Fintech firm Revolut offers Georgians a new way to send money abroad

Popular UK-based fintech firm Revolut announced in December it plans to launch a simplified version of its app for Georgian customers in 2023. Investor.ge examined what the fintech firm has to offer Georgian consumers and how it stacks up against other popular money transfer providers.

Remittances have long represented an important source of income in Georgia, hitting a record high value of $4.37 billion in 2022 and marking in volume the equivalent of 14.2% of the country’s GDP in 2021. Their significance has only increased in recent years, as PMC Research noted in its September 2022 report Emigration and Effect of Remittances on Georgian Economy that 23% of the total Georgian population had emigrated between 2010 and 2020, many of whom left in search of employment and better economic opportunities in places like the EU and U.S.

The announcement in December that British fintech firm Revolut was planning to enter the Georgian market with its offering of “effortless global money transfers” thus came as welcome news for consumers in a country that has largely been shut off from such fintech ventures in the past.

The company, which offers “innovative financial services” to compete with traditional forms of international money transfers and currently serves more than 25 million users worldwide, plans to launch a simplified version of its application in Georgia next year. Designed both for locals and Georgian emigrants, Minister of Economy Levan Davitashvili labeled the announcement an important step in fostering an environment that encourages “the creation of innovative financial products” that will establish a “regional fintech hub in Georgia” in a December meeting with Deputy CEO of Revolut Andrius Biceika.

Revolut has not yet publicly offered a definitive listing of which of its wide-ranging services, which include a multi-currency debit card, a set number of free ATM withdrawals each month, budgeting tools, and investment options, will be available in Georgia when it launches later this year, but Biceika did note in his recent visit that Georgians will have access to the app’s “fast, secure, and easy money transfers.”

What’s on offer?

First lauded as “disruptors” of the financial industry, one of the biggest boasts of fintech apps like Revolut and its main competitor Wise (formerly TransferWise) are that they offer transparent and, often, lower-cost alternatives to more traditional routes of sending money abroad. International wire transfers through a banking institution, for instance, are often subject to a high flat fee charged by the sending institution and can incur additional unexpected charges from intermediary banks in the SWIFT system.

Touting both lower costs and greater price transparency on behalf of the firm, Biceika noted at his December meeting with the Minister of Economy that “traditional transfers can put off customers because of their huge hidden fees, but we waive all our transfer fees if both parties use Revolut, regardless of location. In addition, we always offer the best exchange rate, which we are very proud of.”

This “best exchange rate” is the mid-market, or interbank rate, which is the mid-point between the buy and sell prices of any two currencies at a given time, meaning it does not include a markup. Revolut claims that any currency exchanges made from Monday to Friday (apart from the Thai baht or Ukrainian hryvnia), which constitute “normal exchange market hours,” enjoy this rate. Exchanges made on the weekends are subject to a 1% fee on the transaction.

For Revolut users transferring money to one another within the app, the company says no fee is charged. However, beyond this guarantee, it remains to be seen which exact account options (they currently offer a free standard plan and three premium versions in their larger markets) and fee structure will be offered to Georgian consumers looking to transfer money abroad. Users in the U.S., EU, or UK, for instance, face a “0.3% fee, with a minimum cost of $0.30 and a maximum cost of $6 per transaction” when transferring from their Revolut account to an external bank account “in the same currency as the local currency of the recipient.” For an international transfer to an external bank account in a currency different from the local currency of the recipient, the fintech firm charges residents of those countries “$4 if the payment is in U.S. dollars, British Pounds, Euros, or Swiss Francs, or $6 if it’s in another currency.”

The fintech firm also unveiled a “simplified” offering in five other new markets (Sri Lanka, Chile, Ecuador, Azerbaijan, and Oman) in 2022, noting that it would offer a transfer fee of 1%. This fee structure may be more indicative of what consumers based in Georgia can expect to see later this year. However, Revolut says tools like its transfer calculator and price breakdown features aim to uphold the “highest level of transparency” and help combat confusion around fees. Through the online portal or its mobile app, users can preview transfers with a breakdown of the fee, exchange rate, and total cost to send money. They can also track the transfer and enjoy “speedy global transfers,” with the company claiming “63% of transfers arrive in an hour, and another 15% arrive within a day.”

How does the offer stack up?

So, how does Revolut compare to the other methods used by Georgians to send and receive money abroad? When compared to fintech competitor Wise, Revolut’s currency exchange rate offering is largely the same – both advertise themselves as sticking to the mid-market rate. Revolut’s official entrance into the Georgian market offers one big plus, however, which is that Revolut account users can make free transfers to one another within the app. Wise’s lack of an official presence in Georgia means that residents of the country cannot hold a multi-currency account and are thus always subject to both variable and fixed transfer fees.

Major money transfer providers MoneyGram and Western Union have also long represented popular options for sending money internationally. While their fees vary significantly based on location, payment method, and desired delivery time, both mark-up the exchange rate they offer, meaning senders can be saddled with additional ‘unseen’ costs beyond the obvious transfer fees.

Both have a significant presence around the world, with MoneyGram offering more than 380,000 locations and both providers physically present in more than 200 countries. They offer a brick-and-mortar alternative for those not interested in online money transfers and give recipients the ability to receive their transfer in the form of cash, neither of which Revolut does. However, these benefits seem to consistently come at a higher overall cost for senders.

There is, of course, no definitive “best method” for sending money internationally; the ideal conditions will always be dependent on the size, urgency, and currency being transferred as well as the priorities of the individuals sending and receiving the funds. For the more than $2 billion in money transfers made to Georgia from Russia in 2022, for instance, Revolut’s foray into the Georgian market will bring little benefit, as the fintech firm announced soon after Russia’s invasion of Ukraine that it, like many other financial institutions, would no longer be supporting money transfers to or from Russia or Belarus. But for the increasing number of Georgians who rely on money transfers from parts of the world like the EU and U.S., the opportunity to take advantage of this innovative and seemingly lower cost tech solution for getting money to and from their loved ones will come as welcome and exciting news.