Remittance Fintech TapTap Send Gets $13.4 Million Series A Funding

Taptap Send, a mobile app for remittance service that lets people send money to Africa and Asia for free, on Thursday announced a $13.4 million Series A raise to support its service expansion.

The Series A was co-led by Canaan Partners and LinkedIn co-founder, Reid Hoffman, along with participation from other unnamed investors.

The New York-based startup was founded in 2018 by Michael Faye — a development economist and former United Nations official. Currently, it provides a mobile money transfer service from eight countries, some of which host a significant number of migrants, such as the United Kingdom, Belgium, Canada, France, Italy, etc.

On the other hand, the 15 receiver countries include some of the poorest countries in the world that are the hardest to service, plus emerging markets with some of the poorest populations — DR Congo, Mali, and Madagascar among them. The startup plans to add more countries soon.

Global remittances account for over $500 billion annually, most of which move back into developing countries. But the market is dominated by traditional services that are expensive, can take days to arrive, and have limited reach in rural areas. Taptap Send is helping people to send money instantly and securely for free. In doing so, they are working on making the UN Sustainable Development Goal of bringing cross-border remittance costs down by 2030 a reality today.

“Free” international money transfer

Taptap has raised money to expand the scope of its no-fee international money transfer service. The company says it does not charge any commission or fees for transfers. Instead, it makes a cut on foreign exchange with the help of a tech stack that lets it pass on lower exchange rates to its customers.

The startup’s business model also relies on the economics of scale. That is, offering better rates will drive more users. Although this might not mean better margins, it would result in a higher volume of transactions and more returns overall.

“Taptap Send is taking advantage of this structural change in mobile money and other distribution networks to offer what we hope is the fastest and best-price service to customers,” Faye said in an interview with TechCrunch.

The company’s proposition is sure to appeal to many in Africa, where most remittance recipients have to deal with traditional services that are expensive, can take days to arrive, and have limited reach in rural areas. A significant number of fintech startups are helping to solve these problems, lowering cross-border remittance costs in particular.

Last year, officially recorded remittance flows to low- and middle-income countries reached $540 billion, according to the World Bank.

“Taptap Send has a nuanced, yet powerful strategy that Michael has put into place to allow [it] to be the lowest-cost provider in every market they enter,” said Brendan Dickinson, a general partner at Canaan. “The company gives as much cost savings as possible to the customer, and as a result, is almost always the cheapest player in the market.”

According to Dickinson, all of that makes it economically viable to send smaller remittances and in doing so, expands the total market and volume of remittances sent. “This approach is strongly resonating with customers, as Taptap Send’s massive growth has been 90+% organic.”

Taptap is yet to disclose numbers on its size or customers served. On its website, the company says it’s already moved “tens of millions of dollars and reached tens of thousands of customers.” Faye also revealed that the business overall grew five times in the last year and is posting a profit.