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Swapsy: Secret Weapon to Getting Money Into and Out of China

Bryan P. theBeijinger 2019-05-28

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Trying to transfer money out of China is like being repeatedly punched in the gut by banking. Or at least it did for me as the additional fees and restrictions piled up while trying to pay my foreign credit card debt from China. I didn’t like it. Not one bit.

Fortunately, there is a solution, called Swapsy (theswapsy.com), and no, I don’t work for them. I am just the company’s biggest fan at the moment.

The problem with transferring money in and out of China is that the government imposes strict limits. As a foreigner, I can only wire USD 500 per day, I must prove that I've paid all the relevant local taxes on the money, and the fees are expensive, totaling about USD 40, nearly 10 percent of the transfer. Do it twice and you see how it adds up quickly. Plus, you need to kill a tree’s worth of paper and spend time battling the endless lines of dama at the bank to do it.

Fintech disruptors like Transferwise (transferwise.com, a US-based money transfer service) have worked well for me to exchange between currencies in other countries, but to use that in China, you must be a Chinese national, which I am not. PayPal isn't a good option either, as it forces you to have a Chinese account and a foreign account, paying exorbitant fees to shuttle the money between currencies.

Compared with these unsatisfactory options, Swapsy, a California start-up launched in 2017, offers a real solution for travelers, students, and expats in or from China.


It should not be the case that we exchange all our money to a bunch of foreign notes and coins and carry them across the border.


Swapsy's co-founder, Sandi Yu, began the site with other international students who were struggling with transfer fees. "It should not be the case that we exchange all our money to a bunch of foreign notes and coins and carry them across the border," she told us.

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How Swapsy works
The idea is simple. Swapsy is a peer-to-peer money exchange service, so instead of money crossing borders, the site matches people that have bank accounts in the same countries with you, but wish to send money in the opposite direction. So if you live in China and want to transfer money to the US, you don’t actually send money to the US. Instead, you send yuan to the Chinese bank account of another Swapsy user, and they send the equivalent USD from their US account to yours. Swapsy doesn't hold any of the money at any stage, but 'matches' the users and transactions, and insures the transfers.

For Swapsy to function well, there must be a fairly high number of users in all currencies, actively seeking to move money. The main weakness of the system is that you may not be able to swap the exact amount of money you wish to. Everything depends on what other users need, and when. (In comparison, Transferwise actually acts as the intermediary of their transactions, and thanks to their large, liquid funds, do not depend on other users to facilitate transactions: you pay Transferwise in one currency and they pay you in another.)

In China, you can transfer money using WeChat and AliPay, and in the US, receive using Zelle or PayPal, at the moment. The company currently offers exchanges between RMB and either GBP or USD and the money arrives in less than a day, usually within a few hours, and Yu said that the team is hoping to add other currencies to the site soon.

Swapsy makes money by charging credits for each exchange, which in most cases, amount less than 1 percent of the total sum. Yu said that the fees are dynamic based on demand. Limits on how much money you can move around are comparable to most e-wallets, but most importantly, are far higher than what Chinese banks allow.


We make sure that each [user] is legitimate, you are not transacting with a terrorist or a drug dealer, on our platform.


For those concerned about security, Yu said that users go through a vetting process, including sending a photo of yourself with your passport to verify your identity. "We make sure that each [user] is legitimate, you are not transacting with a terrorist or a drug dealer, on our platform," she wrote.

As an avowed user, I can personally attest to the convenience of Swapsy. To use it, you simply choose the best swap that’s available, send the money with a designated code, and verify the transaction several times along the way. It’s almost like a game, waiting to see if you can get someone who wants to trade the amount you want. You can also request to trade a specific amount of money, though it costs more credits.

I’ve tried every other transfer – barring MoneyGram, but no thanks – and Swapsy is the best value by far.

READ: 14 Emotions You'll Only Understand If You've Lived in Beijing


Image: Veem.com


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