The remittance industry is worth over half a trillion dollars, and a growing list of start-ups want to byte into it, using innovative digital solutions that will challenge behemoths like Western Union and MoneyGram. At stake is access to the wallets of around 200 million people, who work abroad and send money back home. India tops the list with $71 billion (Dh260.7 billion) remitted annually, while China comes in at $64 billion. But on average, senders lose 8 per cent by the time the money reaches remote recipients. And this is precisely an area that is — in start-up lingo — ripe for disruption. AngelList, which tracks start-ups around the world, lists 365 when you search for money transfer. CrunchBase, another popular database of start-ups, lists 111. Interestingly, it is not Silicon Valley, but London that has emerged as the centre of this fintech revolution. Here we look at the most promising — and perhaps the most hyped-up — players in this space.
TransferWise
Founded: 2010
Base: London
Value (est.): $1 billion
Funding raised: $90 million in five rounds
TransferWise wants you to “outsmart your bank” and offers “a totally new way to beat the old system”. How does it work? Well, as The Wall Street Journal explains, TransferWise “matches pools of people in two different countries who want to send money to the opposite country, thus eliminating the need to actually transfer money.” Also, by bypassing banks, transaction fees come down by 90 per cent. The start-up raised an additional $58 million this January for global expansion. Among its high-profile investors are Sir Richard Branson and PayPal founder
Max Levchin.
CurrencyFair
Founded: 2009
Base: Dublin
Value (est.): N/A
Funding raised: $15.4 million in eight rounds
Competing with TransferWise in the P2P game is the Ireland-based CurrencyFair. The start-up claims to solve “the pain experienced by anyone that needs to send money abroad” with its unique peer-to-peer marketplace, where customers can negotiate with other customers “in a simple and anonymous fashion”. This brings the rates closer to, and “sometimes even better”, than the wholesale value — CurrencyFair says
its foreign exchange rates are typically 3 per cent better than bank rates. In 2014, it crossed $1 billion in money-matching transfers.
WorldRemit
Founded: 2010
Base: London
Value (est.): $700 million
Funding raised: $148 million in seven rounds
If not the giant in the business, WorldRemit has at least the potential to grow into a Goliath. Founded by Dr Ismail Ahmed, a former remittance expert at the United Nations, it has become the largest dedicated online remittances platform. It allows senders in 50 countries to transfer funds to more than 120 destinations. The service focuses on migrant workers, and apparently, over half of its 300,000 monthly transfers are done over mobile.
Xoom
Founded: 2001
Base: San Francisco
Acquired for $890 million in 2015
This July Xoom hit the headlines when it was bought out by PayPal, which itself was parting ways with eBay. It will continue to operate as a separate service, enabling
money transfers to 39 countries, apart from bill payments and phone reloads in certain regions. Xoom also has a strong presence in China, India, the Philippines, Mexico and Brazil and has emerged as a popular choice among migrant workers. The company says more than one million customers used its service to send about $6.9 billion in 2014.
Skrill
Founded: 2001
Base: London
Acquired for $1.2 billion in 2015
Skrill started off as Moneybookers, and along the way it not only expanded its offerings but also changed owners a few times — more than doubling in value with each sale. Skrill offers access to over 100 payment options and 41 currencies, covering 200 countries. For sending money globally, it typically charges a low 1 per cent and the fees are capped at €10 (Dh41). Apart from remittances, the service can be used for online shopping, in-game purchases, speculating on currency markets and even betting.
Remitly
Founded: 2011
Base: Seattle
Value (est.): N/A
Funding raised: $23 million in six rounds
Remitly’s most important corridor is US to India, and it has added more than 120 Indian banks to its system. The start-up says its customer base grew 400 per cent in 2014, and it was seeing $100 million a year in transfers.
Meanwhile, in March 2015, the company bagged $12.5 million in Series B funding — it plans to use the money to expand to other regions, including Africa. Among its famous backers are Amazon’s CEO Jeff Bezos and Google’s chairman Eric Schmidt.
Azimo
Founded: 2012
Base: London
Value (est.): $100 million
Funding raised: $31 million in four rounds
New kid on the block Azimo claims to be “changing the way people send money around the world”. The start-up has presence in 198 countries, supports 73 currencies, has more than 270,000 cash pickup locations, and tie-ups with 20,000 banks. Its primary focus is on migrant workers earning below average incomes and remitting in smaller amounts. In July, the UN recognised it as “one of the best valued and most comprehensive money transfer services”.
