Undercuts banks with cheap transfers abroad
A new online app from a UK start-up has been adopted by Facebook to allow users to send remittances directly to friends almost anywhere in the world.
Based in London and founded just last year, Azimo will formally launch the app later today [12th February 2012] having already announced a £300,000 ($480,000 USD) angel investment round as it looks to expand its operations.
Its app lets Facebook users transfer money to 125 countries around the world, charging around 1-2 per cent of the transaction. Azimo also claims to undercut banks and other financial institutions by up to 80 per cent when transferring currency.
According to Azimo, it is the first time that individuals will be able to make direct transfers between international bank accounts via Facebook.
Michael Kent, founder of Azimo, said: “People share pictures, status updates and chat on Facebook – this allows you to send money just as easily. It becomes a digital wallet within your Facebook profile.”
Azimo’s arrival on the mobile money scene, aligned with its integration with Faceook, will pose a direct challenge to established remittance services such as Western Union and Moneygram which control the bulk of the $500 billion remittance market.
Its app is likely to appeal to less affluent groups such as migrant workers who regularly send money to relatives at home, but sometimes find the transfer fees exorbitant. The average commission with established remittance services is nearly 10 per cent, rising to almost 20 per cent for some countries, according to the World Bank.
By comparison Azimo charges a flat fee of £5 to transfer money up to £500 and 1 per cent commission for any larger sums up to maximum £15 fee.
Though Azimo is far from alone in applying mobile phone technology to transfer money, it is thought to offer a greater breadth of service compared to rivals such as Transferwise which is also UK based, or M-Pesa, an African mobile payments used in conjunction with Vodafone’s network in Tanzania.
Other similar startups include Dublin-based CurrrencyFair.
Azimo already allows users to sign up for the money transfer service with a Facebook account. Once users are signed up to its web portal, they are able to send money to Facebook friends, with the payee entering their account details via a Facebook invitation.
Three quarters of regular remittance users are on Facebook, while 60 per cent of those were friends with the person to whom they wanted to send money, according to the company.
With the launch of its own app later today, Azimo will be targeting the growing number of foreign-born residents now living in England and Wales and whose numbers have risen by nearly three million since 2001 to 7.5 million, according to the 2011 census.
The company calculates that about one in eight of residents were born abroad with many needing to send money back home to friends and family, meaning that 13 per cent of the UK population are potential customers.