After $2M Round, San Diego’s Quippi Aims to Disrupt Money Transfer
Each year, an estimated 6 million American households send money abroad to help support their families and friends around the world.
While major banks and companies like Western Union, MoneyGram, Xoom, PayPal, and Viamericas offer a variety of money transfer services at widely varying rates, Michael Aleles says he sees an opportunity to provide an alternative financial service. The startup Aleles founded in 2012, San Diego-based Quippi, offers gift cards in the United States that are intended for making purchases in Mexico.
“We don’t charge consumers anything for that service,” Aleles says. Instead, major retailers in Mexico pay Quippi to provide the cards—which can be used only to purchase merchandise at participating retailers. “It’s not a service that can be redeemed for cash,” Aleles says. Consumers can buy virtual cards on the Quippi website (activating a PIN code for use in Mexico) or at certain retail outlets in the United States.
The startup began offering its cards in December, and recently raised $2.2 million in a Series A round of venture capital led by San Diego-based Avalon Ventures. Accion, the New York microfinance lender affiliated with Accion International, also invested in the round. Altogether, Aleles has raised about $3 million since founding Quippi two years ago.
Aleles, who previously led Latin American business development for PriceSmart and oversaw investments for Intel Capital and TerraSur Advisors, says conventional money transfer services take advantage of consumers by charging high transfer fees or low currency exchange rates—or both.
On the Quippi website, Aleles explains that after spending years living, working, and eventually marrying into a family in Latin America, he realized that “consumers who deserve a fair deal are usually the last to receive one. Millions of hard-working consumers in the U.S. support their families back home but it costs them far too much to do so. And so I thought, ‘Why can’t we put out a better service which enables people to support their families, but do it for free?’”
Aleles says he plans to expand Quippi globally, but targeted Mexico first because annual money transfers from the U.S. to Mexico total almost $23 billion a year. “There is more money sent from the U.S. to Mexico than anywhere else on the globe,” he says. While he spent his career mostly in Silicon Valley and Latin America, the 43-year-old CEO says he moved to San Diego to start Quippi because “doing business in Mexico is far easier here.”
Quippi’s approach is simple and low-tech, but potentially disruptive to the money transfer service industry if Aleles can line up enough partners on both sides of the border. Quippi cards now can be redeemed at Chedraui, one of Mexico’s largest supermarket chains (which also sells clothes and non-perishable items), and Coppel, a Mexican department store chain.
The United States represents a bigger challenge. Quippi has partnerships with ePay, a global processor of electronic payments operated by Leawood, KS-based Euronet Worldwide, and PayNearMe, a cash transaction network based in Mountain View, CA. Such partnerships enable Quippi’s “unbanked” customers to buy their PIN code online and pay for it with cash at thousands of 7-Eleven or ACE Cash Express stores.
More work remains to extend Quippi’s availability. As Aleles puts it, “We’re always working on our distribution relationships and new partners.”