What is ZipZap?
ZipZap is a mobile money transfer app.
What is your current status?
We are licensed and live in Canada with remittances to India, China and the Philippines. We are launching in the U.K. and are expanding to dozens of receiving countries around the globe in early 2018.
Who are the people that use Zip Zap?
Migrant workers in Canada (and soon UK and US) who send money to Philippines, India and China (and soon dozens of other countries)
How many active customers do you have today?
We currently have 300+ active users in Canada and hundreds of recipients in India and Philippines
Do you have customer testimonials?
Yes. Please see the reviews on Google search engine and Google Play Android app.
What are your stats in 2017?
- Total Registered Senders: 3,331
- Total Registered Recipients: 1660
- Total # of Transactions: 1842
- Total $ Volume Sent: CAD $1,028,930
- Average Remittance Amount: CAD $414
How does ZipZap work?
This diagram shows the typical transfer between a Sender in Canada and a Receiver in the Philippines with the remittance via our Currency Router using either digital currencies like Bitcoin or traditional bank-to-bank payment.
What are your key differentiators?
- ZipZap is the only remittance company we know of to utilize a Currency Router with both Blockchain technology and traditional payment rails, resulting in the lowest possible FX cost for the transfer.
- ZipZap markets to the low skilled workers which is the largest segment of the 215 million migrant community pyramid, instead of fighting over the same high skilled workers that all our competitors try to reach online at ever greater customer acquisition costs of $100/person or more.
- ZipZap employs a group of interns called College Ambassadors as well as ethnic retail outlets called Retail Ambassadors for a truly grass roots marketing campaign to reach these low skilled migrant workers in the environment that they feel most comfortable.
- ZipZap offers its customers one free month of service for each paid monthly subscriber referred (which at $10-415/mo is less costly than the competitor’s customer acquisition costs).
Why did you start your company?
We wanted to simplify and streamline remittances so that we can reduce costs and leave more money in the pockets of the migrant workers and their loved ones.
Describe your customers / users: who will benefit from your solution?
Low skilled migrant workers who work 2-3 jobs to send money home to their loved ones
What is the problem you are solving and why is it a big problem?
Remittances are costly due to inefficient ways that current providers acquire customers, perform Know Your Customer (KYC) validations and Anti Money Laundering (AML) rules. We have streamlined all these processes and created a proprietary Currency Router that automatically selects the most efficient way to move money between traditional payment rails such as banks/SWIFT and Blockchain gateways and exchanges worldwide.
How is your customer solving the problem today and why is your solution better?
Migrant workers currently use brick and mortar locations that are inconvenient for them to use (expensive, long lines, paper forms, open during business hours only,...). They pay $8-$10 per remittances that could take 1-3 days to clear. They also pay currency conversion fees of 6%-8% in addition to transfer fees mentioned above.
ZipZap customers use a mobile app that takes less than a few minutes to register and initiate payment, pay $10/mo or $100/yr for unlimited remittances that usually arrive within a few minutes. The process is very transparent to both Sender and Receiver. Behind the scenes, we use sophisticated algorithms to KYC the Sender and Receiver, detect fraud and money laundering, and reduce transaction friction, costs and delivery times.
What is your go-to-market strategy?
- Create a super easy mobile and web apps that are convenient for the consumers
- Integrate with ZED to outsource all back office operations in order to focus on sales, marketing and customer acquisition
- Acquire customers through innovative marketing efforts, retain them with superior service and encourage referrals to friends and family
- Launch with Canada-Philippines and Canada - India corridors and quickly expand to dozens of countries worldwide
- Launch in the UK and obtain licensing to expand presence to the rest of top remittance sending countries: U.S./EU/UAE /Saudi Arabia
What is your revenue model?
- Transfer Fees: $2.00-$4.95/transfer depending on the corridor
- FX Currency Conversion Fee: up to 3%
- Membership Fees: $5-$25/mo (launched in early 2018)
Explain why your team has what it takes (roles and past experience vs challenges)?
We are migrant workers ourselves. Our team members are either first or 2nd generation immigrants that understand the pain point and have a passion to help improve the lives of other migrant workers. The team consists of experienced management led by Alan Safahi (CEO), USC MBA with over 30 years of experience and 5 startups in technology, telecommunications, payment processing and FinTech.
Herbert Magbanua, Managing Director, Canada, is a seasoned manager with 25 years of experience in international management including Philippine Long Distance Company.
Ben McSweeney, Managing Director, U.K., is an Oxford MBA with 7+ years of leadership experience including at American Experience.
