Today, TransferWise is reliable by millions of customers worldwide, with the likes of Richard Branson and Peter Thiel has invested in its vision. Rewind 10 yrs. or so, however, and the picture was a lot different.

In 2008, Kristo Kaarmann, who’s now TransferWise’s CEO was working as a management consultant in London and had received a Christmas bonus of £10,000 ($13,147), which he wanted to put to greater use.

Speaking to the BBC, the businessman explains interest rates were higher in Estonia at the time; he chose to transfer the earnings from his British account to his Estonian savings account — expecting this would help him earn more from the income. This didn’t, however, go as hoped.

Following TransferWise’s website, the two founders, Kaarmann and Chairman Taavet Hinrikus, met at a party and found out that they both worked in London but needed different money.

Kaarmann paid in pounds but had a mortgage back in Estonia that was done in euros, while Hinrikus was paid in euros but required British pounds to pay his charge in London.

Later match-up, the pair would informally transfer money between one another, by looking at the mid-market rate of a particular day every month, allowing them to achieve a fair exchange rate without paying additional bank bills.

The led to the businessmen building a network of Estonian friends transferring money, according to the BBC, which went onto spark the start of their personal business TransferWise, which was launched in 2011.

Today, the cash transfer service acts as an online account for its 4 million-plus customers, allowing them to send money, get paid and spend money internationally, without being faced with high fees.

Now considered amongst Europe’s “unicorn” start-ups which are companies valued with at least $1 billion TransferWise is thriving, with a reported valuation of $1.6 billion during 2018.

Kaarmann said; the United Kingdom broadcaster, BBC News. The CEO explains how he looked into how this had occurred and realized that he “had been incredibly stupid.” “I paid my United Kingdom bank a £15 fee, and transferred the £10,000, and so a week later I saw that £500 less than I had expected had arrived in the Estonian account.”

“I had stupidly expected that my U.K. bank would have given me the exchange rate I saw when I looked on Reuters and Bloomberg,” he said, adding that instead, “the bank had used an exchange rate 5% less favorable, which is how it and all the other banks get their cut. It was my mistake.”

As one of the current business leaders to be profiled by the BBC, Kaarmann said in its “The Boss” series, that this incident went onto see him try to find a way of transferring money overseas in a more cost-effective way. This led to Kaarmann meeting his soon to be a business partner.


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