British businessman Sir Richard Branson, the founder of Virgin Group, is among high-profile technology investors to invest USD25 million into the Estonian-founded international money transfer platform, TransferWise.
“I’m delighted to be investing in such an innovative company as TransferWise,” Branson said. “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.”
The London-based company has pledged to use its new funds to raise awareness of the hidden fees applied to overseas money transfers. According to the company, banks and brokers “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 added in a statement that it “believes that all costs should be presented upfront and only the mid-market exchange rate should be used to process transactions”.
Taavet Hinrikus, the co-founder of TransferWise, said the startup was “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,” Hinrinkus added.
TransferWise started in early 2011 with two founders, making transfers between just the British pound and the euro. It has since added a further 100 members of staff and 234 currency routes. The firm continues to grow between 20-30 per cent a month. So far, TransferWise has transferred over GBP1 billion worth of customers’ money, saving its users, according to the company, over GBP45 million in banking fees.