Fintech

WorldRemit Raises $100M To Take On Western Union In Money Transfers

Comment

Image Credits: epSos .de (opens in a new window) / Flickr (opens in a new window) under a CC BY 2.0 (opens in a new window) license.

WorldRemit, a UK-based startup that is going after the Western Unions and MoneyGrams of the world with a commission-beating online and mobile remittance service, has raised another $100 million — funding that it will use to continue building out its service globally, and specifically in the U.S., where it has laid down roots in Denver.

The funding comes from new investor Technology Crossover Ventures — the firm behind mammoth investments in Vice, Spotify, Minted, Swagbucks and in earlier days Facebook, ExactTarget and many more — and existing investor Accel. This is only the second time that WorldRemit, founded in 2010, has raised money: the first time was in March 2014, when Accel put $40 million into the company.

“A good chunk of that money still in the bank,” Ismail Ahmed, co-founder and CEO of World Remit who once worked for the UN, tells me. He describes this recent raise as “opportunistic.”

This latest round values WorldRemit north of $500 million.

WorldRemit is still relatively small: it processes 250,000 transactions per month, and has been steadily growing revenues, with $25 million in sales in 2014, compared to $9.3 million in 2013. It says it’s on track to grow at the same rate this year.

But on a wider scale, the remittance market is very big business. The World Bank estimates that by 2016 there will be more than $700 billion sent overseas between family and friends, with $646 billion sent in 2015. (WorldRemit meanwhile estimates that the value today is closer to $550 billion.)

Interestingly, the U.S. is the biggest market for sending money today — which is one reason why WorldRemit is doubling down on its presence there. Some 10% of global remittances originate in the U.S., working out to $50 million per year. Saudi Arabia comes in second place after that.

“Remittances are now nearly three times the size of official development assistance and larger than private debt and portfolio equity flows to developing countries,” the World Bank writes. “They exceed the foreign exchange reserves in at least 14 developing countries, and are equivalent to least half of the level of reserves in more than over 26 developing countries.”

Economics aside, remittances also have a very real value for average consumers.

Many people, especially in developing and poorer countries, rely on family and friends living and working in wealthier economies to help them out by sending earnings.

WorldRemit positions itself as a disruptive force in this context: it lets users transfer money at far lower commissions than those charged by larger outfits like Western Union, and it does so using online and mobile technology. But it’s still very early days in online money transfer: Ahmed tells me that only about 5% of remittances are sent online today. And besides large incumbents, there are a lot of finance startups also swarming around the potential of leading the charge on overturning the remittance market. They include TransferWise, which today (perhaps carefully timed to be announced with WorldRemit’s news) announced that it will open for business in the U.S. on the back of a big fundraise last month; Azimo; and smaller but very innovative players like Regalii, which focuses specifically on remittances that can be used for specific purposes, such as paying bills for your friend or family member abroad.

“We see a huge opportunity for us in terms of the growth and what we have achieved so far, with the the rapid shift from offline to online,” he says. “Remittances is one of the last frontiers of the financial services industry.”

Today, WorldRemit lets users in 50 countries send money, and people in 117 countries receive it, giving senders the option to pay into bank accounts, cash pick-up points, or into mobile wallets that can be used for airtime top-ups. Airtime top-ups are especially popular: they currently account for half of all of WorldRemit’s business in Africa.

The last of these — mobile wallets — looks like it will be WorldRemit’s growth engine in future years, through partnerships with telecoms carriers. Carriers play a role in offering mobile wallets to mobile phone users who may not have regular bank accounts. One recent deal, with African carrier MTN, covers 22.5 million users in 16 countries across the continent. In contrast, cash pickups, which were 100% of WorldRemit’s business when it first started, now account for only 30% of its terminations.

Where Ahmed would not be drawn out is around questions about whether WorldRemit might ever partner with other kinds of companies, such as messaging apps, to facilitate money transfers.

The backstory to this is that Facebook has been reportedly looking at offering a service to its users to send money to each other by way of its messaging platforms.

Ahmed concedes that messaging platforms like Facebook, Viber and Skype are very complementary to WorldRemit —  after all, users communicate about sending the money, and then turn to WorldRemit’s apps to do it. But he wouldn’t comment on whether his company is in talks right now with any of them to enable more integrated services.

Still, you have to think that as WorldRemit looks to scale its business, integrating with messaging apps and putting their service front and center with billions of users makes a lot of sense.

For investors, it’s not a matter of whether remittance is a good market to be in — that is a no-brainer — but that WorldRemit seems to have tapped into some interesting routes for cracking it open.

“The $550 billion global remittance market is undergoing significant disruption with a clear shift to online and mobile solutions for international money transfer,” said TCV General Partner John Rosenberg in a statement. “The WorldRemit team… are at the forefront in offering convenient, low-cost solutions, backed by a market leading technology platform, compliance infrastructure, and geographic footprint”.

More TechCrunch

Welcome back to TechCrunch’s Week in Review. This week had two major events from OpenAI and Google. OpenAI’s spring update event saw the reveal of its new model, GPT-4o, which…

OpenAI and Google lay out their competing AI visions

Expedia says Rathi Murthy and Sreenivas Rachamadugu, respectively its CTO and senior vice president of core services product & engineering, are no longer employed at the travel booking company. In…

Expedia says two execs dismissed after ‘violation of company policy’

When Jeffrey Wang posted to X asking if anyone wanted to go in on an order of fancy-but-affordable office nap pods, he didn’t expect the post to go viral.

