Founded in 2016 by Hongkongers Arthur Mak and Caecilia Chu, financial technology startup YouTrip offers a multi-currency mobile wallet that allows customers to pay overseas with no transaction fees, and to exchange and store up to 10 currencies anytime, anywhere.
The company has partnered with Mastercard and EZ-Link, the government-owned firm behind the ubiquitous contactless stored-value card for public transit use in Singapore.
YouTrip uses a contactless Mastercard prepaid card, which enables users to exchange foreign currencies in real-time and pay for goods and services of over 30 million Mastercard merchants worldwide.
“YouTrip users will not incur fees typically charged for currency exchange at banks, as well as online currency conversion and transaction fees typically incurred for cross-border payments,” Chu, the company’s co-founder and chief executive, said, adding that users enjoy competitive, wholesale exchange rates at zero additional fees for foreign currency conversion.
As the company has laser-focused on frequent travelers and online shoppers, “our product offering has to be 10 times better than what’s available in the market”, Chu said.
YouTrip’s efforts appear to be paying off: since its commercial launch in August 2018, it has clocked more than 300,000 app downloads.
Chu said YouTrip’s zero-fee offering and emphasis on creating a convenient user interface for its app, comes from her experience of working in Chinese digital payments startup QFPAY and fintech giant Lufax before launching her own venture.
Instead of charging its users, YouTrip earns its income from the merchant side. Whenever its users spend with YouTrip’s Mastercard prepaid card, the company takes a small cut from the transaction fee that merchants pay to Mastercard.
YouTrip has developed its technical infrastructure for multi-currency exchanges with a network of foreign exchange providers. “When a user submits the request, YouTrip will automatically convert the currencies with the foreign exchange provider offering the best exchange rate,” said Chu.
“YouTrip’s platform will lock up the exchange rate and amount with the trading party in real-time so that YouTrip does not need to do any hedging to avoid the currency risk.”
The proprietary technology platform enables the company to provide foreign exchanges to individual users at a competitive rate that banks cannot provide, she said.
“The difficulty for banks is that there are a lot of traditional technology systems for functions like payment and clearing, which they may have been using for decades. It will require huge cost and effort to revamp their existing mechanisms and processes, if they want to integrate multiple functions to create new products,” she said.
“We do not have the burden of the traditional technology systems as we create our technical infrastructure for the product from scratch.”
Chu, who went to Harvard with Grab founders Anthony Tan and Hooi Ling Tan, and Go-Jek CEO Nadiem Makarim, has seen a booming market for companies developing digital payments, lending, insurance, and other fintech services in the Southeast Asia region.
She is confident that YouTrip will thrive in a highly competitive landscape. The company’s focus on a niche market – travelers – is a major edge in terms of market positioning, compared with other fintech giants such as Grab which offer various types of services ranging from payments and ride-hailing to food and grocery delivery for the mass market.
“Fintech giants, such as China’s Alibaba and Tencent, Grab and Go-Jek in Southeast Asia region, are all trying to build a super-app that encompasses everything from maps and payments to food delivery… But we are not going to do that,” Chu said.
Asked about potential new offerings of YouTrip, Chu said the company is developing new products for frequent travelers – probably travel insurance – and features like personal financial management and expense tracking.
Amid the rise of digital finance, the Monetary Authority of Singapore, both the regulator and the central bank of the nation-state, is issuing five new digital banking licenses to suitable applicants, which will challenge traditional banks by leveraging their technology and their user databases to offer banking services to retail customers and small businesses.
YouTrip itself is carefully considering applying for a virtual banking license in Singapore.
“Becoming a virtual bank is actually part of YouTrip’s long-term goal. And now we have to weigh the pros and con,” Chu said. “[With the license,] YouTrip can develop new financial products, such as savings, that can directly compete with banks, but we will be more restrained in terms of capital requirements, business focus as well as regulatory compliance, which may be a drag on our business growth and the time to market our product.”
This May, YouTrip announced the completion of its US$25.5 million seed round of funding. Investors in the round include Singapore venture capital Insignia Ventures Partners.
While part of the fresh capital would be used in expanding its engineering team in Hong Kong, the funding also comes at a time when the company plans to enter another market in the region.
Without disclosing the target market, Chu said the country has ten times the population of Singapore but with less-established banking services. That implies a first-mover advantage for YouTrip.
As the company is seeking to expand its market, seeking integration with local brands is crucial, she said. “Partnering with mainstream local brands, like EZ-Link in Singapore, is important for our financial products to gain customers’ trust in the local market.”
For now, YouTrip has no plans to launch in Hong Kong. “We’re proud to be a Hong Kong company, but we’ve never thought Hong Kong companies should only be limited to the local market,” Chu said. “We’ve always believed YouTrip can thrive in the Asian region, as well as the international market.”
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