TransferWise, the UK based peer-to-peer money transfer service, has raised $58 Mn in a new round of funding. The company has now reached a valuation of almost a $1 Bn. Prominent investors in the recent funding round include Andreessen Horowitz, Valar Ventures, Index Ventures and Seedcamp, as reported by TechCrunch. The company helps users transfer money across geographies and currencies, at a lower price as compared to traditional players in the space.
TransferWise has transferred more than $3 Bn through its platform and is growing at a rate of 15-20% every month, as reported by Financial Times. The recent investment also highlights increasing interest of US investors in European technology players. The fresh funds would be utilized for global expansion and bring more currency options than currently available. The company is also looking forward to gaining eligibility for doing banking business and is poised to setup offices in US as well.
The funding will also help TransferWise prepare itself better to fight against heavy competition. In addition to companies like PayPal and traditional banks offering money transfer services, there are startups like Azimo, CurrencyFair and peerTransfer which focus on P2P money transfer. Transfer has raised around $91 Mn to date. TransferWise’s peer-to-peer technology, which allows customers to access rates that are typically more competitive than traditional banks, has users save about $200 million in banking fees which are usually incurred when moving money abroad.
Financial technology is becoming increasingly competitive, with start-ups challenging old legacy systems using cloud computing and mobile technology to undercut traditional players on pricing and, moreover, provide a more personalized experience as well. According to World Bank, an estimated $515 billion will be transferred by the US immigrants to their respective countries by 2015. Remittances market is huge and growing exponentially.
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 cost £50. TransferWise offers the same transfer at an attractive rate of £4.50, a direct savings of atleast over £45. The remittance platform offered by TransferWise is aimed at expats, retirees, overseas workers and small and micro enterprises.