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By Jemima Kelly
LONDON (Reuters) - British online money transfer business TransferWise launched its U.S. operation on Tuesday, the first step of an international expansion that will use $58 million in new backing to compete with the likes of Western Union and MoneyGram.
TransferWise is among the biggest of a clutch of internet start-ups that have begun to challenge the dominance of the established companies and banks that provide money transfer services for ordinary consumers.
The new entrants seek to undercut the fees of their bigger rivals but need to increase volumes to make slender 1-3 percent margins feasible.
Initially trading only sterling and euros, TransferWise now offers 292 currency routes, between major currencies such as the yen and U.S. dollar to emerging currencies such as the Indian rupee and the Philippine peso.
It plans to launch a further 300 currency routes in the next year as it seeks to build on the $3 billion-plus transferred through the platform so far. The company says monthly volumes of money transferred are growing at between 15 and 20 percent a month.
"Launching in the United States is a massive milestone for us," said Taavet Hinrikus, who founded the company in 2011 with fellow Estonian Kristo Kaarmann.
"Expats in the U.S. will no longer have to pay extortionate and unfair bank fees for international money transfers."
TransferWise, which has drawn backing from U.S. venture capital firm Andreesson Horowitz and British billionaire Richard Branson, said that it also plans to open new branches in Germany and Australia.