Date
14 December 2018
CurrencyFair is tapping into the renminbi market in an Asia push, with the segment seen as a big part of the company’s future growth, according to COO and CFO Ruth Fletcher. Photo: CurrencyFair
CurrencyFair is tapping into the renminbi market in an Asia push, with the segment seen as a big part of the company’s future growth, according to COO and CFO Ruth Fletcher. Photo: CurrencyFair

P2P money exchange platform CurrencyFair bets big on RMB biz

CurrencyFair, a Dublin-based online peer-to-peer (P2P) foreign exchange marketplace, announced last month the acquisition of Hong Kong payment services firm Convoy Payments, signaling the fintech startup’s major ambitions for expansion into Asia.

Ruth Fletcher, the Irish firm’s chief operating officer and chief financial officer, told EJ Insight in an exclusive interview recently that the Convoy deal gives her firm immediate access to the renminbi market, which CurrencyFair sees as a big part of the company’s growth in future.

Founded in 2009, CurrencyFair aims to take remittance business away from banks, enabling customers to exchange funds and transfer them overseas with its “money-matching” model, avoiding bank conversion fees. The online platform uses P2P technology to match individuals who want to exchange currencies.

As the company explains on its website, users have to register and credit their accounts with money they want to exchange. Then they can submit to the platform the currency and amount they want to exchange. Users can look for the best deal available on the site that others with the exchange demand are offering. As the user picks the deal, the trade will be “matched” by the platform, and the sum will be transferred between the accounts.

This July, the platform announced that it had officially traded 7 billion euro with over 100,000 customers since the launch.

“Currencyfair enables individuals and small businesses to make international money transfers up to 8 times cheaper than banks,” said Fletcher. “Our customers have saved over 200 million euro (US$232 million) through using our service instead of banks.”

On the platform, users set the rate they want to exchange at, though the rates are ‘collared’ by CurrencyFair to keep them reasonable. The startup makes money from ‘haircutting’ the rates.

Fletcher told EJ Insight that CurrencyFair’s core target market to date has covered three primary audiences: those travelling overseas or relocating internationally for work, businesses making or receiving international payments, and asset buyers or retirees who tend to make larger transactions like buying foreign property for investment.

Eye on Asia

Plotting an assault on the Asian market, CurrencyFair announced in August the acquisition of Convoy Payments, which is committed to developing payment services that connect Mainland payment licensed companies with global payments channels. All its operations and staff will transfer to CurrencyFair as part of the new strategic partnership.

Convoy Payments had been a subsidiary of the listed entity Convoy Global Holdings (01019.HK), which had been snared in wrongdoing scandals since last year. Convoy Global found itself being targeted in corruption and market misconduct crackdowns by Hong Kong’s anti-graft body and market regulator.

Some top Convoy executives, including its former chairman Quincy Wong Lee-man, have been arrested by the regulator, and the company was battling multiple lawsuits relating to alleged financial impropriety. Following the arrests, the company appointed new leadership last December.

“We have been working closely with the management of Convoy, and the partnership has been smooth,” Fletcher said in the interview. “We have only worked with the new management team within Convoy on this transaction, and we see no impact/risk on either the acquisition or partnership.”

Fletcher said the acquisition is part of CurrencyFair’s 20 million euro (about HK$182 million) investment plan to drive rapid global growth, which will see the creation of 90 new jobs over the next 18 months, bringing its products to the world’s fastest-growing region.

“We will continue to add more currencies onto our platform and we will enhance our offering to businesses,” said Fletcher, who noted that in Asia, the fastest growing money transfer market, non-cash transactions grew by 43 percent in the fiscal year 2014-15, and “this strong growth is set to continue.”

The firm expects the Asian market to account for approximately a third of global money transfers by 2026.

Positioning for new opportunities

CurrencyFair’s global growth plan will be funded from internal cash flow and with the support of four significant Asian and European investment firms. Convoy Global, the previous owner of Convoy Payments, is also coming on board as a backer.

Asked whether CurrencyFair would acquire other business units from Convoy Global in the future, Fletcher said: “We believe that there will be consolidation in our market over the next number of years. As a profitable business, we are well positioned to make further acquisitions when the right opportunities are available.”

The ability to offer renminbi will give CurrencyFair access to the inbound Chinese money transfer market, estimated to be worth US$61 billion in 2016. Following the Convoy Payments acquisition, the online platform will roll out its services within Hong Kong and provide renminbi offerings to CurrencyFair’s global customer base.

“Remittances into China in 2016 amounted to over US$61 billion, which is a huge market and not one we see as being saturated,” Fletcher told EJ Insight. “The Chinese diaspora crosses the globe with strong presence in Australia, North America and Europe,” she noted.

CurrencyFair uses local banking partners in countries where it operates, which helps ensure that the customers gain access to their funds quickly and at a low cost. Fletcher said the company is dealing with local partners in China who are licensed within the country.

“We are also finalizing our move into the Singapore market and expect to be operational there in the coming months,” said Fletcher. “This will give us a good base for further expansion into the Asian market.”

In recent years, fintech startups have grown rapidly to become the disruptors in the remittance field, reducing the cost of cross-border money transfers due to the “foreign exchange spread” that banks impose. Pursuing global expansion, CurrencyFair’s rival, UK-based Transferwise launched its money transfer services in Hong Kong in July. And local players like Alipay Hong Kong, a joint venture established and managed by CK Hutchison Holdings and Chinese fintech giant Ant Financial, has been offering cross-border remittance service.

Asked about the increasing competition among fintech startups, Fletcher said: “With more industry players coming to the market, this helps to raise the market awareness and provide alternatives to traditional financial services. I believe this is a positive sign of potential market growth which will drive a larger and wider customer base and improve the industry standard (in terms of quality and range of services) in the long run.”

The executive is confident that the substantial savings and value on offer that CurrencyFair provides will prove a highly compelling proposition in the Asian market.

– Contact us at [email protected]

BN/RC

EJ Insight writer

EJI Weekly Newsletter

Please click here to unsubscribe