Monday, December 11, 2017
Business

International startup Transferwise in Tampa is reinventing the way you send money abroad

TAMPA — How does a company solve a problem that people don't know they have?

That is the biggest hurdle for TransferWise, a London-based startup with 600 employees that is breaking into the $200 billion international money transfer industry.

The company has six offices around the world, but the majority of its U.S. footprint is in Tampa, where the office has grown from five to about 60 employees in the year since it opened in Carrollwood. TransferWise's million-plus customers can send money to about 60 countries.

If a parent wants to send money to their child studying abroad or a person working overseas needs to pay a mortgage in their home country, most people use wire transfers or bank transfers, which can be expensive and can take several business days for the money to go through.

Transferwise is looking to make that process more efficient and easier for consumers.

The Tampa Bay Times sat down with the company's co-founder, Kristo Kaarmann, who was in town last week to celebrate the anniversary of opening the company's Tampa office.

What's the big deal with our current international transfer system?

Usually you walk into a bank where you can say I want to send $5,000 to France. I'm going to study or I'm moving there and they will charge you $35 in an international wire fee. It feels a little bit expensive but it's not too bad. But what you don't know is that some money goes missing along the way. If you Google how many euros is $5,000 worth, they will tell you the exchange rate is $1.1 to 1 euro, so you should get a bit less than 5,000 euros. However, your bank will inflate the exchange rate by 5 percent so they can keep $300 of your money to themselves, so you end up with closer to 4,000 euros.

The bank never tells you what they're charging. They can only tell you the exchange rate they're using and keep the true rate secret. You can only find out your fee if you have time and you know where to look.

That's what happened to me when I moved to London about 10 years ago. I had my savings account so I was using access cash from London to Estonia. I was losing 500 euros so that's how I figured out what was going wrong. About $200 billion is lost around the world annually.

So you're hoping to be able to save people money and take a piece of that $200 billion pie?

We're not hoping to. We are. This is what we take great pride in here. Every day we calculate how much we've saved for people compared to what the banks would take. That runs about $1 million per day for consumers.

If you make a big enough splash, won't banks just lower their rate and put you out of business?

If you're a bank, imagine you just came to that point. You go to your customers and say, dear customers, we have charged you 5 percent in hidden fees all this time, now we're going to charge you 1 percent in hidden fees. You can't do that because you haven't been transparent. I'm sure some will try and some will succeed but it's very hard to do.

HSBC doesn't see any loss of customers (from TransferWise), they just see lower and lower volumes in international travel as more and more people are getting the trick and using Transferwise.

The point of a startup like TransferWise is to grow as quickly as possible. What will your company look like in the next few years?

If you look back for the five years, it's been a whirlwind of adding new countries as we've been adding people to the team. From being lonely to having 600 people. We're still very much at the beginning. We're talking about $200 billion and we're only solving it $1 million per day. We're still chipping away at it but it's not fast enough yet.

I think we're getting to the stage where we're already covering most of the world. Now its about going deep in each of those countries to see how the problem is understood. We're making our product better as well. It now takes about 17 seconds to get money from the U.K. to a French bank account. It takes a bank three to five days.

What is it going to take for all of these people to understand this issue? How do you provide a service to solve a problem that someone doesn't realize is costing them money?

It's easier than I thought. It got so very popular in Europe that about 60 percent of the people who use TransferWise use it because one of their friends probably explained the problem and explained the solution. Understanding the problem is the tricky part.

Why did you chose Tampa to host your main U.S. office? This area isn't exactly known for its high-tech startups.

In Tampa, we need to be close to the consumers. Many behaviors around money are very different in the United States and Europe. We needed a team in the States. We wanted to be in the East Coast time zone.

We thought about Massachusetts quite a lot. We knew there was a lot of banking industry in Tampa and we knew other customer support organizations have been successful here. The diversity of backgrounds is what's great in Tampa.

What are you looking for in your employees?

We look for people who would have to be tech savvy. Using technology makes a big difference in how much we can achieve and how good the experience is for the consumer on the other side. Accepting new technologies quickly and being active with a keyboard. We are hiring. Most urgently, we need Portuguese speakers.

