Revolut Challenges Indian Banks on Forex Fees

Revolut's Entry into the Indian Financial Landscape

British fintech company Revolut is preparing to launch its services in India, identifying cross-border payments as a significantly underserved area within the nation’s financial sector. The company estimates that Indian citizens expend approximately $30 billion annually on overseas transactions, incurring roughly $600 million in bank fees – charges that the head of Revolut India deems unacceptable.

Addressing Existing Financial Disparities

Paroma Chatterjee, CEO of Revolut India, explained to TechCrunch that traditional banking institutions have historically controlled this market. Obtaining foreign currency or travel cards from banks often involves substantial fees. Revolut aims to disrupt this established system by offering a more cost-effective alternative.

Strategic Acquisition and Regulatory Approvals

Since 2021, Revolut has been focused on establishing a presence in India, seeking to address perceived shortcomings in foreign exchange and conventional payment systems. The acquisition of Arvog Forex in 2022 provided the necessary license to facilitate remittance and multi-currency account services.

Further bolstering its capabilities, Revolut secured a prepaid payment instrument (PPI) license from the Reserve Bank of India in April. This license enables the issuance of prepaid cards, support for digital wallets, and integration with the government’s Unified Payments Interface (UPI).

Targeting a Digitally Savvy Demographic

With these approvals in place, Revolut intends to challenge established banks and compete with existing fintech companies. The company is specifically targeting over 150 million Indians aged 25 to 45 who are described as “globally aspiring and digitally native.”

The ambitious goal is to onboard approximately 20 million users by 2030 and process at least $7 billion in transactions on their behalf.

Differentiated Customer Experience

Chatterjee emphasized that the PPI license allows Revolut to deliver a superior customer experience compared to competitors reliant on bank partnerships. This independence allows for greater control over service delivery and innovation.

Product Offerings for the Indian Market

Revolut will introduce a prepaid wallet supporting UPI, along with branded UPI handles. Customers will also have access to a domestic Visa card and an international multi-currency Visa card.

Furthermore, dedicated accounts for children and teenagers, linked to parental profiles, will be offered. A subscription-based model, alongside budgeting and spending analytics tools, will provide users with valuable financial insights.

Comprehensive Payment Capabilities

The company possesses the regulatory permissions to facilitate both domestic and international payments and transfers. Additionally, it has secured authorization for same-day remittances from India through a local banking partner.

Focus on Full KYC Compliance

Unlike some Indian fintech firms that employ minimal know-your-customer (KYC) procedures for rapid user onboarding, Revolut will exclusively offer full-KYC wallets. New users will be rigorously verified against global sanctions lists, including those maintained by the Office of Foreign Assets Control and the United Nations.

This stringent approach is designed to attract “high-intent customers” who are willing to complete a thorough onboarding process, including Aadhaar and video verification.

Prioritizing Quality Over Quantity

Chatterjee stated that the full KYC process serves as a key customer metric, ensuring that onboarded users are genuinely interested in utilizing the product. She noted that simply listing the app on the App Store generates downloads driven by curiosity, which is not considered a measure of success.

Measuring Success Beyond User Numbers

Revolut intends to evaluate its performance in India based on user engagement and profitability, rather than solely focusing on expanding its user base.

Chatterjee highlighted that while some companies boast hundreds of millions of customers, Revolut’s global customer base of 65 million generates over $4 billion in transactions and more than $1 billion in profit. This is attributed to a high rate of active users – over 25 million monthly.

Recent Valuation and Waitlist

This performance is reflected in Revolut’s recent valuation, which increased to $75 billion following a secondary share sale. The company currently has a waitlist exceeding 350,000 people in India, with plans to onboard them later this year before opening the app to the general public.

The precise launch date will depend on the speed at which the waitlist is cleared and KYC/AML checks are completed.

Exploring Partnership Opportunities

Revolut is also considering partnerships beyond Visa, including the Indian government’s RuPay network, to provide customers with a wider range of payment options.

Investment and Infrastructure

The company has already invested $45 million in India to initiate operations and adapt its technology to comply with the country’s data sovereignty regulations. Further investment is planned as operations expand.

Significant Indian Workforce

With approximately 3,500 employees based in India, Revolut’s Indian workforce is its largest globally, exceeding even its workforce in the U.K. Many of these employees contribute to the development of products and features used in markets outside of India.

Competitive Landscape

Despite its ambitious plans, Revolut will encounter competition in the Indian market. While banks dominate foreign exchange, fintech players like Niyo, Scapia, Fi, and BookMyForex are already established in the cross-border and remittance sectors.