Shoreditch-based TransferWise has now transferred over £1 billion of customers' money, a jump from £ 125 million almost a year ago.
Co-founder Taavet Hinrikus said it shows people are realising the ‘poor value’ that banks offer when it comes to sending money abroad.
‘In financial services there has been so little change for so long. But people won’t put up with opaque fees and poor service from banks any longer. TransferWise has saved our customers over £45m in banking fees,’ Hinrikus told MT.
TransferWise, which was started three years ago by Estonian-born Taavet Hinrikus and Kristo Käärmann, was given a massive boost when Peter Thiel, co-founder of PayPal and Facebook’s first investor, invested $6m in the startup last May. It was the first European investment for Thiel's fund Valar Ventures.
The money has been used to grow the number of currency transfers that TransferWise offers, which now includes the Polish Zloty, Indian Rupee, Chinese Yuan and South African Rand. A year ago just some European currencies and US dollars were on offer. If one currency is in stronger demand, Hinrikus says the firm works with large institutional partners to deal with the imbalance at the opposite end.
Hinrikus, who was Skype’s first employee, and fellow Estonian Käärmann, a former management consultant, started TransferWise in 2011 after growing frustrated at losing around 5% of their salaries to bank charges when they moved money between Estonia and Britain.
Its peer-to-peer service means it can offer significantly cheaper and more transparent money transfers. Banks charge between 3-6% commission to transfer money abroad. By cutting out the banks, TransferWise offers a flat charge of £1 on transfers up to £200, and a commission of 0.5% on all higher transactions.
When asked whether TransferWise could move into the broader currency exchange market, Hinrikus said he’s focused on money transfer for now. ‘Between 5 and 10 trillion dollars are transferred on a yearly basis. We’ve only just hit the £1bn mark so there’s still a long way to go.’
He also said he would consider teaming up with Facebook, which has hinted that it is looking at letting users store money and pay others across Europe. ‘I don’t know the details, but if they can offer the right numbers then certainly we would want to be involved,’ he added.
Fully regulated by the Financial Conduct Authority, TransferWise has 86 employees working across offices in London and Estonia. The company has become one of the hottest start-ups to come out of East London's Silicon Roundabout.
Other firms have capitalised on a surge in confidence in London’s tech scene by going public. But Hinrikus says it is not something the firm is considering: ‘We have not thought about it at this point. Our priorities are growing the company. We have plenty of capital and becoming a public company wouldn’t make it any easier for us to grow the company.’
For now, he’s continuing his battle against the banks. ‘People are still relying on banks, despite their reputation. We’re changing people’s behaviour and that’s a hard thing to do.’