Crowdsourcing

If you’ve ever had to transfer money from one currency to another, you know that it can be a frustratingly pricey business. Now a new company, TransferWise, has raised seed funding totaling $1.3 million to tackle that problem.

(And, as well like Skype, it is banking on scaling up the business quickly in order to  make some money back on the margin that it loses in individual transactions. So far the service is only available in two currences, euros and dollars, however there may be more added before long.)

“Charging a small amount is evidently a scale business nevertheless we've now proven this model works between Pounds and Euros, so now the question is to expand, adding more users and more currencies and markets,” says Taavet Hinrikus, TransferWise’s founder and CEO. He says dollar expansion is “by all means” something the company is planning yet equally is considering transfers to India and China, in some cases as a result of this funding. “There is so much to do,” he says.

That kind of cost savings appeals specifically to the kind of people that TransferWise is seeing already using the service: expats, retirees, overseas workers and small businesses. These categories of users collectively transfer a significant amount of money ever year: TransferWise notes that expatriate retirees alone transfer £400 million annually transferring money through banks.

Convert money in vain. And send for cheap.That's right. Banks charge a lot for foreign-currency transfers. We don’t. We use real exchange rates to help expats, foreign students and businesses wire money securely, conveniently, and at a very low cost. When all is said and done, a financial service built for people, not banks.TransferWise helps people save money on foreign payments. Typically your local bank would charge you 5% for sending money overseas, TransferWise does it for a fraction of that cost. In other words...

Index Ventures is a leading venture capital firm specializing in investments in information research and life sciences companies. The firm invests in seed, early and growth stage start-ups across US and Europe.Since its inception in 1996, Index Ventures has backed visionary entrepreneurs who have taken on incumbents and built seminal companies in a number of growth sectors including: open source software companies just as MySQL, Trolltech, Zend and Pentaho; broadband and VoIP (Voice over Internet Protocol) companies just as Virata, Skype, FON and...