TransferWise, the billion-dollar valued startup that reduces the cost of cross-border payments, has taken a big step to globalizing its service after it opened an Asia Pacific office in Singapore.
The UK-based service was started in 2010 by Estonian entrepreneurs Kristo Kaarmann and Taavet Hinrikus, its CEO, as a method for sending money from country to country more efficiently. It banishes hidden fees — which banks typically disguise with sub-market exchange rates — and offers near-market rates coupled with a transaction fee.
The firm has raised $117 million from investors to date, and was last valued at $1.1 billion. It claims that over one million people use its service to send over £1 billion each month. Beyond catering to consumers, TransferWise operates a business service that is focused on SMEs.
For a seven year old company that has moved from Europe into the U.S., TransferWise has taken its time entering Asia. While it has partners across the world allowing users to send money to people in 59 countries, it only supports outbound sending (i.e. from the destination country) in four markets in Asia: Japan, Singapore, Australia and New Zealand. Although it is in the midst of expanding to cover Hong Kong, Hinrikus — who was Skype’s first employee — told TechCrunch.
That leaves plenty of expansion possibilities in Asia. Hinrikus said India and China are high on the agenda and TransferWise is “looking to see what’s possible” in those markets. Users can already send money to India and China now, but we shouldn’t expect to see local sender support in either market for some time.
TransferWise localizes by finding bank partners and acquiring relevant local regulatory approvals. With most of its engineering team headquartered in Europe and word-of-mouth marketing, Hinrikus believes there isn’t a pressing demand to have local teams in every part of the world despite this move into Asia Pacific.
“We will see what we need to be successful,” he said in an interview. “We hope we won’t need a team on the ground in every country. [A virtual presence] will help us to be more efficient and pass savings on to our customers.”
Yet, the company is investing in a workforce in Singapore, building on its small teams in Australia and Japan.
Initially there will be eight staff in Singapore, but the plan is to increase headcount to around 30 by the end of 2017. The hires will be across “across the board,” including engineering, operations, and marketing teams to handle both local business needs and also give the firm a 24/7 presence globally.
TransferWise founders Taavet Hinrikus (left) and Kristo Kaarmann (right)
In addition to being a hub for Southeast Asia — and a global financial capital — Hinrikus said Singapore is the kind of market where he believes his service can have a telling impact, despite a total population of just five million.
“There are a couple of million people who are international expats in Singapore,” he explained. “For these people, TransferWise is oftentimes a core part of their life.”
While TransferWise does has a reputation for catering to professionals, Hinrikus said the firm is keen to extend its reach to migrant workers and others in the global remittance market, which is particularly strong in Southeast Asian markets like Singapore and the Philippines, not to mention Hong Kong.
“We don’t like to discriminate between developed or developing countries. It’s all the same: people who want to transfer money between countries,” he said.
A number of remittance-focused startups have sprouted up in Southeast Asia with a focus on migrant workers who are reliant on traditional remittance services like Western Union or MoneyGram, which tend to charge heavily for transfers. InstaRem, for example, has raised $5 million from investors, while other services include Toast ($1.5 million raised) and Coins.ph, which has also pulled in $5 million.
Despite some local services, Hinrikus isn’t concerned nor is he interested in potential M&A activity.
“We haven’t seen anything interesting to be acquired,” he said frankly. “And if we did see anyone offering a better service, it would give us a kick up the balls to improve.”
While the global remittance market is typically pegged at being a $600 billion opportunity, the TransferWise CEO sees larger opportunities afoot.
“We think our market is much bigger — to combine developed market consumers, SMEs and remittance is a $5-10 trillion market,” he argued.
All the more reason for TransferWise to get started on making itself a local player across Asia.