International money transfer platform, TransferWise has raised $25m from Peter Thiel’s Valar Ventures, Index Ventures, Sir Richard Branson and other high profile technology investors in a move to raise awareness of the hidden fees applied to overseas money transfers.
Known for its “cheeky” anti-bank advertising the London-based company aims to shame banks and brokers who disguise the full cost of their fees by hiding it within the exchange rate they offer. World Bank research shows that this significantly misleads consumers – almost two-thirds of those polled by them were unaware that there was any other component to the cost beyond the transaction fee. TransferWise believes that all costs should be presented upfront and only the mid-market exchange rate should be used to process transactions.
The firm has also published an independent price comparison research and a Pinterest “Board of Shame” featuring its competitors’ prices to illustrate the excessive and opaque fees applied by banks and currency brokers for sending money abroad.
In a statement, Sir Richard Branson, founder of the Virgin Group, said:“I’m delighted to be investing in such an innovative company as TransferWise. Financial services such as foreign exchange have been ripe for disruption for decades and it’s great to see TransferWise bring transparency to the market. It’s encouraging to see entrepreneurs using technology to reinvent the old-fashioned FX industry and make a real difference in the market. I see tremendous opportunity for startups like Transferwise to offer breakthrough financial services and products.”
This investment marks TransferWise’s ‘Round B’ funding, with Sir Richard Branson joining as a new investor. Existing investors also participated, including Peter Thiel’s Valar Ventures, IA Ventures, Index Ventures, TAG (Robin Klein and Saul Klein), and the owner of Le Monde Xavier Niel (via Kima Ventures). This brings the total TransferWise has raised to $33 million in the three years since its launch.
According to Taavet Hinrikus, co-founder of TransferWise, “We are truly honoured to have Sir Richard Branson join Peter Thiel’s Valar Ventures, IA Ventures and Index Ventures to back our mission to stomp out hidden bank fees and make the world of money transfers a fairer place. This new investment and faith in our business is concrete affirmation that our campaign for transparency is really taking grip.
We’re going to use this money to lead the charge against hidden bank fees and expose the problem to a wider audience. It’s outrageous that they can get away with advertising that claims their transfers are ‘fee-free’ despite often taking up to 5% of the money sent through the exchange rate.“
International money transfers are more expensive than meets the eye – even when banks and brokers claim there are ‘no fees’. Many banks take as much as 5 percent of the money being sent. TransferWise is the clever new alternative that allows people to transfer money abroad at a lower cost than ever before. It uses technology developed by the people who built Skype and PayPal to remove all the fees the foreign exchange industry has kept hidden for decades. Customers have already moved more than £1bn using the platform – an approach that has put over £45m back in their pockets.
With word on the street that the firm is set to work with Facebook on international mobile money, TransferWise launched early in 2011 and has transferred over £1bn worth of customers’ money, saving its users over £45m in banking fees. TransferWise has attracted $33m from some of the world’s best investors most sought after investors such as Richard Branson, founder and CEO of Virgin Group., Facebook’s first outside investor and co-founder of PayPal, Peter Thiel with a $6m investment in the company. Other investors include SV Angel, Max Levchin, IA Ventures, Index Ventures, TAG (Robin Klein and Saul Klein), Seedcamp, Betfair’s former CEO David Yu, and Kima Ventures).
Prior to starting TransferWise, Taavet was Skype’s director of strategy until 2008, starting as the firm’s first-ever employee. He also helps the startup community as an advisor and angel investor. His investments include Tweetdeck, Mendeley, OMGPOP, Betaworks, Farmeron and Teleportd among others. At TransferWise, Taavet looks after marketing and product development. The other co-founder, Kristo Kaarmann was a management consultant with Deloitte Consulting and PricewaterhouseCoopers. He worked with European banks and insurers to modernise their processes and systems. Stunned by their inefficiency, he teamed up with Taavet Hinrikus, then Skype’s director of strategy, to develop an entirely new system for moving money across borders.
TransferWise supports currency transfers between Euro, British Pound, Swiss Franc, Polish Zloty, Turkish Lira, Romania Leu, Bulgarian Lev, Georgian Lari, Hungarian Forint, Danish, Swedish, Czech and Norwegian Krone. It also supports transfers from these currencies to Indian Rupee, US, Australian, Singapore, Hong Kong, and New Zealand Dollar.