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@example.com. Follow @KnotheA on Twitter.