Two new P2P mobile money transfer start-ups – American mobile transfer Beamit and UK based TransferWise – have received funding to grow their cross-border remittance services.
The young British remittance company TransferWise has raised $1.3m from an angel funding round led by IA Ventures, from New York.
Index Ventures, Paypal co-founder Max Levchin, Kima Ventures and Seedcamp are some of the other investors backing up the Transferwise seed funding.
“We will use this to continue on the same path – expanding currencies, fuelling our growth and building a better product,” said the Estonian founders of TransferWise, Taveet Hinrikus and Kristo Kaarman, on their blog.
The funding comes little more than a year after they themselves started sending funds abroad.
Until now, the service has been available only in pounds and euros.
The funding will help the company expand into other countries and currencies in Europe by the end of May, the founders said.
The Estonian entrepreneurs claim to offer the cheapest rates in the market, explaining they adopted a P2P crowdsourcing strategy, to lower their fees to a fraction of those by other institutions – a business model similar to the one adopted by Skype, where Hinrikus was the first employee.
The company was ranked second cheapest by the German newspaper Frankfurter Allgemeine Zeitung early in April.
TransferWise charges start from £1 per transaction.
In its first year, the company attracted a total of $13.4m in transfer exchanges in its first year of operation and more than 5,500 individual transfers with an average of $2,300 per transaction.
“TransferWise is moving the money transfer market to the 21st century at a time when many banks and traditional financial services firms are forgetting innovation and customer experience,” said Roger Ehrenberg, managing partner at IA Ventures who will join the TransferWise board of directors, on the blog.
Founders Co-op is leading the seed funding of Beamit, a mobile cross-border remittance platform. Chris Devore from Founders Co-Op told Dow Jones that the new money will be spent on engineers, developing the product and “knocking down regulatory barriers”.
A total of $2.4m was raised in the funding round to finance Beamit, which was founded last year by Matt Oppenheimer, former head of mobile and internet banking initiatives for Barclays Kenya.
Big tech hitters Eric Schmidt, from TomorrowVentures, and Jeff Bezos, with his company Bezos Expeditions, also joined the angel financing of the m-money transfer start-up. Bezos also took part in another angel funding that provided Beamit with $750,000 in convertible debt back in November 2011.
Beamit’s app allows the user to send money from the US to another country. The company aims for a slice of a market that is worth $374bn a year, according to World Bank estimates.
Oppenheimer’s main targets are the developing countries, and transfers between America and the Philippines have already been on trial. He is planning Beamit’s public launch for the third quarter.