Thunes, a Singapore-based startup developing a cross-border payments network to make financial services more accessible in emerging markets, announced today it has raised a $60 million Series B. The round was led by Africa-focused firm Helios Investment Partners, with participation from Checkout.com, and returning investors GGV Capital and Future Shape.
Thunes launched in 2019 when financial tech company TransferTo split into two companies: Thunes for business-to-business solutions, and DT One, which focuses on consumer services like mobile top-ups and data bundles.
Thunes develops APIs and other technology for financial companies, including banks, digital wallet providers, and money transfer services, that helps them reach customers in emerging economies, who often don’t have access to traditional bank accounts. Instead, many rely on digital wallets or mobile money accounts to make or receive online payments.
The company now operates in about 100 countries, up from 40 when TechCrunch covered its $10 million Series A in May 2019. The latest round will be used to grow its operations across Africa, Asia and Latin America, and brings Thunes’ total raised so far to $70 million.
Headquartered in Singapore, Thunes also has offices in London, Shanghai, New York, Dubai and Nairobi. Chief executive officer Peter De Caluwe told TechCrunch that Thunes looked for active investors who could help it work with banks and regulators in new markets, and help them connect with potential clients. Part of its Series B round will be used to hire teams in countries it wants to enter or expand its operations in, including Kenya, Tanzania, Zimbabwe, and Ethiopia.
“Having Helios, who know many of the regulators and players already in Africa, will allow us to grow faster and get introductions,” said De Caluwe. “GGV did the same for us in China, because GGV is well-established in China and the [San Francisco] Bay Area.”
In an email to TechCrunch, Helios Investment Partners co-founder and managing partner Tope Lawani said the firm focuses on fintech, especially payments, in Africa, and backed Thunes because it is building important financial infrastructure.
Its other investments include online payment platform Fawry, which recently went public on the Egyptian Stock Exchange.
“Cross-border payments represents a significant market opportunity globally given increasing cross border trade and globalization; yet, across several emerging markets, fragmented and complex payment ecosystems often leave businesses and consumers struggling with slow, costly and unreliable ways of moving money,” Lawani said. “Thunes’ unique platform which was set up to address these pain points by providing accessible, fast and reliable payment solutions stood out to us as a company very well positioned to capture this growth”
Pulling together a fragmented ecosystem
Similarly to how the SWIFT system connects traditional banks, Thunes’ cross-border payments network makes it easier to transfer money online to recipients in different countries, even if they use different financial services, by serving as a hub for financial institutions, digital wallets and other payment systems.
De Caluwe said Thunes divides its markets’ needs into four categories. The first are countries that are primarily cash-driven, like the Philippines. The second are places where there is a dominant digital wallet, like MPesa in Kenya (one of Thunes’ clients). Then there are countries like Indonesia, where there are a host of new financial instruments, like GrabPay or GoPay. Finally, Thunes also serves banks that usually work with businesses.
“Nobody really connects all these players together. It might sound very logical to do that, but it’s almost like building an infrastructure, making sure there are pipes, tunnels, or whatever you want to call it, going between a wallet in Africa, a bank in China or accounting in Southeast Asia,” said De Caluwe.
SWIFT (or the Society for Worldwide Interbank Financial Telecommunication), founded in 1973, revolutionized the financial industry by connecting banks through a standardized messaging system. This is what enables people to deposit checks from another bank into their accounts.
Thunes wants to do the same thing with digital financial services in emerging markets. “All of these e-wallets, bank accounts, mobile money accounts, we plug them into our central platform, so they become interoperable, which means that you can easily transfer money from one country to another country over our network,” De Caluwe said.
Thunes’ market opportunity is massive: based on data from a strategic workshop it conducted with financial research firm EY, about $45 trillion flows between the countries Thunes operates in. That amount includes many different kinds of transactions, but Thunes is taking a focused approach to which ones it handles, with APIs designed for specific use cases.
The first example De Caluwe gave is for remittance companies, including MoneyGram, Western Union and Remitly (all Thunes clients), to move money into digital wallets and bank accounts. Another API was developed for processing large amounts of payments and is used by clients like VIA, a region-wide mobile wallet alliance launched by Singtel Group, the Singapore-based telecommunications conglomerate. Thunes’ technology allows people to make payments from their VIA wallets in different currencies and countries. A major part of Thunes’ business is also its B2B solutions, designed for cross-border trade, that allows companies in different countries to transfer money directly into each other’s bank accounts without needing to deal with a maze of interbank connections and long wait times.
How Thunes’ technology helps
Part of Thunes’ Series B is earmarked for product development, specifically technology that will enable more collections from countries. De Caluwe explained that so far, most of Thunes’ solutions have focused on moving money into its markets. A potential use case for collections are Chinese retailers who sell to customers in African countries. Thunes’ new solution will allow them to collect payments directly from a digital wallet like MPesa, while making it easier for people to make payments on sites that don’t accept digital wallets or mobile money accounts. To serve those customers, Thunes is also working on digital bank accounts, which it has already begun piloting in Indonesia. Users are able to deposit cash into their digital bank accounts at ATMs, and then use those funds for online payments.
Other noteworthy Thunes clients include Grab, which uses its real-time payment system to make daily transfers to drivers’ digital wallets, bank accounts or cash pick-up locations, and the National Bank of Dubai.
Traditional methods of sending money across international borders are time-consuming and expensive, and there many financial tech companies looking to solve some of those pain points. Some of the best-known are Transferwise, Revolut and Payoneer.
Thunes differentiates by focusing almost exclusively on emerging markets, where the barriers to entry are high. Transferwise theoretically is a competitor, but it doesn’t serve as many markets as Thunes, and is also a potential client for Thunes’ technology, De Caluwe said.
Thunes does compete with regional digital payment hubs, but De Caluwe said the market opportunity is so vast he’d be “happy to share that $45 trillion with many players, because even if we could get one or two percent of that, we would already be a very larger business.” He added, “the market is so large and the systems that are currently used are broken or not helpful because many consumers can’t even get access to it since they don’t have a bank accounts, they only have a digital wallet or mobile money account.”
One advantage of Thunes’ technology is that it significantly reduces the amount of transaction fees consumers or businesses need to pay. The company makes revenue by charging a fixed transaction fee between two cents to $2, depending on the destination country. If there is a currency exchange involved, it charges a small markup on the exchange rate, using mid-market rates for reference.
“We need to make money, but our price also needs to be very attractive for a bank, a financial institution, digital wallet or mobile money accounts, so they can also make a markup on what they’re selling to the customer,” De Caluwe said. “So we operate on small margins, high volumes and high frequency.”