A year and a half after Currencycloud raised $80 million in a round that included Visa, the London-based developer of APIs that power remittance and currency exchange services is getting even closer to the financial services giant. Today, Visa announced that it would acquire Currencycloud in a deal valued at $963 million (£700 million).
This price is a very decent leap from that last funding round, when sources told us the startup was valued at around $500 million.
(As Visa already has equity in the company, the amount it will actually pay will be reduced by that amount.)
Currencycloud has some 500 customers in 180 countries that use its APIs to power multicurrency wallets, currency exchange services and account management, including some of the biggest startups around, such as Monzo, Moneze, Starling, Revolut and Dwolla. These will continue, and on top of that Visa will use the startup's technology to bolster its own currency exchange rails to provide a wider set of services to its own customers, which include financial institutions, fintechs and more, as well as to build new services for consumers, as well.
“At Currencycloud, we’ve always strived to deliver a better tomorrow for all, from the smallest start-up to the global multi-nationals. Re-imagining how money flows around the global economy just got more exciting as we join Visa,” said Mike Laven, CEO, Currencycloud, in a statement. “The combination of Currencycloud’s fintech expertise and Visa’s network will enable us to deliver greater customer value to the businesses moving money across borders.”
Remittance and currency transfers are big business in the world of financial services, and that opportunity is growing. Two of the factors driving this are that e-commerce has extended well outside of our national borders, especially in the past 18 months, and so have supply chains. (Visa notes that some 43% of all small businesses globally carried out some form of international trade in 2020.) And with the rise of cloud-based, mobile services to facilitate transactions, consumers are ever more globalised in their outlooks, too.
At the same time, remittances and currency transfers are two areas ripe for disruption, with incumbent services often costly and inefficient. All of this sets the stage for a company like Currencycloud, which has built a new implementation of currency transfer that can be embedded into other financial services to help them run more smoothly.
The exit is also a classic example of how larger, incumbent financial powerhouses typically find it harder to innovate and jump into new services, so instead they tap smaller and more agile startups that are taking big bets on technology, and pulling it off, to help propel themselves into the next generation of financial services. Whether Visa will be able to successfully integrate and use Currencycloud's tech and work with its team are two things that were already tested out: the two were strategic partners prior to this deal.
“The acquisition of Currencycloud is another example of Visa executing on our network of networks strategy to facilitate global money movement,” said Colleen Ostrowski, Visa’s Global Treasurer, in a statement. “Consumers and businesses increasingly expect transparency, speed and simplicity when making or receiving international payments. With our acquisition of Currencycloud, we can support our clients and partners to further reduce the pain points of cross-border payments and develop great user experiences for their customers.”