed. He says, “When we began it was just a simple idea that used euros and pounds only. Occasionally it took some days to make transfers a success. Nowadays, we are using 400 different currencies, and the transfers are very fast. Also, we are the only agent that can transfer money from the UK to France in 17 seconds or less. We have set records on speed concerning international transfers.”