At first blush, YouTrip’s business strategy looks sound. Singapore is Southeast Asia’s key financial hub, and can serve as a jumping-off point for the rest of the region. Being based there allows YouTrip to access the city-state’s strong fintech ecosystem, in particular funding channels. At the same time, given its focus on travel as a multicurrency wallet, there are a lot of nearby destinations where YouTrip’s customers to use its products.
Indeed, for all the efforts to enhance financial connectivity among the Asean countries, there is no regional currency like the euro in Europe. Each country has its own central bank, and the Singapore-Brunei arrangement which allows their respective currencies to be used in both countries is the exception rather than the rule. This reality makes a multicurrency wallet targeting Southeast Asia a good idea.
At the same time, YouTrip seems to have learned the right lessons from the woes of its peers who focused on growing fast at all costs. Even as it seeks to raise a Series C round, Chu talks about profitability more than quick expansion.
When it comes to YouTrip’s business model, we do have some concerns though. Revolut has been successful with a multicurrency wallet, but it has a hard time making a profit from that alone. What makes Revolut attractive to investors now is the possibility that it could offer full-fledged banking services across multiple markets.
So how does YouTrip make money? Instead of charging conversion fees, YouTrip takes a cut from the merchant processing fees when users pay through its app or prepaid cards at brick-and-mortar stores and online. The company has issuing licenses with Mastercard and Visa.
Caecilia Chu told Nikkei Asia that in Singapore travelers often pay using their foreign-issued credit cards but incur currency conversion fees that can usually exceed 3.5%. But this problem can often be mitigated by paying in local currency. And there are numerous credit cards available that have no foreign transaction fees. With that in mind, YouTrip may need to broaden its product offerings in the next few years as it prepares for an IPO.