- New Zealand fintech is helping customers make $1bn of international money transfers every year
- OrbitRemit fees for cross border payments are almost 50% lower than traditional bank services
Kiwi fintech upstart OrbitRemit has announced that it is now helping people make international money transfers totalling close to $1bn every year.
The company, which employs 40 staff and is headquartered in New Zealand capital Wellington, competes with more established money transfers firms such as US giant Western Union and UK-headquartered online money transfer service WorldRemit.
Independent checks have indicated that, in comparison with traditional banks, OrbitRemit can approximately half the cost of sending and receiving larger sums of money to or from major foreign currencies.
An example illustrates the savings customers can expect: last week, based on the mid-point exchange rate operating at the time, ASB Bank offered to exchange £40,000 to AU$75,060, skimming off a margin $1063 in the process. At the exact same time, OrbitRemit, by contrast, offered $75,604, collecting a margin of just AU$519 – virtually half that of the bank’s.
Bank charges for international money transfers are driving a rising tide of consumer disgruntlement. Ciaran Hyslop, New Zealand’s Banking Ombudsman Scheme manager, said that his office had received 148 complaints and inquiries in connection with bank charges on cross border payments in the last five years alone. Five had led to formal investigations.
He added, “Most of the cases were about processing times and concerns from the customer that they did not get the best foreign-exchange rate.”
Yet according to OrbitRemit CEO Robbie Sampson, Kiwis generally get better foreign exchange deals from the banks than their Australian counterparts do.
He went on to say that OrbitRemit has cultivated a good relationship with the banks, most of which were starting to realise that they need to become more competitive and offer better rates to their private customers.
However, they were not very well placed, Sampson noted, for competing with the “low value” end of the spectrum where relatively small transfer amounts are involved, largely because of the resources they have to deploy in the event of a transaction going wrong.
Banks tend to hold “floats” of major currencies, which basically means that they rarely have to buy or sell currencies in order to transfer money because they depend on price movements between the different currencies rapidly cancelling each other out.
But that model breaks down and vanishes when transactions are made in smaller “exotic” currencies, Sampson added. OrbitRemit, by contrast, holds cash balances in all the currencies it does business in.
Initially, OrbitRemit focussed on helping people who had settled in New Zealand from the Philippines to send money back home, Sampson explained, but since then it has grown to help people move larger amounts of money between New Zealand, Australia and the UK. From modest beginnings, it currently has offices in all three countries.
In the first month of 2018, OrbitRemit enabled 75,000 transactions totalling around $80m, he explained, adding that his firm’s biggest concern was once building trust with customers.
When it first opened for business in 2009, Sampson said “it was terrible:” more people were questioning why they should trust the new upstart than were asking to do money transfers. But that problem has shrivelled in the intervening years, Sampson said, to the point where the Inland Revenue now promotes the firm as one of four services that people living abroad can turn to for making payments against their student loans.
