Alternative international payment provider Transferwise has received a US$25million dollar investment from Richard Branson among others, it was announced today.
TransferWise, which offers international fiat transfers at a significantly lower cost to the consumer than banks themselves, “couldn’t be more excited” about the investment, which in addition to Branson was facilitated by Peter Thiel’s Valar Ventures, Index Ventures, IA Ventures and more.
The company said in a blog post:
“We’re going to use this money to lead the charge against scandalous overcharging, expose the scam to a wider audience and let them know that with TransferWise, you don’t need to get ripped off when you send money abroad.”
The move is a particularly interesting one for Branson, who recently contributed to a US$30 million investment in Bitcoin payment processor Bitpay.
While TransferWise has not yet mentioned Bitcoin in its strategy, a Branson-fostered partnership cannot seem too distant a possibility. If it were to happen, BTC-to-fiat transfers could benefit from increased flexibility and consumers could avoid the unwieldiness of converting BTC under the current setup, which includes country restrictions as well as fees and other requirements imposed by exchanges.
TransferWise’s mission specifically aims to undercut the hidden fees imposed on international fiat transfers by banks and remittance organizations, instead providing an alternative with considerably lower fees, around 0.5%, which are stated upfront.
The service was launched three years ago by Taavet Hinrikus and Kristo Käärmann, who created it as an alternative to the many international transfers they both needed to make while working abroad.
“…Money is meant to flow freely,” their website explains, while perhaps tellingly adding, “But in the absence of a global currency, it doesn’t.”
With Branson’s backing, however, the potential for TransferWise’s to grease the wheels of a truly affordable global currency is loud and clear.
Separately, the true cost of the existing model is being realized. A Bitcoin-accepting merchant posted details of charges applied by PayPal for its fiat costs, and the results speak for themselves.
On revenues of US$245,301.46, PayPal charged the merchant u/bitcoinshops US$11,256.86 in what the user refers to as “normal” fees and US$5,626.26 in “hidden FOREX transfer fees”, while seller platform fees were $12,265.07. In total, fees paid associated with transmission reached US$29,148.20, or 11.8% of total revenue.
“We just came out with a new eCommerce Adult Toy Shop and decided that we will ONLY accept Bitcoin with this business and any new business endeavor!” u/bitcoinshops said in subsequent commentary on the figures.