Banks are overcharging and underserving small businesses when it comes to international money transfers, according to Taavet Hinrikus, Skype’s first-ever employee and the co-founder of TransferWise.
He spoke to Dynamic Business while in Australia to promote TransferWise, an international peer-to-peer money transfer platform he co-founded with Kristo Käärmann in 2011. To date, the platform has attracted USD$117 million from investors including Richard Branson and PayPal’s founders, Peter Thiel and Max Levchin. Since its launch in Australia, last July, more than $1.5 billion AUD has been transferred to and from Australia.
“Whether they’re paying freelancers or suppliers overseas, small businesses transferring money abroad have been overcharged and underserved by banks and brokers for decades,” Hinrikus said.
“Every year $100 billion is sent in and out of Australia, meaning Australians are losing an awful lot of money to the banks. Of those who transfer money overseas, over three quarters have done so up to five times in the last year. But on average we underestimate the amount it’s costing us by over 10x.
“People want to be able to transfer money at a lower cost, faster and with complete knowledge of what it costs them and the exchange rate they get. TransferWise is typically up to 8 times cheaper than banks to send AUD$1,000 and it charges a small, transparent service charge.”
Outside of TransferWise, Hinrikus is involved in the startup community as an advisor and angel investor. His investments include Tweetdeck, Mendeley, OMGPOP, Betaworks, Farmeron and Teleportd among others.
“I look for companies that are going to have a big impact on the area they’re focusing on: ones that could change the world for the better,” he said.
“The key thing is that they’re solving a real problem and that they’re clear what this problem is. The solution needs to be 10x better and it helps if it’s a big market. Then it’s about the team and their ability to make things happen.”