We believe we're changing the way this industry operates. We want people who are passionate and ambitious about making a little change in the world. We're not removing poverty or doing anything as noble as that, but it's a big inefficiency in society that we're making right.

Contact Alli Knothe at [email protected] Follow @KnotheA on Twitter.

Comments
Record numbers are signing up for Obamacare in Florida as enrollment period draws to a close

Record numbers are signing up for Obamacare in Florida as enrollment period draws to a close

With just four days left to enroll for health insurance on the federal exchange, advocates for the Affordable Care Act say Florida is headed for a record-breaking year. In week five of the six-week open enrollment period, about 823,180 people signed ...
Updated: 11 hours ago
Driven by demand, Planned Parenthood opens second clinic in Tampa

Driven by demand, Planned Parenthood opens second clinic in Tampa

The floor-to-ceiling glass windows are heavily tinted and the inside is hidden behind rows of curtains. Security cameras monitor every corner, and only patients with an appointment and valid identification can pass through the intentionally cramped e...
Published: 12/12/17
Hotly anticipated Ichicoro Ane is now open in St. Petersburg

Hotly anticipated Ichicoro Ane is now open in St. Petersburg

Noel Cruz seemed remarkably chill. As did his partner Kerem Koca. All around them in the Station House building in St. Petersburg, workers pounded the last nails, bartenders unpacked boxes of glassware and jewel-toned bottles of Amari, and the kitche...
Published: 12/12/17
Medical field accounts for 7 of 10 highest-paying jobs

Medical field accounts for 7 of 10 highest-paying jobs

The nation’s highest-paying jobs don’t quite track with the fastest-growing jobs in Florida. According to a new study released today by California-based CareerCast, the highest-paying jobs are largely in the medical field and require post-graduate de...
Published: 12/12/17
Ruskin artist to help poor kids build bikes reflecting their personalities

Ruskin artist to help poor kids build bikes reflecting their personalities

RUSKIN — Art meets transportation for a good cause in an after-school program where two dozen kids will create bicycles guaranteed to turn heads. The vision comes from Ruskin artist Michael Parker, who calls his prototype machine a "rat bike" ...
Published: 12/12/17
Outback Steakhouse co-founder Chris Sullivan steps off Bloomin’ Brands’ board

Outback Steakhouse co-founder Chris Sullivan steps off Bloomin’ Brands’ board

Chris Sullivan, co-founder of Outback Steakhouse, resigned from the board of the restaurant chain’s parent company last Wednesday, according to a Monday filing with the Securities and Exchange Commission. The document, filed by Tampa-based Bloomin’ B...
Published: 12/11/17
Tampa Hillsborough Expressway Authority plays beat the clock on GOP tax bill

Tampa Hillsborough Expressway Authority plays beat the clock on GOP tax bill

TAMPA — With the Republican tax bill poised to eliminate the opportunity, the Tampa Hillsborough Expressway Authority on Monday said it had refinanced a big chunk of its debt to save money in the future.The authority borrowed $152 million from the bo...
Published: 12/11/17
JW Marriott Clearwater Beach project still on target despite some bumps

JW Marriott Clearwater Beach project still on target despite some bumps

CLEARWATER BEACH — While Tampa is excited about its first JW Marriott hotel, plans are moving ahead for a $130 million JW Marriott property on Clearwater Beach, despite some hiccups. "We’ve done really well in our opinion," Uday Lele, developer of t...
Published: 12/11/17
HSBC says U.S. will dismiss criminal charges against it

HSBC says U.S. will dismiss criminal charges against it

HSBC said Monday that U.S. authorities were preparing to dismiss criminal charges against the bank, five years after it reached an agreement to avoid prosecution related to lapses in its money-laundering controls.In 2012, the bank, one of the world’s...
Published: 12/11/17
Major auto manufacturer offers longer hours, incentives to fix airbags

Major auto manufacturer offers longer hours, incentives to fix airbags

TAMPA — With nearly 200,000 people around Tampa Bay still driving around with defective airbags that could kill them, a major automaker is trying to dramatically cut that number down this week.Fiat Chrystler Automobiles U.S. has launched Airbag Recal...
Published: 12/11/17