Pomelo will offer a free, cashless product enabling a way for users to extend their credit abroad while avoiding expensive remittance fees – an industry first
Pomelo announced $5 million in seed funding and will be the first company to combine credit and international money transfer in one unified product. Its launch will aim to help users build credit while sending money to family overseas without any fees. Pomelo is backed by a number of high-profile investors, including solo capitalist Josh Buckley, Xfund, Afore Capital and Abel Tesfaye, known professionally as The Weeknd.
“Pomelo is on a mission to make the American Dream more attainable for U.S. immigrants, while providing financial stability for their families back at home,” said Eric Velasquez Frenkiel, Pomelo founder and CEO. “The annual outflow of remittance from the U.S. to countries like the Philippines and India is staggering, yet there remain few safe and cost-effective options to send funds to loved ones. Pomelo plans to change that.”
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Frenkiel brings entrepreneurship and engineering experience from his previous work at other startups. Prior to founding Pomelo, he co-founded Singlestore, formerly MemSQL, now valued at over $1 billion, which he led as CEO from 2011 to 2017. A graduate of Stanford University’s School of Engineering and former engineer at Facebook, Frenkiel was previously named on the Forbes 30 under 30 list of technology innovators. He now seeks a solution to the financial challenges facing immigrants and descendants of immigrants in the U.S.
Recognizing a deficiency in the system, Pomelo is reinventing the money transfer experience so customers can build credit in the U.S. while sending money anywhere in the world without fees – a first for the market. While combining money transfer with credit, Pomelo makes sending money around the world easy, cashless and free.
“When it comes down to it, banking is about trust,” said Eric Sprink, Coastal Community Bank president and CEO. “Pomelo is weaving together expertise in financial technology with a true focus on the people at the heart of its business. Pomelo gives U.S. immigrants and their families an opportunity to build a financial future, which is why we were eager to be involved.”
“As the son of Ethiopian immigrants, I am encouraged by the impact Pomelo is making,” said Tesfaye. “They’re empowering members of the immigrant community and their families back home to gain true financial security.”
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Product
The Pomelo Card is powered by the Mastercard network, issued by Coastal Community Bank, and will feature a mobile application available on an Android or iOS smartphone. U.S. citizens and permanent residents 18 years and older will be able to apply for a Pomelo Card. Then, their families anywhere around the world can join a family plan as authorized users. Pomelo sends these users personalized Pomelo Cards as part of the family plan, enabling the convenience of online shopping and swipe at checkout instead of handling cash.
Pomelo will ensure customers get the best real-time exchange rate for each purchase made with the Pomelo Card, eliminating the need for tedious price hunting. Unlike traditional money transfer services that can charge up to 7% in transfer fees, Pomelo will be paid by the merchant via interchange and daily foreign exchange rates, eliminating fees for its customers.
For those with low or no credit, the company will offer a Pomelo Secured Card, allowing users to deposit funds they would normally remit and be issued a secured credit line that will help them begin to build credit.
“Establishing credit is critical to financial wellness in the U.S., but it is often challenging for newly established citizens,” says Frenkiel. “Even when financial activity is conducted responsibly, individuals remain credit invisible unless the activity is reported to a U.S. credit bureau. This can severely limit opportunity to build wealth and economic security for a group of people already effectively supporting themselves and their families abroad. We plan to recognize and reward them.”
Customers can sign up and reserve their card ahead of Pomelo’s official product launch and account openings later this year. Pomelo’s card holders will be able to send money from the U.S. to the Philippines, with India and Mexico to follow.
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