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Since I’ve begun blogging here, I’ve quickly come to understand that transferring money internationally can be a pain. There are various methods of doing it, like transferring money through PayPal, wiring it directly through a bank, or using a site like Odesk, but you wind up losing a percentage of the money transferred regardless of the option you select. As a result, we recently began using TransferWise, a wire-transfer startup founded by Estonians Kristo Kaarmann and Taavet Hinrikus which allows customers to avoid losing money through commissions and to transfer money as much more favorable rate than banks and other services typically offer. The founders of this startup are well-aware of the difficulties that people face in transferring money and believe that there is a market for those seeking an alternative, less painful option. However, just this week we received a tip about a competing service which also seeks to make its mark in this industry.
TransferGo is a money-transfer service based in the U.K., but founded by a Lithuanian team, which also aims to challenge banks and other services and offer an easier way to transfer money. I had an opportunity to speak with Daumantas Dvilinskas, one of the founders of the company, about the service and he told me that they are offering users the ability to transfer money internationally at a fee of a mere 2.5 British pounds and convert currency a 1.5% fee. Further, unlike banks, they will offer customers next-day delivery, as opposed to requiring a waiting period of several days, as banks might do. Finally, although they’re currently setting up offices in the U.K. and Lithuania, Dvilinskas says that TransferGo definitely has plans to expand to the rest of Europe and United States. Ultimately, the goal is to turn this into an international firm.
Considering that TransferGo only launched their service in September, remained in beta until December, and currently only supports transfers between Lithuania and the U.K., it’s pretty understandable that they have not yet developed a large user base. They currently have 500 users and a 40% monthly retention rate.
TransferGo has recently lined up Greg Kidd, formerly an advisor to Square, Twitter and a former analyst of Federal Reserve Board, and a team to support their development in both Lithuania and the United Kingdom. Thus far they have raised $200,000 (150,000 euro) from Lithuania-based Practica Capital and Dvilinskas told me that they are planning to complete a Series A, although they have not made any decisions regarding the investors from which they’ve received interest.
In comparing the two, it seems that TransferWise has a bit of an advantage because they offer services in a wider range of currencies at the moment and more funding to play with, as the Estonian startup has raised 1 million Euro about a year ago from PayPal co-founder Max Levchin and others. Having just won the award for “Best Middleweight Startup (Less than 3 years and/or less than 2 million euro in funding)” at The Europas 2013, they’re already starting to generate a bit of buzz. However, at this point it seems that neither startup has really established itself in this market. TransferWise seems to have an advantage, but even they do not yet offer users the ability to convert funds from the U.S. dollar to the pound or other popular currencies. Both startups are in their early stages, so there’s definitely an opportunity for either to gain traction in this market. With an advisor like Greg Kidd on board, TransferGo should certainly have an opportunity to make its own mark in this industry.
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