The round, led by Prosus’ PayU, with support from Generation Investment Management, Owl Rock Capital, Stripes and others, brings Remitly’s total funding to more than $400 million, according to PitchBook data. The Seattle-based company was reportedly valued at around $1 billion following a $220 million round last year.
Remitly will use the funds to invest in PassBook, a banking and debit card product aimed at multinational workers, who frequently face hurdles when trying to set up bank accounts.
The cross-border payments industry has been hammered by the coronavirus. The World Bank expects remittances to low- and middle-income countries to fall by around 20% this year, largely due to decreased earnings by immigrant workers.
Despite that, Remitly co-founder and CEO Matt Oppenheimer said that new users tripled in May on a year-over-year basis, and that the company’s existing customer base remains strong amid the challenging economic circumstances.
“Remittances have never been more important and needed,” Oppenheimer said. “With a global pandemic, a few hundred dollars goes an incredibly long way in the Philippines or Mexico or Kenya right now.”
The pandemic has accelerated a shift from physical to digital transfers. Incumbent money transfer company MoneyGram reported a sharp drop in walk-in business following coronavirus-related lockdowns in March. Meanwhile, digital transfers at the company shot up.
Remitly competitor TransferWise has also seen its valuation rise during the pandemic, with investors recently pegging its worth at $5 billion during a secondary share sale. Lone Pine Capital and D1 Capital Partners led the round, which represented a 43% valuation jump from May 2019. Like Remitly, TransferWise has seen demand for digital payments rise during the pandemic.
Oppenheimer takes the growth of digital services amid grim industry news as a sign that people may be unable or unwilling to use physical money transfer locations during the pandemic. Physical locations accounted for around 70% of international money transfers in 2017, according to a 2018 Business Insider report.
“Remittances will not look the same after this pandemic,” Oppenheimer said.
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