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Zepz, which owns the WorldRemit and Sendwave brands, totals approximately 1,600 employees.
Soba photos | Light Rocket | Getty Images
LONDON — The company’s chief executive told CNBC that Zepz, owner of money transfer companies WorldRemit and Sendwave, is looking for mergers and acquisitions after cutting 26% of its workforce last month.
With a valuation of $5 billion, Zepz is one of the largest financial technology companies in Europe, backed by major investors including Accel, TCV and Leapfrog.
The company enables users to send money from a smartphone or computer to people abroad, who can receive it in their bank account, mobile wallet, or as a mobile phone top-up.
The service is competitive with large banks and well-established money transfer services such as Western Union, touting cheaper fees and the ability to move money quickly. A close competitor is Wise, which also claims to offer cheaper international money transfers than banks.
Zepz CEO Mark Lienhard said the company wanted to grow its merchant portfolio in a bid to own a larger piece of the global digital payments pie.
Lienhard didn’t specify which companies ZipZ was looking to buy, but said the sharp downturn in private fintech valuations made it an attractive time to start exploring mergers and acquisitions.
Digital wallets
The total value of cross-border payments is expected to rise from $150 trillion in 2017 to more than $250 trillion by 2027, according to the Bank of England. It is a very competitive industry with many players operating and taking a slice of every transaction made by the consumer.
A particular focus of Zepz’s products in the near term is digital wallets, Lienhard said, as the company plans to launch its first digital wallet “soon.”
“We want to be a primary financial center for a very specific segment,” he told CNBC on Wednesday, with a particular focus on the immigrant communities that send money home.
The rush into M&A is a surprising move in many ways because it follows a significant amount of cost cutting in the 13-year-old company. In May, Zepz laid off 420 employees, about 26% of its global workforce.
Zepz says it cut jobs to shore up its operations after its acceptance of US remittance company Sendwave led to duplication of roles.
However, at the time, Zipps said he wasn’t pausing hiring, and was actively trying to fill 200 positions.
This is the second time in just under a year that ZipZ has laid off employees. In June 2022, Zepz will cut about 5% of its workforce, according to Sky News.
“Anytime you lay off people, it’s hard, it sucks, but it was definitely the right thing to do. We’ve been expanding things like that,” Lienhard said Wednesday.
He added that he hopes the company’s next digital wallet product will convince customers to rely more heavily on Zepz, rather than using competing digital banks and other financial apps that have developed their services to offer a much broader range of products.
For example, PayPal offers users mobile wallets, buying and selling cryptocurrency, buy now, and pay later installment loans, among other things.
Like other fintech companies, Zepz has been in cost-cutting mode as the industry faces massive pressures from a slump in tech valuations, which has been stoked by a host of macroeconomic headwinds including rising inflation and interest rates.
Despite this, Zipz says it has been less exposed to those economic pressures than other companies in the space. According to Lienhard, global remittances are less affected by broader macroeconomic pressures than, for example, banks.
Zepz’s total customer transactions are up 25% year-over-year as of April 2023, the company said, while its customer growth accelerated to 30% on average and up to 80% in certain regions.
The company, which reported monthly profits in the first half of 2022, wants to achieve profitability on a full-year basis this year.
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