- Targets 5% share of country’s foreign-remittance market
- Touts peer-to-peer model to save money for people sending cash
TransferWise Ltd., the U.K. money-transfer startup, began operations in Japan Wednesday, its latest effort to shake up banks’ dominance of the market for sending cash abroad.
TransferWise will target the 1.3 million Japanese expatriates who want to send money home, as well as the 2.2 million foreigners living in the Asian nation, Taavet Hinrikus, co-founder and chief executive officer, said in an interview in Tokyo. The firm will work with Mitsubishi UFJ Financial Group Inc. to complete transactions and ensure liquidity, he said.
Hinrikus created the venture with Kristo Käärmann six years ago to match people who want to send money across borders. It facilitates exchanges at the so-called mid-market rate that excludes the markups banks charge customers to convert currencies. The London-based company says its fees are up to eight times cheaper than what banks and traditional money-sending services charge.
TransferWise is starting its Japan business with three local employees and plans to increase the number to about 10 over the next 12 months, mainly for marketing and engineering, Hinrikus said. The website will be in Japanese as well as English. He’s seeking to grab a 5 percent share of the local remittances market over the next couple of years.
“It’s good to be close to our customers,” said Hinrikus, 35. “It would be hard without a local team.” Getting approval from Japan’s Financial Services Agency was “relatively straightforward,” he said.
As well as Japan, TransferWise has started operations in Brazil, Canada, China and Singapore this year and plans to do so in New Zealand and Hong Kong next. The company processes more than $1 billion each month and saves customers $1 million every day, according to Hinrikus. The business has more than doubled in the past year by monthly revenue and the number of transactions, he said.
Revenue almost tripled to 27.9 million pounds ($37 million) in the year ended March, its annual report shows. TransferWise isn’t yet profitable, with its net loss widening 55 percent to 17.3 million pounds.