By Ingrid Lunden
Image Credits: Angela Bax / EyeEm / Getty Images
Cross-border remittances — when people living and working abroad send money back home to friends and family — continues to be a huge part of how those living in developing countries, off the global financial grid, can be helped. The World Bank estimates that some $589 billion will be sent this way 2021, according to research from the World Bank, up 7.3% on 2020, as parts of the global economy started to claw back growth after a tough 2020 due to Covid-19.
In one development of that theme, today, Taptap Send — one of the startups building tools to manage these money transfers — is announcing $65 million in growth funding as it continues its mission to enable remittances specifically to the most overlooked countries.
The company’s hook is that it charges no fee for the transfer (it makes its cut via foreign exchange rates), and believes that its service is the easiest on the market to use, and it integrates with whatever mobile money wallets are already being used locally, meaning recipients do not have to add anything extra to their devices, or learn any new techniques, to be able to receive money via the service. At a time when the global economy has been under pressure, Taptap Send saw business grow eight-fold, the company said.
The Series B is being led by Spark Capital, with participation also from Unbound, Reid Hoffman and Canaan Partners (both of which led its previous round, a $13.4 million Series A earlier this year), Slow Ventures, Breyer Capital, Wamda Capital, Flourish Ventures, and additional unnamed investors from the Middle East, Africa, Asia and Latin America. The company has now raised more than $80 million, and while it is not disclosing its valuation, PitchBook data notes that it is $715 million as of this round (which appears to have closed earlier in the year).
There are dozens, maybe even hundreds, of companies playing in the cross-border remittances field, from incumbents like Western Union through a myriad of tech players, some of which have gone public and some of which remain privately held. Taptap Send believes that its unique place in the market is that it has built not just the easiest, but the most reliable system to initiate, manage and receive those transfers.
“It’s quite easy to say remittances are crowded, but you could have said that for social networking or videoconferencing before TikTok or Zoom came along,” said Michael Faye, the CEO who co-founded the company with Paul Niehaus. “Remittances are a deceptively simple product on the surface, with an exceedingly complicated execution under the hood. There are 1,000 parts to get right and when you do you can deliver more value to users via price, speed and reliability.” He notes that a lot of the remittance services have been less than reliable, another area to improve for those looking to be more competitive.
“Remittances is one of the most sensitive things a person buys. It’s not like a shirt that you can touch and feel,” he said. “In remittances you are entering payment information and waiting and hoping that the money is getting to someone who likely needs it quite urgently. You need to have the utmost trust to take that money and send to someone else.”
The founders have arrived at their understanding of the market based on a long history in the field, having previously founded GiveDirectly (for charitable cross-border transfers) and Segovia (focused on B2B transfers). Segovia was acquired by Crown Agents Bank in 2019, and theoretically the product of Taptap Send was spun out from that ahead of the deal.
Taptap Send has been steadily growing and adding more countries to its list of served markets. It currently covers some 20 countries for receiving money, some of the very poorest and/or least developed places in the world including Bangladesh, Cameroon, DRC, Ethiopia, Kenya, Madagascar, Morocco, Nepal, Nigeria, Pakistan, Republic of the Congo, Sri Lanka, Vietnam, Côte d’Ivoire, Ghana, Guinea, Mali, Senegal and Zambia.
Its growth, as with many other remittance providers, has been predicated on the rapid rise of mobile technology, and the fact that even in the poorest communities, people will have handsets that can be used to initiate transfers and act as proxy-bank accounts, even if they are not smartphones.
“The change has been profound, and the number of countries where these domestic wallets are popping up around the world is shifting dramatically,” Faye said.
The company was attractive to investors in part because of its growth during what has been a challenging time for the industry, and in part because of the team and its ethos of bringing financial inclusion tools to as wide a swathe of the developing world as possible.
We’ve looked at a lot of fintech companies in the space, and think Taptap’s team and community-led approach are best in class,” said investor James Kuklinski of Spark Capital in a statement. “We couldn’t be more excited to be joining them on our mission to bring low-cost, accessible, cross-border financial products to underserved diaspora populations around the world.”
“I invest for scaled global impact and team, and Taptap is among the best combinations I’ve seen, ” added Reid Hoffman.