With AI startups booming, nap pods and Silicon Valley hustle culture are back

OpenAI’s Superalignment team, responsible for developing ways to govern and steer “superintelligent” AI systems, was promised 20% of the company’s compute resources, according to a person from that team. But…

OpenAI created a team to control ‘superintelligent’ AI — then let it wither, source says

A new crop of early-stage startups — along with some recent VC investments — illustrates a niche emerging in the autonomous vehicle technology sector. Unlike the companies bringing robotaxis to…

VCs and the military are fueling self-driving startups that don’t need roads

When the founders of Sagetap, Sahil Khanna and Kevin Hughes, started working at early-stage enterprise software startups, they were surprised to find that the companies they worked at were trying…

Deal Dive: Sagetap looks to bring enterprise software sales into the 21st century

Keeping up with an industry as fast-moving as AI is a tall order. So until an AI can do it for you, here’s a handy roundup of recent stories in the world…

This Week in AI: OpenAI moves away from safety

After Apple loosened its App Store guidelines to permit game emulators, the retro game emulator Delta — an app 10 years in the making — hit the top of the…

Adobe comes after indie game emulator Delta for copying its logo

Meta is once again taking on its competitors by developing a feature that borrows concepts from others — in this case, BeReal and Snapchat. The company is developing a feature…

Meta’s latest experiment borrows from BeReal’s and Snapchat’s core ideas

Welcome to Startups Weekly! We’ve been drowning in AI news this week, with Google’s I/O setting the pace. And Elon Musk rages against the machine.

Startups Weekly: It’s the dawning of the age of AI — plus,  Musk is raging against the machine

IndieBio’s Bay Area incubator is about to debut its 15th cohort of biotech startups. We took special note of a few, which were making some major, bordering on ludicrous, claims…

IndieBio’s SF incubator lineup is making some wild biotech promises

YouTube TV has announced that its multiview feature for watching four streams at once is now available on Android phones and tablets. The Android launch comes two months after YouTube…

YouTube TV’s ‘multiview’ feature is now available on Android phones and tablets

Featured Article

Two Santa Cruz students uncover security bug that could let millions do their laundry for free

CSC ServiceWorks provides laundry machines to thousands of residential homes and universities, but the company ignored requests to fix a security bug.

2 days ago
Two Santa Cruz students uncover security bug that could let millions do their laundry for free

TechCrunch Disrupt 2024 is just around the corner, and the buzz is palpable. But what if we told you there’s a chance for you to not just attend, but also…

Harness the TechCrunch Effect: Host a Side Event at Disrupt 2024

Decks are all about telling a compelling story and Goodcarbon does a good job on that front. But there’s important information missing too.

Pitch Deck Teardown: Goodcarbon’s $5.5M seed deck

Slack is making it difficult for its customers if they want the company to stop using its data for model training.

Slack under attack over sneaky AI training policy

A Texas-based company that provides health insurance and benefit plans disclosed a data breach affecting almost 2.5 million people, some of whom had their Social Security number stolen. WebTPA said…

Healthcare company WebTPA discloses breach affecting 2.5 million people

Featured Article

Microsoft dodges UK antitrust scrutiny over its Mistral AI stake

Microsoft won’t be facing antitrust scrutiny in the U.K. over its recent investment into French AI startup Mistral AI.

2 days ago
Microsoft dodges UK antitrust scrutiny over its Mistral AI stake

Ember has partnered with HSBC in the U.K. so that the bank’s business customers can access Ember’s services from their online accounts.

Embedded finance is still trendy as accounting automation startup Ember partners with HSBC UK

Kudos uses AI to figure out consumer spending habits so it can then provide more personalized financial advice, like maximizing rewards and utilizing credit effectively.

Kudos lands $10M for an AI smart wallet that picks the best credit card for purchases

The EU’s warning comes after Microsoft failed to respond to a legally binding request for information that focused on its generative AI tools.

EU warns Microsoft it could be fined billions over missing GenAI risk info

The prospects for troubled banking-as-a-service startup Synapse have gone from bad to worse this week after a United States Trustee filed an emergency motion on Wednesday.  The trustee is asking…

A US Trustee wants troubled fintech Synapse to be liquidated via Chapter 7 bankruptcy, cites ‘gross mismanagement’

U.K.-based Seraphim Space is spinning up its 13th accelerator program, with nine participating companies working on a range of tech from propulsion to in-space manufacturing and space situational awareness. The…

Seraphim’s latest space accelerator welcomes nine companies

OpenAI has reached a deal with Reddit to use the social news site’s data for training AI models. In a blog post on OpenAI’s press relations site, the company said…

OpenAI inks deal to train AI on Reddit data

X users will now be able to discover posts from new Communities that are trending directly from an Explore tab within the section.

X pushes more users to Communities

For Mark Zuckerberg’s 40th birthday, his wife got him a photoshoot. Zuckerberg gives the camera a sly smile as he sits amid a carefully crafted re-creation of his childhood bedroom.…

Mark Zuckerberg’s makeover: Midlife crisis or carefully crafted rebrand?

Strava announced a slew of features, including AI to weed out leaderboard cheats, a new ‘family’ subscription plan, dark mode and more.

Strava taps AI to weed out leaderboard cheats, unveils ‘family’ plan, dark mode and more

We all fall down sometimes. Astronauts are no exception. You need to be in peak physical condition for space travel, but bulky space suits and lower gravity levels can be…

Astronauts fall over. Robotic limbs can help them back up.

Microsoft will launch its custom Cobalt 100 chips to customers as a public preview at its Build conference next week, TechCrunch has learned. In an analyst briefing ahead of Build,…

Microsoft’s custom Cobalt chips will come to Azure next week

What a wild week for transportation news! It was a smorgasbord of news that seemed to touch every sector and theme in transportation.

Tesla keeps cutting jobs and the feds probe Waymo