Is ZipZap registered in all sending and receiving countries?
We are registered with FINTRAC in Canada and FCA Sandbox in the U.K. We work with banks and licensed money transfer companies in India and Philippines to remit funds to recipients using their money transfer license.
What are your transaction costs and fees?
We pay about $1.00-$2.50 for payouts through banks and cash pickup locations through traditional payment rails and 0.25% - 1% through OK Link and ZED. We charge between $2.00 - $4.95 per transfer and up to 3% in FX Currency Conversion Fees. We plan to offer membership plans starting in Q3/2018 that range from $5/mo- $25/mo which unlock exclusive features and benefits for members as follows:
ZipZap Membership Benefits
| Pay As You Go||Basic Membership||Premium Membership||VIP Membership|
|24 hour Limit||<$1,000||$3,000||$5,000||$10,000|
|30 Day Limit||$3,000||$5,000||$10,000||$50,000|
|Locked-In Rate||1 day||2 days||4 days||7 days|
|Cash Pickup (where available)||Yes||Yes||Yes||Yes|
|Door to Door Delivery (where available)||Yes||Yes||Yes||Yes|
|Recipient Send Request||Yes||Yes||Yes||Yes|
|FX History Chart||Yes||Yes||Yes|
|Flex Send – Post Date||-||Yes||Yes||Yes|
|Flex Send – Set Rate||-||Yes||Yes||Yes|
|Recurring Transfers (credit/debit cards)||-||Yes||Yes||Yes|
|Planned for Q4/2018:|
|Mobile Top Up||-||Yes||Yes||Yes|
|Mobile Top Up Discounts||-||10% off||15% off||20% off|
|Bill Payment Discounts||10% off||15% off||20% off|
|Send now, Pay later (on approved credit)||-||Yes||Yes||Yes|
|ZED Rewards Loyalty Points||-||-||Yes||Yes|
|Vote on new features||-||-||-||Yes|
What are the barriers to entry in this market?
The barriers to entry include;
- Customer Relationships - ZipZap has been operating in Canada since 2016 and enjoys a solid base of happy customers that contineously refer their friends and family to ZipZap
- Licensing - ZipZap has license in Canada through FINTRAC and a sandbox license agreement with FCA in the U.K.
- Banking- ZipZap has USD, CAD, INR and PHP bank accounts (most banks will not support new remittance companies due to exposed risks)
- Payment processing- ZipZap has partnerships in place with bank transfer, Debit and Credit card processing in Canada and U.K.(most processors will not support new remittance companies due to exposed risks)
- Blockchain Technologies - ZipZap has partnered with Blockchain based companies such as OK Link and ZED for payments and integrations to gateways and exchanges globally for quick to market and low cost remittance solution
- Currency Router- ZipZap has created a proprietary platform to automatically find the most efficient
- Payout Networks - ZipZap has partnerships in place to pay recipients in India through ALL banks and the Philippines through all banks and 10K+ cash payout locations. ZipZap is in integration phase to expand payout partnerships to dozens of other countries around the globe in Q1/2018
- Application - ZipZap has a fully functional iOS, Android and web apps which are robust, yet very user friendly
- Membership Plan- ZipZap offers exclusive features and benefits including higher transfer limits to members based on their membership levels
Who are your competitors and what makes you unique/ gives you a sustainable competitive advantage?
- Legacy Providers such as Western Union, MoneyGram and RIA have an entrenched network of agents that they need to keep happy and thus they do not actively promote their mobile apps that take away revenues from these agents
- New age mobile and internet remittance companies such as Azimo, Remitly, Transferwise, WorldRemit and Xoom do not currently utilize Blockchain technologies such as our Currency Router technology that provides us a significant cost advantage.
- Blockchain based remittance companies such as ABRA, BitPesa, ReBit rely on Bitcoin which has a higher cost and transfer delays due to mining fees versus other crypto currencies also offered by ZipZap like OK Coin and ZED which have virtually no costs and/or delays
Is ABRA a competitor?
ABRA is trying to build a peer-to peer-remittance network in addition to a large global distribution network, two major undertakings which take a very long time to accomplish. Although we will likely compete with them in direct customer acquisition, it is also possible that they will need to partner with companies like ZED to scale in order to have enough volume to keep their “agents” happy.
How is ZipZap different than Transferwise?
- Transferwise is a peer to peer network, enabling tech savvy consumers to trade "currencies" with each other instead of using banks while ZipZap primarily targets migrant workers who often work 2 jobs to send money home to maintain their family
- Transferwise uses Currency Cloud as their back up currency provider in case of lack of liquidity. ZipZap uses ZED which utilizes a network of traditional banks and remittances companies in addition to a global network of Blockchain exchanges and gateways to find the most efficient way to move funds.
