P2P currency exchange marketplace CurrencyFair has closed a €10 million ($10.7 million) funding round, the Dublin-based company said on Thursday (April 16).
The Series A round was led by Octopus Investments with participation from existing investor Frontline Ventures, and brings CurrencyFair's total funding to $15.4 million. The new money will be used to enhance and expand CurrencyFair’s existing currency corridors between the U.K., Europe and Asia/Pacific, according to the company, which says that in 2014 it became the first platform in the world to hit $1 billion in money-matching transfers.
"The money transfer sector has seen a lot of attention recently, with customers beginning to realize the high fees charged by banks when sending money internationally," CurrencyFair CEO Brett Meyers said in a prepared statement. "These customers, made up of an internationally mobile workforce, retirees and foreign property owners, are regularly sending €2,000 or more in the form of pay, pensions, mortgages and rents. For these people we are a great match as we are virtually unbeatable over £2,000, sometimes even beating the interbank rate, which banks, brokers and other transfer services can’t do."
The basic mechanism is simple: Customers send funds to their CurrencyFair client account via a local transfer, it's converted to the target currency at an exchange rate that's typically much better than that offered by banks or Western Union, and the customer gives the receiver's account details to CurrencyFair, which does the rest. In theory that can cut the transfer cost by 90 percent.
In practice, there can be far more fine print, according to CurrencyFair's website. For example, U.S. and Canadian dollar deposits typically must be made by (more expensive) wire transfer, and there are also extra fees associated with funds that start out as South African or U.A.E. currency. (Most European, Australian, New Zealand and Hong Kong currencies have very low deposit fees, though.) And because the actual exchange rates are decided by marketplace users, there's no guarantee that rates will be spectacularly low.
Still, CurrencyFair says it typically gives much-better-than-banks results that aren't huge but are still larger than about $2,000. For smaller transfers, or places where CurrencyFair doesn't go (such as most of Africa, Asia and South America), other remittance-oriented startups like TransferWise and WorldRemit are taking up the slack, according to TechCrunch. And even traditional remittance giant Western Union is sharpening up its approach with a technology partnership with Hyperwallet.