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Instarem, the Singapore based fintech startup that specialises in fast, convenient and cost-effective cross-border money transfer has won approval from the Reserve Bank of India to start facilitating overseas remittance from India.
The company say that they will start processing payments as early as November 2017, in partnership with a leading Category I Authorised Dealer (AD-I) as per RBI’s governing conditions.
Instarem say they will offer international money transfer services from within India for transactions pertaining to business, private visits, overseas education, and medical treatment, amongst other services.
Company CEO and co-founder Prajit Nanu has commented:
“Traditional ways of transferring money overseas are expensive due to high transfer charges along with hidden fees which are not known to the customers. We are able to offer transparent international money transfers at a fraction of costs compared to the traditional players. We are confident of capturing a substantial market for outbound money transfer from India,”
Ability to offer cheaper services
According The Hans India, who describe the money transfer industry in India as “expensive and opaque”, operators often charge between 750-1,500 Indian Rupees (approximately £8-15 British pounds) in transfer fees per transaction as well as an additional 3% in hidden FX spreads.
When sending INR 100,000 (approximately £1,150 GBP) to the US, the site reports, customers end up spending nearly £50 in fees, whereas using Instarem, they could instead be paying as little as INR 500 (£5 GBP).
Instarem has won praise from the World Bank for its services, which also transfer money faster – between 24-36 hours – than traditional services, which often take 2-4 days to complete an overseas transaction.
IPO for Instarem in 2020?
The license win in India for Instarem, where it has offices which employ more than 100 staff in Mumbai, means the company now holds licenses across Asia, including Singapore and Hong Kong, and Europe, the UK, Australia and Canada.
Instarem raised a funding round of $13 million in July 2017, led by China based GSR Ventures and with participation from venture capital firms Vertex Ventures, Fullerton and Global Founders Capital as well as a Dutch / Japanese investment fund, and According to Tech Crunch the firm may well be eyeing an IPO in 2020.
The company caters for both business and retail clients, using its own institutional platform MassPay, which it makes available to corporate and SME firms who can control their own high volume international transfers, and working with banks to ensure its customers benefit from wholesale rates and therefore better cross border rates.
Instarem said in July after the fundraising that the company was processing more than 150,000 transfers every month, with an average size of approximately $1,800.
The company, which already offers services in 50 countries worldwide hopes to reach the whole of Europe and the United States by the end of the year, speeding up transaction times across Europe to a matter of seconds as opposed to one or more days.
CEO Nanu told Tech Crunch that ““If we hit profitability, we could be looking at an IPO for 2020”, which would most probably take place in Hong Kong; one of the hottest destinations in the world for emerging fintech firms.
The Money Cloud View
Firms from Sinagpore and Hong Kong are really tearing up the rulebook when it comes to international money transfer and taking the fight to big banks and traditional money transfer services by offering faster, cheaper services.
Instarem has worked fast to put partnerships in place with foreign governments and their financial authorities and India could be a big win – in 2015, foreign workers in India sent around $8.5 in remittances back home to their families and loved ones, according to data from the World Bank.
Expect to to see the firm become competitive in Europe and the US over the course of 2018.