Revolut, the ‘super app’ provider and most valuable digital banking startup in the UK, is attempting to bolster its US offerings with a new remittance service and challenge Klarna with a future BNPL service, according to reports by Forbes and the Evening Standard.
The company, valued at $33 billion, is planning to take on BNPL giant Klarna with an upcoming service expected to be introduced in European markets next year. The services are still in early development, but show Revolut is interested in competing in a wide range of fintech services.
It makes sense, when you see that the size of the BNPL market has quadrupled in the UK since last year, with over five million British users adopting BNPL services since the start of the pandemic and the market quadrupling to a size of almost £2.7bn in that time.
“For Revolut to succeed in such a crowded market, it’s going to have to offer something most of its peers don’t — that could be enabling users to convert purchases made using Revolut to installment payments at a later point, for example,” Founders Factory strategist Sarah Kocianski told Evening Standard.
The new remittance service, which launched in July, is the company’s main attempt to compete in the US, with the remittance market growing by 31% in May alone, according to BBVA Research.
While access to the US has historically been tricky for foreign companies, Revolut has seen success so far with 300,000 customers gained since first launching stateside in March 2020.
The platform currently allows US users to send money via standard international wire transfer with recipient’s bank accounts, has the lowest transfer fees among remittance companies and is expected to expand to Mexico in the near future.
“We’re primarily focused on the U.S. and Mexico because that’s where we see the biggest benefit, and we can do it at one of the best exchange rates in the world,” Revolut CEO Ronald Oliveira told Forbes.
The company is currently applying for a state banking license in California, a state that would cost a large amount of money to set up and operate, but would generate large amounts of service revenue. The high-cost, high-reward game is not new for Revolut, which doubled losses and increased revenue 57% year-to-year from 2019 to 2020.
These two new services highlight expansion for Revolut, following its recent $800 million Series E co-led by SoftBank’s Vision Fund 2 and Tiger Global Management. The company’s platform is poised for success, given funding and its willingness to spend in the short term for long-term profitability.
With deep pockets and new services planned, Revolut is continuing to lay groundwork that will likely see it widen market share and competitiveness in digital banking in the US and abroad.
In other recent fintech news, fintech Wave raised $200 million to become Francophone Africa’s first unicorn with a $1.7 billion valuation. Secfi is also expanding its leadership with the $20 billion worth of unicorn equity it holds.