WeSwap is the latest company to jump on the peer-to-peer bandwagon with its bid to solve currency exchange problems.
The London-based startup provides a platform where users can exchange currencies at the interbank rate for a flat fee, and in some cases for free.Currently, when travellers want to exchange currencies, the middle man or exchange agencies quote a higher price (commission) than the interbank rate, WeSwap is aiming to remove this middle man and maximize the monetary benefit in the exchange process.
How it works: User A is planning to exchange US$ into GBP and User B is planning to exchange GBP into US$. Both users upload their amount in respective currency into their WeSwap account. Then the platform does the conversion (and takes 1% flat fee), deposits the money in a prepaid Mastercard and sends it to the user (free of charge).
In case a match is not found for exchange, then WeSwap converts the money (at interbank rate) for a flat 1.5% fee.
WeSwap was founded by Jared Jesner and Simon Sacerdoti. The company's service can be accessed via its mobile apps - iPhone, Android.
How it works - WeSwap
Q&A with founder Jared Jesner:
Tell us how you founded the company, why and what made you decide to jump in and create the business.
I wasn’t driven by a desire to create a business or be an entrepreneur – I felt deeply that travellers should be allowed to swap currency with each other directly and that banks and corporates have no right taking massive hidden commissions from travellers.
A very strong belief in this idea combined with a feeling of restlessness in my job made me jump. It was a big jump - I had to sell my house to pay the bills in the early days. It’s not cheap living in London with three little kids!
But I wasn’t the only one who jumped. I was introduced to Simon whilst still at my old job. He immediately saw the huge potential in this idea and saw a gap in the market for a peer-to-peer travel money exchange service.
Simon’s extensive experience in corporate finance and advising successful entrepreneurs, and the fact that he had been involved with online businesses for over 20 years, enabled us start commercialising the idea.
Together we founded WeSwap and that’s how the business was born.
Size of the team, names of founders, management roles and key personnel?
Simon and I are the founders of the business and we’re very hands on from day to day. We currently have 15 members of staff working in our London office.
I look after technology, product and marketing. Simon’s focus is on operations, customer service, compliance and finance. In reality we make joint decisions across all areas. The business seems to perform better that way.
We have raised approximately £2.25 million to date. All of our funding at this point has come from angel investors and a couple of super angels, as well as the initial £300k which was raised from friends and family. More funding news to follow.
Estimation of market size?
The travel money market is enormous. In the UK alone travellers spend around £38 billion abroad each year. Currently, WeSwap is live across 10 markets.
Our USP - we offer travellers the best possible rate on their foreign currency by cutting out the middle man – it’s as simple as that!
We’re also unique in that we provide a prepaid MasterCard, which allows customers to access their cash anywhere completely free of charge. We are the only product of our kind that allows you to complete the full sign up process and go on to swap money via our app, so we’re truly a mobile business.
Whilst plenty of travel money businesses exist (e.g. Travelex) no other business offers a peer-to-peer (P2P) exchange for travellers, giving travellers the ability to swap money at the interbank rates and pay a very low, transparent cost.
WeSwap also offers online travel businesses unparalleled insight into traveller’s behaviours enabling an ultra-personalised user experience. In fact, our offer to OTAs and metasearch businesses is almost as innovative is the core business of currency swapping.
Revenue model and strategy for profitability?
Our business model is based around cutting out costs from the supply chain.
WeSwap allows consumers to swap directly with one another, who can thereby avoid expensive bureaus who charge commission on top of the interbank rate. As a result, this brings down the cost of currency exchange and offers an unbeatable proposition to travellers.
The key to our revenue model is to get people to swap. Swapping enables us to run the business in a far cheaper and more efficient way, we can then pass that saving on to customers and continue to drive down the cost of travel money while still maintaining a profitable business.
How did the initial idea evolve and were there changes/any pivots along the way in the early stages?
The core WeSwap offer to travellers has not undergone any significant pivot – it's working extremely well.
Whilst we have some great improvements in the coming months, the core product remains the same.
The biggest change has been our approach to distribution. We have developed an OTA/metasearch offering that is unique and compelling. It offers WeSwap a superb route to market whilst providing select travel players serious competitive edge.
Why should people or companies use the business?
People should use the business because it offers an unbeatable deal for travellers. WeSwap allows users to sign up, load your account with money then organise a currency swap at the real mid-market exchange rate, paying only 1% commission.
On top of this, customers get a multi-currency MasterCard with the currency pre-loaded so you can use it abroad free of charge, and the WeSwap app means that accessibility to your account to manage your swaps and balances is easy and fast.
It’s a really flexible product that’s perfect for consumers heading abroad on holiday or even business travellers in need of multiple currencies regularly.
What is the strategy for raising awareness and the customer/user acquisition?
A key part of our marketing strategy is partnerships with OTAs. The OTAs distribute WeSwap to their travelling customer base. In addition to this approach, we employ a range of social and content strategies across our markets.
On top of this, the product is built to encourage word of mouth referrals. If you sign a friend up, you both get free swaps with each other for life!
Where do you see the company in three years time and what specific challenges do you anticipate having to overcome?
In the long-term, we want to revolutionise the travel money exchange industry and to become the leaders in travel money across the world.
Ultimately, we want to disrupt the currency exchange market and inspire a world where swapping money is the norm. Our goal is to spread the word about WeSwap even more, to educate travellers in this new way to exchange currency and to extend our reach to more countries to offer the WeSwap service.
The main challenge that we face is having to overcome some pretty entrenched thinking in the world of payments. The need to persuade the key players that what they believed was impossible is in fact possible is also crucial to WeSwap’s future success.
What is wrong with the travel, tourism and hospitality industry that requires another startup to help it out?
The travel industry is awesome. The rapid innovation from high street travel agents to instant mobile bookings and metasearch has been incredible.
The winners over the next few years in this industry are those players that personalise the best and have the most engaging mobile apps. WeSwap can help them achieve this in a really big way.
What other technology company would you consider yourselves most closely aligned to in terms of culture and style... and why?
There are lots of cool peer-to-peer models on the market right now. One of the most successful of those is Airbnb. We’re aiming to do with the travel currency market what Airbnb has done with accommodation – disrupt the norm and show consumers that there is an alternative that puts you in the driving seat and helps to save you money.
WeSwap's business model is interesting and simple. Because, it solves a real pain point for a traveller, and it is based on the peer-to-peer model that is gaining momentum globally.
The pain point of not knowing the best available rates available in the market (lack of transparency) and charging a commission on top of interbank rates brings frustration to the exchange process.
The problem is so much that, in India, a startup company launched a service where a user can place a currency exchange request and agents can bid with their best possible exchange rate.
It is worth mentioning that there are commission free currency exchange services available in the market, however, the exchange rates vary.
While the solution offered by WeSwap looks easy, there might be legal complications. For example, in India, exchanging Indian Rupees to other country currencies mandates (by law) the user to submit their local address proof, travel details, and PAN card (similar to SSN in the US) documents.