Zepz

Slashing remittance costs for low-income consumers

Industry:

Payments

Region:

Global

Website:

zepzpay.com

$ 1.3 0 B +

Monthly send volumes

5,000 0 +

Transfer routes

130 0

Recipient countries

Zepz is a leading digital remittances provider, delivering affordable online money transfers for customers in 50 markets to remit money to recipients in 130 countries. Each month the company acquires ~100,000 new customers and sends more than $1.3 billion.

The Challenge

Remittances are a key source of income for many emerging consumers. Described as a “lifeline of the developing world” they often make up a significant portion of GDP for emerging economies.¹

In 2023, global remittances to low and middle-income countries grew by 4% to $669 billion and are expected to reach $690 billion by year end 2024.²The informal market may be similarly large. Despite the size of the market, the P2P cross-border payments market remains largely offline and is characterised by high transaction costs and poor customer experience.

The global average cost for sending remittances is 6.2%, more than double the target of 3% set by the UN’s SDG 10.³ In Sub-Saharan Africa that cost is substantially higher at 7.4%, due in part to low penetration of formal digital remittance providers and use of black-market money exchangers.⁴Use of digital remittances is growing, now making up 30% of total transactions at an average cost of 4.6%, in comparison to average non-digital remittances at 6.9%.⁵

Remittances alleviate poverty, improve nutritional outcomes, and are associated with increased birth weight and higher enrollment rates for children in disadvantaged households.⁶ Studies show that remittances help recipient households build resilience, for example, through financing better housing and recovering from losses in the aftermath of disasters. Remittance flows to low-and-middle-income countries are a key contributor to economic growth, surpassing the sum of foreign direct investment and overseas development assistance in 2022.⁷ In Somalia, the home country of Zepz founder and chairman Ismail Ahmed, remittances account for 35% of the economy, and help finance the country’s substantial trade deficit as well as stabilise the local currency.⁸ As the first financial product used by many low-income people, remittances can act as a stepping stone to further financial inclusion.

1 United Nations, Press Release, June 2021| 2 KNOMAD, Migration and Development Brief 39, December 2023| 33 World Bank, Remittance Prices Worldwide, September 2023| 4 World Bank, Remittance Flows Register Robust 7.3% Growth, November 2021 | 5 KNOMAD, Migration and Development Brief 39, December 2023 | 6 Malpass, Remittances are a critical economic stabiliser, December 2022 | 7 GFRID, Summit 2021 Summary of Proceedings | 8 World Economic Forum, The World’s Top Remittance Recipients, May 2021

Remittances, Foreign Direct Investments and Official Development Asistance Flows to Low-and-Middle Income Countries 1990-2022

Zepz' Solution

Zepz increases access to affordable, efficient and secure digital remittances for emerging consumers, sending over $1.3 billion per month from 50 countries to recipients in 130 countries.

Somaliland migrant Ismail Ahmed founded WorldRemit, now known as Zepz, in 2010 after recognising the need for affordable money transfers between countries. The company has revolutionised P2P cross-border payments, an estimated $1 trillion market opportunity, by leveraging the increasing uptake of mobile phones.

Zepz services over 5,000 transfer routes with its digital remittances, including in many previously underserved markets which relied on high-cost providers. Customers using the company’s WorldRemit and Sendwave brands enjoy a fast, flexible user experience, with 85% of transactions settled in minutes. Senders have the option to remit money into bank accounts, cash pick-up points, or into mobile wallets for cash-out and airtime top-ups. Compared to cash remittance services, the cost of Zepz’s digital remittances is significantly lower in both fees and FX margins.⁹

Zepz has built an expansive agent network to connect with recipients of funds no matter where they are located, reducing distance to access points and so lowering travel costs for receivers of money transfers. Identification and registration of customers is simplified through an online verification process backed by card payment infrastructure, removing a key pain point for the receiving low-income consumers who often have little documentation. Zepz’s remittance network also supports financial inclusions, with transaction records from transfers creating documentation that can be leveraged to assess creditworthiness for credit products.¹⁰

9 IFAD, Global Forum on Remittances, Investment and Development Forum, 2021|10 Ibid

LeapFrog's Impact

Since LeapFrog’s investment, Zepz has grown into a key player in the high-growth cross-border payments market, expanding its emerging consumer reach from 5.4 million to more than 51 million, an impact multiple of almost 10x.

LeapFrog has supported the company to expand its footprint rapidly through inorganic growth, assisting with the acquisition of app-based remittance company Sendwave, increasing its footprint to over 130 countries in Africa and Asia.

To improve Zepz’s global reach, LeapFrog has made several introductions to mobile money operators and cash-out partners in high priority markets. The company now has 300+ cash-out partnerships with local institutions, which also bring trained agents and in-country support to assist transfer recipients in emerging markets. Over 45% of customers are women, and remittance recipients on average support a five-person household.

Zepz and LeapFrog have worked together to reduce the average transfer rate to 2-3%, versus a global average of 6.3% (and as high as 7.4% in sub-Saharan Africa). Over the course of the investment, annual transactions per customer have doubled, a clear indicator of customer value. Meanwhile, turnaround time for customer complaints has fallen from 5 days to 2-4 days.

LeapFrog has also supported critical hires to further strengthen the team and improve business discipline and intensity for its next stage of growth. In 2024, LeapFrog supported the company to refinance its expensive term debt through a $250 million equity raise led by Accel. LeapFrog also participated in the raise.

Page last updated September 2024.

Remittance Impact According to Household Income Level

Zepz

$ 1.3 0 B +

5,000 0 +

130 0

The Challenge

The Challenge

Remittances are a key source of income for many emerging consumers. Described as a “lifeline of the developing world” they often make up a significant portion of GDP for emerging economies.1

Zepz' Solution

Zepz' Solution

Zepz increases access to affordable, efficient and secure digital remittances for emerging consumers, sending over $1.3 billion per month from 50 countries to recipients in 130 countries.

LeapFrog's Impact

LeapFrog's Impact

Since LeapFrog’s investment, Zepz has grown into a key player in the high-growth cross-border payments market, expanding its emerging consumer reach from 5.4 million to more than 51 million, an impact multiple of almost 10x.

Learn more

Zepz raises cash at $5bn valuation

Zepz raises $292m in new primary Series E financing

WorldRemit completes Sendwave acquisition

Somalilanders’ remittance businesses thrive worldwide

WorldRemit to acquire Sendwave in $500m deal

WorldRemit raises $40m to target 10 million customers

Zepz raises cash at $5bn valuation

Zepz raises $292m in new primary Series E financing

WorldRemit completes Sendwave acquisition

Somalilanders’ remittance businesses thrive worldwide

WorldRemit to acquire Sendwave in $500m deal

WorldRemit raises $40m to target 10 million customers

Remittances are a key source of income for many emerging consumers. Described as a “lifeline of the developing world” they often make up a significant portion of GDP for emerging economies.¹