Las Vegas startup Pomelo hopes to change money transfers

Las Vegas startup Pomelo hopes to change money transfers

Sending money to family members living abroad can be expensive and stressful, but a Las Vegas-based startup hopes to change that experience.

Founded by CEO Eric Velasquez Frenkel, Pomelo offers its customers a credit card that can be used by friends or family members in other countries, making it easier to move money across borders in a faster and safer way.

“Pomelo was founded at the beginning of the pandemic to reinvent money transfer using credit instead of sending cash for the first time,” Velasquez Frenkel said.

Pomelo – named after a citrus fruit native to Southeast Asia – underwent beta tests this year but officially launched its service last month and says it is the first company to combine credit and money transfer. The company has partnered with Mastercard and currently serves the Philippines, although it plans to expand to other countries.

Pomelo was launched as a way to address pain points that arise when US residents try to send money to family members abroad – the exorbitant fees and risks involved in receiving large amounts of cash in person – but it also benefits from a lucrative market.

There is a lot of value with global remittance flows, or money sent to people in other countries. The market is expected to rise 4.2 percent this year to $630 billion, according to the World Bank. She said the average transfer fee is 6 percent when sending $200, as of the fourth quarter of 2021.

Creating an easier way to transfer money could be huge for the global economy, says UNLV Associate Professor Hans Rohauser, who believes what Pomelo is doing is unique.

“There are a lot of countries that are very dependent on remittances. They are a big part of their GDP,” Rohauser said. “Small countries in particular that have a lot of people immigrating to the United States.”

Kristen Rockwell, board member of the Asian Chamber of Commerce in Las Vegas, said that sending money to her extended family in the Philippines is often stressful and complicated. When her family sends money, they often collect the money and send it in one large amount to avoid multiple fees.

But she said there was still concern even after the money was sent, adding that places in the Philippines where her family can receive money are often targets for burglaries.

“This is where money transfers usually happen…there is a lot of security, and you think I should be careful,” said Rockwell. “But with cards, I think it makes it easier. It’s something we’ve always been thinking, ‘When can we use a card?’…So I think this is really groundbreaking.”

“Personal mission”

Sending money to the family is a process Velázquez Frenkel knows well, which is why he launched the company.

Pomelo was supposed to fix a “personal problem” he noticed while preparing to return to the United States from the Philippines during the pandemic.

“I said to myself, ‘Okay, I’m going back to the states to pay that credit card bill. Why can I just leave a card with my family (in the Philippines), instead of sending money every month through Western Union? Velasquez Frenkel said.

“In about five minutes, anyone can sign up (in the US) and have someone buy something online in the Philippines,” a Henderson resident said now.

“This is my conversion,” he said.

If someone wants to send money abroad using the Pomelo service, they can apply for a credit card on the company’s website. Depending on their credit history, the applicant may have to place a security deposit. The applicant can then add up to three approved users who live abroad. Beneficiaries will get a credit card within 10 days and the card can also be used online with the balance paid monthly by the applicant.

Velasquez Frenkiel said Pomelo offers its customers an unsecured credit of $1,000. An individual can also set spending limits on the card, which has no interest rate and acts as a charge card.

The pomelo transfer fee is no more than 1 percent because it transfers costs to merchants rather than cardholders.

Velasquez Frenkiel said merchants are willing to pay the fee because it encourages faster withdrawals, more e-commerce opportunities, and fewer opportunities for fraud or theft that can come with cash-intensive businesses.

Rawhouser believes that passing fees on to merchants can be a “clever” idea if merchants are willing to incur these fees.

Currently, only credit card and online transfers are available to Pomelo customers, but Velasquez Frenkiel said it could create a cash option such as ATM withdrawals in the future.

collecting money

This isn’t the first time Velasquez Frenkel has founded a technology company. The former engineer at Meta Platforms Inc. , formerly known as Facebook, founded the data platform SingleStore in 2011 and then left seven years later to focus on launching a consumer-focused business.

Pomelo announced last month that it had raised $70 million in seed funding, with $20 million in equity financing and $50 million to cover credit card balances, according to Velzaquez Frenkel.

The funding round was led by Founders Fund General Partner Keith Rabois, Xoom Corp Founding Partner, A* Capital General Partner Kevin Hartz with Afore Capital, Xfund, investor Josh Buckley, Chainsmokers and singer Abel Tesfaye, aka The Weeknd.

“Pomelo has just gotten off to a great start with the pool of funding that allows us to get into the market through our Philippine corridor,” said Velzáquez Frenkel.

According to Rawhouser, placing Pomelo as a new service could allow the company to be a leader in the field, but it could also create more competition.

“This only adds to the credit card services market in the Philippines,” Rohauser said. “But I imagine other credit card companies will start copying…and I hope before that happens they will be able to build a brand and be seen as authentic, trying to solve a problem for immigrants and their families back home.”

Velasquez Frenkel said Pomelo’s big focus was on helping immigrants build their credit scores in the United States.

“For many of our customers, the Pomelo is their first credit card here… but it’s also the first for their families abroad,” he said.

Building credit as an immigrant can be tough, said Rockwell, who remembers when she moved to Las Vegas 20 years ago couldn’t get a credit card from a major corporation.

“No one will give you a regular card,” she said. “And you only care about building credit, not necessarily what the process is, all I know is that you have to open a credit card.”

Although Pomelo only serves the Philippines initially, they still provide a large customer base. The Filipino community in the United States has more than 4 million people, and Vegas has the sixth largest Filipino population in the country, according to the Pew Research Center.

Velasquez Frenkel said it plans to expand into Mexico and India but does not have a specific timeline.

“We are committed to growing the pomelo at a healthy pace, but we are really looking to ensure we can deliver value to the Philippine Corridor before we look to expand into Mexico and India,” he said.

Contact Sean Hemmersmeier at Follow Lord save her on Twitter.

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