- Transferwise charges a transfer fee of $10 for each transfer in Canada (0.9% for US-India or $9 for a $1,000 payment) while ZipZap charges much less Transfer Fees and FX Fees
- ZipZap plans to offer a membership model that unlock significant benefits and feature for members such as higher transfer limits and better FX rates
What are your FOREX conversion costs and fees?
We charge up to 3% above the bank-to-bank rate (well below 6-8% charged by traditional remittance companies to consumers)
Are there any taxation or federal regulation compliance issues?
There are no taxes for remittances in Canada. Local banks and remittance partners will handle the receiving countries’ taxes, if any. We are in full compliance with all regulations in all jurisdictions that we operate in.
Are there any currency hedging requirements?
We use a proprietary Currency Router that routes the transaction to the least expensive option, whether through traditional banking rails or Blockchain gateways and exchanges. We carry minimal risks for currency fluctuations if we decide to hold currency amounts in excess of our daily needs which risk we can reduce through hedging practices if needed.
What happens if the government shuts down Bitcoin or ZED?
ZED is launched in compliance with both US and Canada securities regulation so the likelihood of them getting shut down is very low but even if they are shut down, the ZED currency will still be processed as ZED is built on top of Stellar network with a distributed network of multiple gateways and exchanges worldwide.
Please note that we use a Currency Router that routes the transaction through a hybrid of traditional payment rails as well as Blockchain currencies (Bitcoin, ZED, OK Coin, etc.). The reason we chose this hybrid approach was so that we are not dependent on any single payment option or currency.
Therefore, there is no threat to ZipZap even if Bitcoin or ZED is gone tomorrow because the platform would then simply use another payment option including traditional banks.
What is the advantage that ZipZap has in the case that Bitcoin is shut down?
Our currency Router is capable of routing transactions through unlimited number of options, so if Bitcoin fails, we can route the transaction through banks/SWIFT, remittance companies or other decentralized currencies such as ZED, OKCoin, etc. The advantage is that we are not locked into only one option - we will select the BEST option no matter what the circumstances are. This provides the maximum flexibility and the best rate for our customers.
What are Investor entry and exit strategies?
This is a convertible debt round with a $20M Valuation Cap with 5% discount and 5% interest. Investors can participate through StartEngine by paying a minimum of $500 and we pay the closing costs. Investors can exit by converting to equity at a $5M+ Series A round or upon sale of the company.
What is your valuation?
The Valuation Cap for this round is at $20M. The Valuation Cap for the last round in 2017 was at $15M before we had any significant traction. We have since greatly increased our customer base, transaction volume and revenues.
What do you attribute the initial lower margin gains to?
Remittance business is all about scale and therefore, it makes sense to sacrifice margins initially for rapid growth.
What is the history of funding and development at ZipZap since inception?
ZipZap was launched in 2011 with $550K investment from Founder Alan Safahi. We also raised $1.075M from early stage VCs (Blumberg Capital, TriplePoint Ventures, Fashionmall.com) in 2011 to build a global cash payment network to process payments for online merchants and crypto currency exchanges.
We raised another $1.0845M in June 2014 fr0m Blockchain Angels and VCs (500 Startup, AngelList, Blumberg Capital, Cryptocurrency Partners, etc. ) to build our Currency router based on Blockchain technologies and access to crypto currency gateways worldwide.
In 2014, we began to build a remittance app on top of our cash payment network and Blockchain assets that was beta launched in October 2015.
We launched in October 2016 with remittances to Philippines and added India and China in 2017.
We raised $134,740 in a Regulation Crowdfunding round in July 2017 to test various marketing plans and perfect the product/market fit.
We are now growing rapidly and need additional funding to continue to scale up in preparation of a Series A funding.
Please see above section titled Prior Funding History for more details.
What's the status on Bank tie-ups both in Philippine & India?
We are live with all banks in the Philippines and India. In addition, we offer cash pickup at over 10,000 locations in the Philippines and are in the final steps of integration with payment partners that allow us to grow to dozens of additional markets worldwide.
What are the regulations around this business & the status of ZipZap compliance?
Remittance companies are required to be licensed in the countries they initiate payment (i.e. collect funds from consumers) and work with other regulated bodies in the countries that they remit money to. We are licensed in Canada and a licensed Agent for 30 states in the US. We work with banks and licensed money transfer companies in India and Philippines.