Ultra-modernity has swept across London’s financial center in recent months, somewhat future-proofing its status as the world’s largest and most important financial center.
The post-industrial dereliction of Shoreditch has become Silicon Roundabout, home to several financial technology startups backed by shrewd venture capital investors, and the Conservative government has made its wish quite clear to encourage the side-by-side interaction of Britain’s longstanding, global financial institutions with the new and avantgarde thought leaders which will ensure that technology across the financial sector from mobile trading to Bitcoin infrastructure.
The latest example of British ingenuity with regard to electronic transaction technology is the raising of $2.3 million by startup Revolut.
Investors Balderton Capital provided the funding which backs the company’s mobile solution which aims to enable users to pay less exchange fees when traveling internationally. Revolut provides an application which seamlessly exchanges or sends money, and an optional debit card to pay around the world or online.
The company had initially raised funding from Seedcamp, thus Balderton Capital joins Seedcamp as an additional investor.
In terms of functionality, the Revolut application operates in a similar vein to online banking systems in that it creates virtual bank accounts in three different currencies, USD, EUR and GBP.
Users can top up their account in any of these currencies using a credit or debit card, or a bank transfer.
Following the successful transfer of funds into a Revolut account, users can exchange pounds into euros (or any other combination) without any fee, with users being promised interbank rates of exchange.
Transactions are completed within a few seconds because the funds are held by Revolut in the various currencies at all times, therefore the user is not waiting for an automated system to buy currency and sell the original currency on the open market, as the transaction is completed internally at interbank rates, thus keeping the cost down as no commission is charged and per-transaction exchange fees are avoided.
Funds can be sent either to another Revolut user or can be withdrawn from a Revolut account via a transfer. It can also serve as a pseudo-bank account, as Revolut will provide users with a dedicated Revolut MasterCard debit card that will work internationally across 23 countries and will debit funds directly from a Revolut account assigned to it. withdraw it from your account with a transfer. You can also ask for a Revolut debit card, which is a good old MasterCard physical card that should work around the world.
Currently, Revolut states that its services are free of charge, including opening an account, transferring money and paying with Revolut’s MasterCard. In common with many startups, the offer of free services could be a loss-leader in order to boost membership and user takeup, however Revolut has indicated that it may begin applying certain fees to certain services in 12 months time.
Revolut differs from peer-to-peer money transfer services like CurrencyFair or Transferwise, as these existing services allow the transfer money between two existing bank accounts, however the particularly interesting ingenuity behind Revolut is that, for those who travel regularly, Revolut’s transaction costs are likely to be significantly less than other peer to peer services because of the method by which Revolut holds all funds itself in all currencies.