Breaking into the remittance market two years ago, Pangea began small.
It served just a single corridor—South Carolina to Mexico—targeting consumers who routinely transfer funds across borders and are fed up with waiting in lines and untangling complex fees.
And starting small has paid off.
Pangea’s instant-transfer mobile app now serves six Latin American countries and it’s eyeing expansion to Asia, with a formula based on speed and simplicity. Its model underscores how much room still exists for fintech development in the highly competitive remittance market, said Nishu Thukral, the Chicago-based company’s CEO.
“The remittance market is very big and customers will benefit from multiple products with innovations around convenience and specific use cases,” he said.
Pangea supports a use case in Mexico that's somewhat unique: Its mobile app enables funds to go directly to a recipient’s debit card or bank account, so recipients get funds immediately. The mobile-centric approach means the entire remittance process can be complete less than a minute after it starts, versus traditional funds-transfer services that can take up to 4 or 5 days to settle, Thukral said.
“We’re the only provider doing cross-border, debit-to-debit transfers instantly, so people don’t have to wait in lines to send or pick up the money, one of the biggest pain points in remittances,” said Thukral, adding that 80% to 90% of Pangea’s volume is repeat customers and 98% use its mobile app.
Relying primarily on word-of-mouth marketing, Pangea now reaches the entirety of the U.S. as well as Guatemala, El Salvador, Colombia, the Dominican Republic, and last month it added Honduras. Pangea, which did not disclose its total users or transaction volume, so far has raised about $20 million from investors. The U.S.-to-Mexico path for funds—the world’s largest remittance corridor—is its most popular.
Launched on a shoestring in 2012 at Impact Engine, a Chicago technology incubator, Pangea’s founders spent three years developing the platform before going live, setting up necessary money-transmitter licenses in the U.S. and establishing direct connections with banks and processing partners to enable direct-to-debit transfers.
Pangea’s platform supports speedy enrollment by authenticating the sender and receiver in less than a few minutes by verifying their identity, address and mobile number through a variety of data sources using its proprietary technology, according to Thukral.
“The customer enters a few fields of data and in most cases they’re onboard immediately and able to send funds right away,” Thukral said.
Offering its services on a flat fee of $4.95 also has been vital to Pangea’s growth, Thukral said. “Our customers want to know exactly what they’re paying, and we make that clear, while rival remittance services often have complex fee structures that make it hard for users to figure out the cost,” Thukral said.
Senders still must fund Pangea transfers via a debit card, but Pangea is adding ACH capabilities soon.
In Illinois, senders also may initiate fund transfers with cash at 7-Eleven stores, for an added fee of $5.99; the app generates a map to the nearest retail location and a code to present to the clerk to complete the transaction. Thukral said Pangea is piloting the feature and hopes to expand cash-loading to more states.
Pangea is one of many remittance providers in the Latin America and it faces plenty of competition from the likes of PayPal’s Xoom, Remitly and WorldRemit that also emphasize speed and convenience, said Talie Baker, a senior analyst with Aite Group.
Flat-fee pricing could possibly be a useful differentiator for Pangea, even if it is not always the cheapest option, according to Baker. “You almost have to be a math whiz to figure who’s the best price-wise for remittances, and the price leader changes on a daily basis,” she said.
Pangea’s debit-to-debit option limits its reach to customers that have access to a bank account, which could slow its growth, Baker suggested. But mobile money in general is a strong growth driver in countries with heavy remittance traffic, she said.
Thukral, who joined Pangea a little over a year after a stint as head of payment strategy at Redbox, is optimistic about Pangea’s targeted strategy.
“Some people have said we’re crazy to try innovating on a smaller scale in a market where so many companies—including large ones—are trying to crack the code, but we’re seeing results by delivering a product that resonates with certain users,” Thukral said.