This article was posted in TechCrunch and reviews a 2019 Singapore-based startup called Thunes, which is yet another example of the race to innovate in the cross-border payments space. There have been numerous announcements during the past couple of years around improving the client experience in this lucrative area of global payments.
In this particular case, the company has received a $60 million funding round from several investors. Mercator Advisory Group has been covering the B2B space in cross-border for some time, and this is where the largest amount of commercial value flow exists. Much of the heretofore investment has been in the P2P (remittance) and B2C (disbursements) space but B2B is catching up.
‘Thunes develops APIs and other technology for financial companies, including banks, digital wallet providers, and money transfer services, that helps them reach customers in emerging economies, who often don’t have access to traditional bank accounts. Instead, many rely on digital wallets or mobile money accounts to make or receive online payments….The company now operates in about 100 countries, up from 40 when TechCrunch covered its $10 million Series A in May 2019. The latest round will be used to grow its operations across Africa, Asia and Latin America, and brings Thunes’ total raised so far to $70 million.’
Given the focus on less developed areas, there is likely a good opportunity to capitalize on more nascent B2B operations, especially in Africa, where things like M-Pesa have been common for years, but mostly in consumer activity. Our readers will know that traditional methods of cross-border have been slow and opaque, using a correspondent banking network mainly involving book transfers internationally and locally executed RTGS or batch e-payments, although checks are also still in play as well.
There are many initiatives underway to improve this experience, including SWIFT gpi, blockchain, and real-time international payments (P27). Another key differentiator in the new approaches is reduced cost.
‘One advantage of Thunes’ technology is that it significantly reduces the amount of transaction fees consumers or businesses need to pay. The company makes revenue by charging a fixed transaction fee between two cents to $2, depending on the destination country. If there is a currency exchange involved, it charges a small markup on the exchange rate, using mid-market rates for reference….“We need to make money, but our price also needs to be very attractive for a bank, a financial institution, digital wallet or mobile money accounts, so they can also make a markup on what they’re selling to the customer,” De Caluwe said. “So we operate on small margins, high volumes and high frequency.” ‘
We’ll continue to follow developments.
Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group
