Deal focus: InstaRem leverages convenience in money transfers

"If you look at large payment brands, the first names that come to mind are the likes of Western Union and PayPal. They're all American brands," says Prajit Nanu, co-founder and CEO of InstaRem. "If you look for an Asian payment brand, there is none."

InstaRem, which recently received a $5 million investment led by Vertex Ventures, hopes to provide a new option for money transfer customers, and create a truly Asia-focused platform. To do this it is leveraging technology to create savings for customers that it says are long overdue.

For InstaRem, gaining customers has been a matter of outdoing traditional money transfer platforms in the key areas of speed and cost. Rather than the 24-48 hours required by other services, InstaRem is able to complete payments the same day it receives the money, and often within a few hours. Its fees are also lower, typically less than 1%.

The company achieves these efficiencies through tie-ups with medium-size banks in the markets in which it operates. These partner banks process payments as part of their normal currency trading deal flow rather than as separate transactions. InstaRem prefers dealing with mid-size rather than large institutions, because they are more willing to compromise on fees in order to get business.

In addition to individual consumers - including expats sending remittances to their families back home and high net worth individuals - the company also hopes to attract enterprise customers. In particular, it aims for small to medium-size enterprises (SME) that can benefit from its speed advantage. Faster transfers offer cash-strapped start-ups more flexibility when it comes to scheduling payments.

"I was in Australia a few weeks back and met one of our largest SME customers. He was saying, ‘Before you guys I had to process an invoice four days early. Now I can process it on the same day, and I know that he can get money on the day I process it, so it's much easier for me,'" says Nanu.

InstaRem claims SMEs make up about 20% of its customer base. The company also appeals to firms that need to send bulk transfers to multiple countries. Instead of contracting with a separate bank in each target country, these customers can process all of the payments through InstaRem.

At its launch a year ago, InstaRem operated only in Australia; since then it has acquired trading licenses in Hong Kong and Canada. It accepts transfers from those countries to India, Sri Lanka, Singapore and Indonesia. Currently it is applying for licenses in Singapore, Malaysia, Japan, selected states in the US - which will allow it to trade in US dollars - and Luxembourg, which give it access to EU member states.

InstaRem claims strong month-on-month growth. Its transaction volume so far in 2016 is greater than that for the whole of 2015. That fast growth was what led it to seek additional funding after an initial investment by Global Founders Capital, a VC firm founded by the Samwer brothers of Rocket Internet (which also participated in the most recent round). In Vertex, the company believes it has found a strong partner that will help it build the needed banking and technology networks in the region.

"Vertex is very strong in Southeast Asia. They have great investments and a good network. And that's something that was pretty important for us," says Nanu. "So it was not the amount of money. We could have raised more from other funds, but we chose Vertex because of the pedigree they bring."

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• Topics
• Southeast Asia
• Technology
• Venture
• Early-stage
• Financials
• Vertex Management (II)
• Singapore
• Financial Services