Peter De Caluwe of Thunes: Building a Cross-Border Payments Network for Emerging Markets

On the Rise: Thunes

One central ecosystem with complete interconnection and operational convenience between banks, digital wallets, and any payment system in existence - this is the ambitious vision of Thunes, a company managing the world’s largest cross-border B2B payment network. 

“All the different payment companies in different local markets are not connected to each other,” explained Peter De Caluwe, Executive Chairman and CEO of Thunes. “If you take an example of an African bank who wants to transfer money to a Chinese bank, there are usually correspondent banks in between, if they have it. So...the money moves around three, four, or five parties before it’s arrived. So it’s time-consuming, it’s expensive, and the more touchpoints it has, everybody takes a cut.”

Headquartered in Singapore, Thunes announced the successful conclusion of its Series B funding in September 2020. GGV Capital was one of the participating investors in this round, extending its ties with Thunes after leading its $10 million Series A funding back in May 2019.

The company has said that the $60 million raised will go towards building its global network and accelerating its expansion and growth in Africa, Asia, and Latin America, with a focus on maintaining a high-quality service experience for both partners and users.

Why Emerging Markets?

So why did Thunes kick start its operations in emerging markets, where infrastructure, networks, and services need to be built from scratch? “In emerging markets, I feel like there are 1,000 opportunities,” Peter reflected. “You can fail ten times and still have a long way to go, it’s that speed of entrepreneurship and willing to create an infrastructure that works.

In an interview with Tech in Asia, Peter also estimated the projected size of emerging markets for cross-border payments at around US$45 trillion. A company spokesperson also highlighted the fragmented and complex nature of existing payments ecosystems, resulting in “slower, more costly, and at times unreliable ways of moving money”.

These payment systems and methods also lack interconnection, compelling users to adopt multiple apps, banks, or systems to be able to perform the transactions they need. To fill these connectivity gaps, Thunes aims to connect mobile wallet providers, banks, technology companies, and money transfer operators through its cloud-based application programming interface.

An interconnected, wide-spanning network could also accelerate financial inclusion – a recent report by the International Monetary Fund estimated that 1.7 billion people have no access to a bank account, and that small- and medium-sized enterprises (SMEs), which make up for 95% percent of businesses in the world struggle to access finance.

A global-spanning digital payments network like Thunes’ could open up access for many of these unbanked individuals along with high mobile penetration and internet access. “We have seen in China how it moves very quickly with Alipay and WeChat payment how fast it can take up,” agreed Peter. “But there’s a lot of hurdles…is the government supportive? There are a lot of elements of play going from corruption and non-supportive government infrastructure domestically, it’s completely missing, there is also tax avoidance, etc.”

With this lofty goal of connecting as many partners as possible, it is inevitable that there are challenges like culture, governance, and wildly diverse quirks of local business environments. “There is a specificity if you look at Africa or Southeast Asia, Latin America,” Peter said. “There are countries where there are APIs with no documentation. Technology is not documented in the local language, [or] you have regulators, which are very unfamiliar with technologies.

The challenge of localised market understanding and user experience

Not all emerging markets are built the same. “You have a country like China, you can’t compare it with an African country,” observed Peter. “Everything is different in every country. And we talk about hundreds of countries.”

This is why Thunes supports transactions in some 60 currencies and plans to devote significant effort and resources to hiring local staff as they continue to increase their physical presence and set up local entities.

Peter also believes that Thunes’ dedication to building in-depth relationships and getting in touch with individual cultures is a key strength for the company. “If you look at [our] competitors, they have been mainly focused on China, Europe, US, or Mexico..we talk about Africa, but it’s multiple countries, again, with multiple governments, multiple complexities. And it’s exactly a specificity to be local, deep, integrated, knowing how regulations and governments and structures work and be connected to that.

“It requires boots on the ground,” Peter surmised. “Usually, how we operate is we have a local person who will take care of it. So we hire…people who will do business development; who come from an industry linked to the financial services, speak the local language… know the culture and how to navigate in the country.”

A focused, diverse team

In its previous incarnation, Thunes was a small product team for MoneyTransfer. But Peter and his team took the step to create the company as a separate entity, enabling them to hyper-focus on reaching fintech companies and other payment systems. “We felt that giving it a separate life with a focused team, a dedicated team on their own was gonna give us more speed to get things done,” Peter recalled.

Today, Thunes has a team of some 70 members from over 25 nationalities, a deliberate hiring decision. “It’s a very global organization with people everywhere around the world… I played to our strength because we have so many cultures, so many views. And we really use these people’s input to understand because I can’t know anything from emerging markets,” said Peter.

The Network Effect

Aside from its platform, which offers a one-stop API for partners to connect their operations to Thunes’, its strength lies in its network, which currently has over 400 partners, including financial institutions like Ethiopia’s Lion International Bank, Western Union, Commercial Bank of Dubai and the United Nations Federal Credit Union.

“We want to grow [the network] in the next year to more than 2,000 across Southeast Asia, Africa, and Latin America. And then the use cases automatically follow. We see currently in effect if we add more members, the volume of transactions grows by default because you have the network effect pumping in,” Peter said.

The company has also forged some notable strategic partnerships with the likes of Grab, Airbnb, and Kenya’s M-Pesa, enabling small businesses to receive payouts quickly and conveniently. “You had a lot of fights between competition,” said Peter on the ride-sharing scene in Indonesia. “So one of the elements where Grab could differentiate itself was basically to do payouts for the drivers on demand…we developed that network of instant payouts.” Aside from the obvious benefit of instant gratification with payments, Thunes’ presence in Grab’s processes meshed seamlessly with the country’s cash-dependent culture, where quick cash was paramount to purchase necessities.

With Thunes’ support, Airbnb is able to move payments from US-based customers to bank accounts of Brazilian hosts “instantly”. Likewise, the M-Pesa partnership connects Kenyans with the means to buy and sell goods internationally and receive payments via PayPal.

Besides partnerships, Peter is also a proponent of cooperation instead of competition. In another interview with TechCrunch, he pointed to the large market potential of digital payments and stated “he’d be “happy to share that $45 trillion with many players, because even if we could get one or two percent of that, we would already be a very large business.”

It is this spirit that has enabled Thunes to put the largest digital payments network in the world together, and the team at GGV Capital is keen to see what’s in store as they continue to make waves in their sector.

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