WorldRemit management team
By JAMES HUTCHINSON
Thursday, March 13, 2014
London-based money transfer start-up WorldRemit is set to open an office in Australia this year, as it looks to take on the country’s $US7 billion ($7.7 billion) remittances market.
The firm, which rivals centuries-old businesses Western Union and MoneyGram, allows migrants and ex-pats to transfer money to their home countries online, to be picked up in cash or through a bank deposit on the other end.
Founder and chief executive Ismail Ahmed said the company would use a $US40 million investment received this week from US venture capital firm Accel Partners - a previous investor in the locally listed OzForex and software developer Atlassian – to quadruple staff this year and open new offices.
In Australia, where Mr Ahmed said an office would be located this year, the company currently accounts for approximately $120 million in remittances outside of the country.
An estimated $US550 billion was transferred globally through remittances during 2013, according to the World Bank, with three-quarters of that money going to developing countries.
A report issues last year by the bank indicated Australia was one of the highest-fee countries for money remittances, with fees of up to 20 per cent taken on transfers to the Phillippines.
Mr Ahmed told The Australian Financial Review he wanted to “challenge the very high costs, inefficiencies and low transparency associated with the traditional money transfer businesses like Western Union”.
“The money transfer business has been the last frontier of the internet. Similar industries like travel, and hotels went online as early as the 1990s but money transfer market has remained offline,” he said.
“We expect the online money transfer market share to increase from 5 per cent currently to 30 per cent in the next few years and we’re going to be at the forefront of this significant shift.”
The company is capitalising on the huge shift to mobile economies in developing countries, especially in Africa where mobile wallets such as the M-PESA in Kenya and EcoCash in Zimbabwe have quickly become prevalent forms of banking, challenging traditional incumbents.
Mr Ahmed said WorldRemit had seen 40 per cent of money transfers to Zimbabwe move to EcoCash in the past year, and 90 per cent of transfers to Kenya end up in mobile wallets under the M-PESA system.
“Australia is our fastest growing market currently,” he said. “Migrants and expats in Australia tend to be more tech-savvy.
“Three years ago less than 10 per cent of our customers were using smartphones – today 40 per cent are accessing our site from smartphones and we think in the next two or three years that will move to more like 70 to 75 per cent.”