Western Union rival Zepps to lay off 26% of workforce as fintech cuts continue

Money transfer group Zeppz is laying off 420 employees, the company exclusively told CNBC, as the fintech sector grapples with a difficult macroeconomic environment.

The London-headquartered company began informing employees about the job cuts on Monday, before issuing larger communications to individual employees told by their managers. By Tuesday, the entire company was informed about the move.

Zepz, which owns the WorldRemit and Sendwave brands, totals about 1,600, meaning the cuts translate to roughly 26% of its workforce.

The cuts will primarily affect Zepz’s customer care and engineering teams as Zepz seeks to move those functions from multiple countries to more centralized hubs, the company said.

The firm is headquartered in London but has regional offices in the United States, Canada, Australia, Hong Kong, Poland, Kenya and other countries.

Zepz said it’s doing what it calls “workforce optimization” after combining Sendwave with WorldRemit under one parent company to account for the duplicated roles.

Collectively, both money transfer services are used by over 11 million users in 150 countries. Sendwave was acquired by Zepz in 2020 for an undisclosed sum.

This is the second time in less than a year that Zapz has laid off employees. In June 2022, Zepz implements job cuts affecting approximately 5% of its workforce sky News,

Zepz CEO, Mark Lenhard, said the decision is “an important and necessary step in transitioning from two large, fragmented teams to one dynamic organization under Zepz and laying the ambitious foundation for our long-term strategic direction as a portfolio business.” “

He said the company took the decision to reduce its head count due to the need to streamline its structure rather than due to macroeconomic pressures.

“Over the past year we have taken a serious look at how to optimize the organization to continue scaling in a mature fashion that sets the business up for long-term success,” he added.

“The remittance industry has maintained strong growth despite global economic conditions, and we have seen this audience take great measures to ensure they support their loved ones as costs rise around the world.”

Employees will be offered support in the form of mentorship, coaching, career and CV development, job applications and interview skills.

Despite the job reduction measure, Zapz said it is still recruiting for 200 roles.

The company enables users to send money overseas from a smartphone or computer, with people at the other end able to receive it in their bank accounts, by cash, in mobile wallets or as mobile airtime top-ups.

The service is a challenger to established money transfer services such as Western Union, which boast cheaper fees and the ability to transfer funds faster. is a close competitor behaviourWhich claims to offer cheaper international money transfers than banks.

Fintechs like Zepz face a variety of challenges, including more cost-conscious consumers and increased regulatory scrutiny. This has affected the value of various companies in the sector – both in the public and private markets. Funding has dried up and many fintechs have cut valuations.

Even traditional banks have struggled to gain traction in the market Goldman Sachs recently Is scaling back its fintech ambitions,

Zepz last raised cash in August 2021 at a $5 billion valuation, when it announced $292 million in fresh funding from investors led by hedge fund Farallon Capital. The startup is backed by leading venture capital firms including Leapfrog, TCV and Accel.

“After suffering profitability last year, the Zepz team is focused on continuing to drive efficient growth and build a large, sustainable business,” Accel partner Harry Nellis told CNBC.

“Following the acquisition of SendWave a few years ago, the next step in the integration of the two companies is to remove duplication of roles across the brand’s locations.”

“While the team’s decision to adapt the workforce was difficult, it was critical to the long-term growth of the business and we are confident that Zepz will continue to disrupt the industry,” Nellis said.

Zepz has long been a darling of the UK fintech world. It was founded in 2010 by British-Somali entrepreneur Ismail Ahmed, who started the company after fleeing civil war-torn Somalia to the UK.

Ahmed’s idea to create Zepz, then WorldRemit, stemmed from his own experience moving money in emerging markets; He would transfer the money to his family, who then lived in a refugee camp in Ethiopia, but transfers were costly and took months to complete.

Ahmed stepped down as CEO of Zepz in 2018, although he remains on the board as non-executive chairman. His successor at the time was Braun Corcoran, an Irish businessman who formerly headed the British betting company Paddy Power Betfair.

In 2022, Corcoran was replaced by Mark Lenhard, a former executive at bill payment firm Bill.com, whose appointment reportedly came as the company raised prospects for an initial public offering.

Lenhard added that Zepz “never announced a timeframe for the IPO and do not plan to announce an exit plan at this time.” The company will achieve operating profitability in the first half of 2022, he said, adding it is “on a sustainable track to increase profit margins.”