Founded in 2010 by Somali entrepreneur Ismail Ahmed, WorldRemit — a London-based tech startup providing low-cost international money transfers — made headlines a few weeks ago when it raisedUS$100-million in series B funding.
Having personally experienced the frustrations of using traditional money transfer agents, WorldRemit’s founder Ahmed set out to create a service that would use technology to improve the sending process, enhance compliance and reduce the costs for the customer.
I’m not surprised at all by the success that WorldRemit has achieved, and in my previous articleI urged African startups to look at the bigger picture: the opportunity presented by the remittances and international payments market.
Sixty five percent of all remittance pay-out locations are serviced by the two largest traditional money transfer service providers, Western Union and MoneyGram, charging high transaction fees to support their large distribution chains in Africa. This means that new and interesting startups, especially those leveraging mobile in Africa, are finding new ways of providing extensive global and on-the-ground coverage at a fraction of the traditional cost.
However, with the lion’s share of the market, the incumbents are not motivated enough to change the status quo. This is despite the fact that it could put US$4-billion more in the pockets of Africa’s migrants and the families who rely on these remittances for survival.
As a result, tech startups such as WorldRemit, Azimo and Kwanji have come into the spotlight to shake things up and if WorldRemit’s latest funding round is anything to go by, they will be giving the traditional agents a run for their money.
WorldRemit teaches an important lesson about how innovation for the sake of the customer in the developing world can be the making of a successful, global company.
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