Wise is great. I won’t go into all the generic reasons why it is great — many other people have written about this on the web. As a South African who went to study in the UK and who has travelled back and forth (particularly during this whole covid thing), Wise has been just great.
In the post below, I discuss who Wise would be for, the main functions it can perform for them, how to fund a Wise account using South African Rand (ZAR), and finally why you should get your personal network to join Wise, too.
A summary of Wise’s offerings for SA – lacking the Debit Card, but everything else is offered.
South Africa and Wise
Specifically, Wise is great for South African citizens and long term visa-holders/residents who…
- live overseas but return often to South Africa,
- are moving to South Africa again (e.g. after studying abroad)
- do (remote) work for an overseas employer or clientele, getting paid in USD, GBP, EUR etc (while based in SA or travelling)
- want a way to diversify their ZAR savings with stronger currencies
Opening a Wise account as a South African resident/long term visitor (or business, see this post) is easy. Beyond some basic details, proof of residence, biometrics, you should soon be approved. You can do this using my referral link, which would get you a free transfer up to 500 GBP (or equivalent).
As of July 2022, Wise offers two main functions for residents of South Africa (if you are resident elsewhere, you might be able to get their Debit Card now; this hasn’t been released in South Africa yet):
1 the multicurrency account
Although not a bank, Wise does offer an account in which you can hold balances in various different currencies. They call this their multicurrency account, and — if one you match one of the categories above — this is primarily what makes Wise so great. Once you have money in the account (more on this below), you can do a number of things:
- manage currency exchange risk by buying (and holding) stronger currencies
- take advantage of excellent, bank-beating exchange rates offered by Wise. These rates are far better than anything the typical SA banks offer.
- gain account details, in your own name, to receive foreign currency. For South Africans, the most relevant account details that Wise offers are: British Pound (GBP), US Dollar (USD), Euro (EUR), Australian Dollar (ASD), NZ Dollar (NZD) and the Canadian Dollar (CAD). If you freelance and earn in foreign currencies, Wise is the perfect solution.
- facilitate offshore investment, i.e. depositing and withdrawing funds in international financial brokerage firms (e.g. Interactive Brokers, international cryptocurrency exchanges).
Thus if you have some kind of access to strong foreign currencies like USD, GBP, EUR, ASD etc, then you can easily add or receive these currencies in your account. You can convert these currencies into rand/ZAR whenever it’s convenient for you (or whenever the exchange rate demands it of you!) — and then, you can:
- remit these funds back to South Africa (more on this below),
- spend them while in South Africa using the Debit Card, if you have residency elsewhere (e.g. UK, Australia, USA, Canada, EU etc).
- convert your ZAR back into a stronger currency. This wasn’t possible when I first started using Wise (it was still TransferWise back then), but now it seems possible.
2 Remittances back to South Africa
To remit/send from another currency to a SA-based, ZAR bank account, currently incurs a base fee irrespective of the amount – around R85 at the time of writing. It would also incur FX fees, if you have yet to convert the funds into ZAR (making these cheap is Wise’s market niche). Sending to a SA-based foreign currency account is also possible, but I can’t speak to the transfer dynamics here. (Why you would want to do that, considering that you can just keep it in Wise, escapes me).
Wise work with their local SA partner Exchange4Free, who upon your first transfer get in contact with you to sign a form — only once per annum — to indicate the source of the funds. This is a SA Reserve Bank reporting requirement, apparently, but once you’ve done it, transfers back to SA are painless and don’t take long.
How to fund your Wise account using ZAR
As already mentioned, if you have access to strong currencies, funding you Wise account is easy — just send it to your personal GBP/USD/CAD (etc) account details, and voila. Wise does not have ZAR account details, however, and thus you cannot easily send ZAR from your South African bank account to Wise.
There are a number of decent, though imperfect ways to do this:
- The first, and possibly best method, is by using the Shyft app to transfer ZAR to Wise. It provides one of the better FX fee structures when converting from ZAR to a stronger currency – e.g. a once-off fee of 14 USD when converting from ZAR, at a decent (though not mid-market) rate. To send this onward into your Wise USD account would incur another 14 USD, however: Shyft encourages you to keep your money on its platform. It’s the most similar local service to Wise, but has hefty fees when sending to foreign accounts (compared to Wise), and its upfront conversion fees make smaller FX conversions uneconomical.
- The second is to open a local (SA) foreign currency account (e.g. with FNB, or Discovery Bank), buy the relevant foreign currency, and then send it offshore to your Wise account (using the currency-specific details). In some cases, this might end up cheaper than Shyft (to be confirmed).
- The third — which I haven’t tried personally — would be to fund your Wise account once you’ve opened it by using a ZAR credit/debit card. This would trigger all manner of FX fees dependent on your bank and account type, so be sure that you know what to expect first!
- Finally, you could use a foreign currency broker from South Africa, like CurrencyFair or Exchange4Free (who Wise uses as their agent for transfers into South Africa). Again, I haven’t tried this and can’t speak to the FX fees relative to Shyft, but this might be an option to look up.
If you think Wise is for you, you can join using my referral link, which would get you a free transfer up to 500 GBP. Or use someone else’s referral link. Or nobody’s! But get on there. The more South Africans using Wise (or similar services, which don’t really exist yet AFAIK), the better.
Getting others on the Wise wagon
Firstly, it’s better when your friends and family have Wise too. Sending currencies, including ZAR, from one Wise user to another is free, and virtually instantaneous. The more South Africans (or people with significant links to SA) who use Wise will mean it becomes increasingly easy to exchange foreign currency within your personal network, cutting out the middlemen — the banks — who have had little reason to reduce fees until the recent arrival of services like Wise. It will also mean that you can cut Wise out of their own quite decent FX fees, if you find a willing buyer of GBP for ZAR, and vice versa. The more South Africans using Wise, the more likely that they will accelerate plans to add features available overseas for local residents (I’m thinking of the Debit Card in particular).
Secondly, as you may have guessed from my punting of a referral link, Wise incentivises you to spread some Wise words, like I’m doing right now. Depending on when you joined, whenever you successfully recommend the service to 3 new users (who then transfer a certain amount) you’ll get a nice reward in GBP.