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Pinay-founded US startup aims for fintech to have social impact in the Philippines
Art Fuentes, ABS-CBN News
MANILA - A US-based fintech startup founded by a Filipina is aiming to make sending remittances from the United States “as easy as sending a text message” while at the same time making an impact in the lives of OFW families.
TANGapp said it aims to do this with a low 3 percent fee for transfers, as well as a “live exchange rate” that tracks the value of the dollar against the peso and is updated every hour. Money sent from the US can also be received “within minutes”, said TANGapp founder and CEO Rebecca Kersch.
Kersch said she conceived of the app after seeing how OFW families pay “exorbitant” fees to send money to their families back home. Kersch also noted how OFW families who received remittances were often unbanked and thus had no access to financial services that would have helped them better their lives.
She said TANGapp aims to change this state of affairs by offering much cheaper rates than traditional remittance companies. She also envisions the app as becoming a gateway to financial inclusion for OFW families.
Kersch, whose mother is a Filipina and whose father is Dutch-Indonesian, said she often observed how her “Tita Baby” would get charged an average of 8 percent every time she sent money home.
Tita Baby, who is a cousin of Kersch’s mother, was a migrant worker who “sent home almost everything she earned.”
Kersch noted that the 8 percent remittance fee is close to 1/12, which meant that in a full year of working and living abroad, almost a full month of her Tita Baby’s wages go to remittance companies.
“I grew up seeing this and obviously thought it was exorbitant,” Kersch said during a meeting with journalists last Feb. 13 in Makati.
Aside from making it easier to receive remittances and lowering the cost of sending money, Kersch said TANGapp also aims to make it easier for OFW families to access financial services.
She said that while doing research for the app in the Philippines, she saw that the lives of many OFW families had not improved significantly despite the money sent home by their loved ones abroad.
“This was when I realized: This is a crisis,” Kersch said.
While TANGapp is limited to being an app for receiving remittances and buying prepaid cellphone loads, Kersch said she envisions it becoming a platform for many other financial services that can help OFW families.
The app itself only came live on Sept. 1, 2020. On Google Play, it has been downloaded and installed just over 10,000 times. The company is also still just a 12-person team composed of Kersch and several other tech and business grads, many of whom are her schoolmates from Harvard University.
But TANGapp is expanding exponentially, she said. Last year, the app saw a month-on-month growth rate of 35 percent, with 40 percent of its users being repeat users.
The company said raised $1.5 million in pre-seed funding from 17 angel investors in 2021 and is currently raising its $2.5 million seed round from venture capital firms and angel investors.
One of its largest investors so far is Katrina Razon, the CEO and founder of US-based venture capital firm KSR Ventures. She is also the daughter of ports billionaire Enrique Razon.
For 2023, TANGapp said it is focusing on meeting more Filipino business and community partners. It also wants to reach out to non-profit and charitable organizations.
TANGapp will have some hefy competition. Fintech giant GCash is looking to expand abroad beyond cross-border payments. GCash recently announced that the Bangko Sentral ng Pilipinas has allowed it to sign up Filipinos in Japan, Italy and Australia even without a Philippine SIM in a beta test.
Viber, which is one of the most popular instant messaging platforms in the Philippines is also looking to add a payments feature on its app which will let users send money and receive money worldwide.
Usage of digital payments platforms exploded during the pandemic as locked-down Filipinos turned to online shopping and payments.
Under its Digital Payments Transformation Roadmap, the Bangko Sentral ng Pilipinas aims to convert 50 percent of retail payments into digital and to onboard 70 percent of the adult population to the formal financial system this year.