Wise has made its intentions clear on changing how people send and receive money by making it easier and faster. The company has made its mark and recently made things even more interesting after launching its multi-currency account and debit card to compete with the likes of Pay iO and Starling on multiple fronts.
After several years in the game, how does Wise compare to Starling, which is still considered by many to be way ahead of the game? Some people consider Wise a fierce competitor that shouldn’t be ruled out. But the only way to be certain is to compare the key aspects of their services to see which one fairs better than the other.
Starling Vs Wise: Overview
Starling and Wise accounts are both digital-only accounts that have an app and come with a debit. But under that, they have many differences that can help you identify the ideal option based on your needs.
For starters, Starling is a fully licensed bank. Unlike Wise, Starling deposits are protected by the Financial Services Compensation Scheme (FSCS) up to £85,000. You also get more features with some of Starling’s accounts, like overdraft services.
Starling also offers more financial features like budgeting, spending categorisation, and saving goals. Wise, on the other hand, focuses more on money transfers without the added features.
Wise has some excellent strong points as well. It lets you hold money in 53 different currencies. You get shareable bank details for 10 ‘local” country accounts, including for the UK, US, EU, and Australia.
Another nifty benefit of Starling is that it pays a small interest rate on account balances. You get up to 0.05% on balances up to £85,000, whereas Wise doesn’t pay any interest on savings. Starling also offers additional financial products from itself and its financial partners, like Insurance, mortgages and ISAs, in addition to money transfers.
Although Wise doesn’t offer these additional services, it does an excellent job covering as many countries as possible. Starling only supports 20 currencies, while Wise supports over 50 currencies and lets you send money to over 80 countries.
A Wise account is much easier to set up because you don’t need to apply for a current account to send money with Wise. All you need is an online account as a stand-alone user and make money transfers from the current account you have on Wise to your existing banking provider.
Starling Vs Wise: Fees and Charges
Fees and charges are an excellent yardstick for measuring which online finance system is the best, especially if you use it frequently. Both Wise and Starling make a compelling case with their competitive rates and transaction fees.
Both companies don’t have a monthly fee which is a huge benefit for individuals and businesses that won’t use them daily. With Starling, you get their debit card free of charge, while Wise will charge you a £5 fee.
Card payments are free in the UK and abroad and can be converted using mid-market exchange rates where necessary when overseas with Starling. With Wise, the card is also free to use in the UK and abroad. But, the Wise currency conversion fees apply if you don’t already hold a balance in the local currency of wherever you are. This is a much better deal because you get mid-market rates and can save a lot of money in currency conversion costs.
The downside is that Wise will charge you a fee of 0.24% to 3.69% for card payments and ATM withdrawals, depending on the currency involved, while Starling doesn’t attract such charges.
ATM withdrawals are free in the UK and abroad. However, wise only offers two free withdrawals in the UK or abroad or up to £200 per month. After that, a 1.75% fee and a 50p withdrawal charge apply. You will also incur the Wise currency conversion fees if you don’t hold a balance in the local currency.
If you’re transferring money, Starling offers free transfers to UK accounts. International transfers have a SWIFT/Local network fee plus a 0.4% Starling fee. Also, the money is converted at the interbank exchange rate.
Every money transfer involving Wise involves a fixed fee plus a variable fee. These depend on the currencies involved. Also, currencies are exchanged at the interbank exchange rate.
The better option as far as the fees are concerned isn’t an easy decision to make. That is because it depends on the currencies involved. However, both options have an interbank exchange rate but use different fee structures. So the best approach is to use calculators to determine the cheaper option to send money.
While at it, remember that Starling only makes international transfers between 02:00 Monday to 20:00 Friday.
Starling Vs Wise: Features
Starling has an exceptional range of features that attract many customers looking for the benefits of traditional banking with the convenience of an online platform.
The bank has a business tool kit with a free business account and a slew of useful features for its clientele.
The bank also has accounting software integration which allows you to connect your Starling bank account directly to the software for more insight into your spending, budgeting and other features.
With Starling Bank, you get instant invoices, and you can send invoices directly to your customer. This is a handy tool to have that could make receiving payments easier for your business.
