Foreign exchange platform CurrencyTransfer announced recently that it would be extending its services to holders of Israeli shekels. The announcement comes on the heels of the British company opening new offices at the South of Salame (SOSA) co-working space in Tel Aviv.
“Foreign exchange is sadly one of the last areas of financial services where the end customer doesn’t know what they’re paying,” co-founder and CEO Daniel Abrahams told Geektime. “When you leave a market, you know how much apples and bananas cost down to the last penny or shekel.”
The Israeli sector is currently in beta mode but should be open soon. Thus far, the average Israeli trade hovers around $30,000, matching the overall average, according to Abrahams. The marketplace brings the transfer cost to within .5% of the true exchange rate: They claim the rate with banks is typically 2-5%, and that banks still encompass 85% of the market for foreign exchange.
CurrencyTransfer‘s biggest hook would be no fixed transfer fees nor subscription fees. “Our business model is based on taking a small revenue share from the winning currency supplier. The client always gets the best deal as suppliers battle on every exchange to win your business,” Abrahams explained.
Their services are open to businesses and private clients, requiring a minimum of £5,000 ($7,500) per transfer. The company has overseen $40 million in transfers thus far and hopes to hit $500 million in the next 12 months. Abrahams said they don’t look to compete with smaller-scale transfer hubs like Western Union or P2P companies, many of which are also headquartered in London. They also offer split payments, limit orders, and forward contracts.
CurrencyTransfer is working on a Series A round. They’ve raised an undisclosed amount of seed financing from several prominent angel investors: Wonga Founder Errol Damelin, former 888 CEO Gigi Levy, former Taykey CTO Itay Birnboim and “serial angel” Barak Rabinowitz.
From London to Tel Aviv
Abrahams told us that, “We started our own journey working at TechHub, Google Campus. The focus for the CurrencyTransfer.com launch has been the UK and Europe due to how favorable the regulatory landscape is in the UK. As the currency providers, we compare hold FCA permissions. This effectively passports our ability to start trading clients in Europe, which is huge when planning our growth.”
The UK already has 41% of the global foreign exchange market as of 2013 — a $6.67 trillion industry. London dominates a number of verticals within fintech and accounts for a number of the startups moving into foreign exchange, including Ebury, Midpoint, Currency Fair, TransferWise, WeSwap.com, and Kantox.
As a marketplace that aggregates other services, they can avoid some of the regulation that the listed companies have to go through. That shortens the wait time between the decision to expand and being up-and-running in a new market: Coming to new markets is only a matter of weeks.
“We’re building a global team who scout reputable and regulated non-bank currency suppliers. In Israel, this would mean Israel Ministry of Finance currency specialists with a minimum track record. It then becomes a question of technical integration,” Abrahams noted.
Like other Israeli startups, fintech companies need to look abroad for customers from day one. Abrahams suggested that the UK — perhaps implying not the U.S. — is the place to land off the spring board.
“As a UK-Israeli business ourselves, we think we are marrying two of the best startup ecosystems in the world. There is no doubt London is certainly more mature when it comes to fintech, boasting more employees in the space than either New York or Silicon Valley.”
“However, shows like Bank Innovation coming to Israel,” which the company attended in November, “I think is testament of a local Israeli fintech ecosystem that is growing in stature and we’re seeing some significant companies emerge.”
CurrencyTransfer was founded by CEO Daniel Abrahams and CTO Stevan Litobac. They now employ 10 people between offices in London and the SOSA co-working hub in Tel Aviv. The company claims to have saved customers over $600,000 so far.