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New money transfer fintech from Robinhood ‘mafia’ comes out of stealth to take on Paypal and Wise

Atlantic’s investors include Ribbit, Index, Kleiner Parkins, Harry Stebbings, Elefund, Amplo, Seth Berman, Day One and the founders of Robinhood.

a couple of men sitting on the floor

Patrick Kavanagh & Neeraj Baid

Atlantic Money, a new money transfer service, has launched and revealed big plans to take on the likes of Wise.

The company, which has been in stealth mode for just over a year, allows customers to send up to £1m internationally for a fixed £3 fee making it the cheapest money transfer fintechs for larger amounts over £1,000, according to Atlantic. The company also says there is no FX markup with customers receiving the mid-market rate.

For now, the service will only be for UK customers but Atlantic also has plans for a Europe wider launch later this year.

Atlantic Money was founded by Patrick Kavanagh and Neeraj Baid. Kavanagh was Robinhood’s first angel investor and an employee and Baid and one of its first engineers. The duo worked on a number of projects together including building out its crypto brokerage.

Both moved to London in 2020 and fully decided to leave Robinhood for their own venture that autumn. In early 2021 they received a £3.5m seed round from investors including Ribbit, Index, Kleiner Parkins, Harry Stebbings, Elefund, Amplo, Seth Berman, Day One and the founders of Robinhood.

AltFi caught up with the pair to hear their plans, which centre on competing with some of the biggest names in fintech such as Paypal and Wise. Is the space not already heavily competitive?

Atlantic’s eventual investors with Baid and Kavanaugh’s early conversations had the same question.

“Money transfers, they said, is so saturated?  You’ve got PayPal and Wise. But if you look at them, more closely many of them had use cases 10 years ago, or five years ago. Many of these products have gotten very unfocused, and are either too expensive for like sort of the power user that we plan to serve. Or the UI just doesn't make sense,” said Kavanagh.

Baid says they landed on the idea of money transfer at a fixed fee as the central idea of their fintech as they had to move money across borders themselves but were surprised at the costs

“Initially we were holed up in an Airbnb for a few months talking to customers. We saw a lot of opportunities here. Something that’s often overlooked is the density of this region,” said Baid.

“Our first stop was Wise but then you look at the fee structure and it didn’t make sense. When you move money across borders it doesn't cost a percentage. We put our pro fintech hats on and found another solution that was really hard to use but with much better economics” he said.

That process, he adds “proved the pipes exist” to do lower cost transfers for larger amounts. 

International money transfer involves a number of steps. You have two bank transfers at each end and in the middle, you are converting currency. It is in this middle part, says Baid, that has the most potential for optimisation. 

“You can work through either a bunch of middlemen or go and go work with the rails themselves. You try to get as close to the actual rails as possible to cut down on variable costs and cut down on, fixed fees and get those numbers to be really low.”

“But I think the middle is where it's really interesting because there are so many different ways you can convert currency, that's something we observed. You can work directly with global markets, which is the same place that banks are converting currency,” he added. 

“Banks are happy to charge [high fees] to both individual and corporate clients, which is absurd. We are building a business with a lower cost structure, and passing those savings on to customers. That's basically the crux of what we ended up doing.”

While Atlantic may move into other niches or services in due course, Kavanagh says they will resist the urge to pursue becoming a ‘super app’ as a number of established firms have done in recent years.

“If you look at any one of the ecosystem they all start with one thing that they were better at than anybody else like money transfer,  foreign exchange fees or investing. Then they branched out to do 10 other things,” he said. 

“Some of those 10 things might be best in class but the customers don't necessarily want them all in one place. And when they all are one place, if you have 10 services in front of you, only one of them is any good then the other nine are all distractions,” he added.

Kavanagh believes fintech is a juncture that will prompt market segmentation. He thinks to compete and survive “you cant just come out with a generic debit card”

“The problem with fintech and consumer fintech is that most products are so unfocused, that they don't know who their core customers are."

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