The Starling app can also help you analyse account activity and estimate the taxes that might be due. You will also get automated expenses using automatic filters, a bills sorter and a to-do list to track the most important events, such as VAT or other tax deadlines. Customers can only use the Business toolkit via computer, not the smartphone app.
The Wise Business account also has some nifty features, including an option to pay international invoices in one click with real and live exchange rates. The charges on payments can be up to 19 times cheaper compared to other competitors like PayPal.
Wise makes payments faster and more efficient. Up to 50% of the payments are instant or arrive within the hour giving businesses some much-needed liquidity and working capital.
With Wise, you can easily make batch payments of up to 1,000 people with just one click. You can move currencies in seconds while avoiding high conversion fees.
Although Wise doesn’t have the same accounting tools that Starling has or budgeting tools, your Wise business account can be connected to other accounting platforms like Xero, allowing you to enjoy similar, if not more advanced, features in your account.
Because the Wise Business account is free, it is more appealing to new startups and freelancers that aren’t making much and need an account that will keep the overheads low.
The fact that Starling has a banking license and many built-in features makes it a more attractive option for many businesses because you can also get loans and other financial services. Wise is a better pick for businesses and individuals with minimal financial needs and only need to send and receive payments.
Starling Vs Wise: Safety
Starling is a licensed bank in the UK, so its dedication to security and safety is not in question. Customer deposits are protected by the Financial Services Compensation Scheme (FSCS) with a maximum of up to £85,000.
The business model appears stable, with several million customers across both customer and business. The average monthly deposit and amount per customer is much higher than most of its competitors, which shows that customers have a lot of faith in the safety and stability of the bank.
Another noteworthy fact is that Starling Bank achieved the highest score of any UK bank in a study of UK banking security conducted in 2021.
Wise is not covered by the FSCS and doesn’t have a banking license. However, they are covered by the FCA but are a self-proclaimed low-risk financial institution. That is why they don’t touch cryptocurrency.
Wise is LSE-listed, licensed and regulated globally, meaning institutions are confident with the measures that the company has put in place. Wise has separate individual and business deposits to protect personal finances in case of bankruptcy. It also has various security features that keep your money and information safe while retaining the ease and efficiency of transacting.
Before choosing the better option in this case, you need to understand the financial facilities you need. Businesses that require deposit protection can benefit from Starling’s banking license. You can also get additional financial benefits and tools.
Wise also has exceptional safety features. However, it’s not a bank and the deposits are not insured. But Wise can be a great option if you receive and send payments globally.
Starling Vs Wise: International Transfers
Customers can get different accounts under Starling Bank. You can pay £2 per month to get a EUR account and £5 monthly to get a USD account.
You get to receive free international payments into your Starling Bank account and make international currency transfers at the interbank rate with a flat fee of 0.4% of the amount transferred.
You can also make SWIFT transfers charged at £5.50 per transfer. You can also transfer without SWIFT using other methods. However, these are sent without a reference.
International payments through Wise are also fixed. They depend on the currency and the payment method in question. The platform will show you the fee and the exchange rate upfront before making any payments.
Another huge benefit of Wise is that you can have different currency accounts at no extra cost. You can use the account to hold up to 50 different currencies.
If you’re sending money internationally, the more you send with Wise, the more your transfers will cost. That’s because the fees are worked out as a percentage of the amount you’re sending.
The fee will also vary from currency to currency. If you’re sending a small amount of money, you get a cheap minimum fee.
The costs will also plummet when you send amounts above £100,000. In addition, the fee will drop whether you send the money in one lump sum or multiple monthly transfers.
Regarding the efficiency and cost of making international transfers, Wise seems to have the edge. You can transact in more currencies with Wise, and you don’t have to worry about incurring monthly costs or running a multi-currency account as you would with Starling. The costs are more affordable, especially when you send large amounts in a month. So it’s safe to say that Wise gets the win here.
Wise Vs Starling: Closing Remarks
The digital fintech industry is rapidly expanding, giving users and businesses tons of options to choose from. Starling and Wise are ahead of the pack in different aspects, along with other competitive options like Pay iO. Both options are excellent in their own right. You just need to carefully weigh your options and the type of financial needs you require and match them to your needs.
