According to World Bank, 3% of the world’s population that is 215 Mn people reside outside their country of birth. Immigrants in US alone will end up transferring money worth $515 Bn to their respective countries by 2015. Pangea, a Chicago based payments startup in a space heating up with startups (including Transferwise, Regalii, etc.) seems to make its presence felt.
Pangea was founded by Rahier Rahman, CEO and Kyle Stoner, COO in September 2012. The company received US $1 Mn in seed funding from investors OCA Ventures, Origin Ventures, FireStarter Fund, I2A Fund, Larry Kaplan, Bill Gee and Bryant Keil. Pangea was given $10,000 for winning Innovation Project’s ‘Best in Show’ Award in 2013.
Pangea claims to offer an innovative value transfer system that leverages mobile, retail and web connectivity. The company employs a multi-platform solution that allows users to transfer money. Pangea leverages global prepaid networks that power the activation of prepaid products. Through what they call as proprietary integration software, Pangea enables these disparate networks to speak to each other, making money transfer possible across millions of retail locations.
With Globalization, and economies being more intertwined than before, increasing income disparities and technological advancements, there is more movement of people from one part of the globe to another and hence more movement of money. “Our service will be meaningfully cheaper and far more ubiquitous than traditional money centers like western Union or Money Gram”, says CEO Rahier Rahman. “We will provide customers mobile, web and retail touch points to do transactions using cards (credit/debit/prepaid) or cash.”
Pangea Payments are yet to launch officially. They have plans to speak to the media about their current launch status and their future plans at Launchpad360 held between October 6-10, 2013. It would certainly be interesting as to how their business model competes with Regalii, Transferwise or Western Union.
The business model of Regalii is to allow migrants to send money for food and bills to their families through SMS. Regalii charges $3 for every SMS sent. Whereas, TransferWise offers a disruptive solution to individuals sending money from one country to the other (involving different currencies). A normal transfer of £1,000 into Euros using Western Union can cost over £100 once you add in exchange rates and other fees, whereas through a bank wire transfer it costs £50. TransferWise offers the same transfer at an attractive rate of £4.50, a direct savings of atleast over £45.
LTP View: It is yet to be seen how effective their low cost and cross platform business will fare in comparison to its competition. By getting the investors and the funding in place, they might have got the right start. With the large population of under banked and general shift in consensus towards mobile communication. There is a high likelihood that there will be a rise of remittance based startups eyeing the $515 Bn remittance market.