At just over six years old, Seoul-based KakaoTalk has more than 170 million registered users on its flagship chat app, and enjoys nearly 93% market penetration in South Korea. But when the $2.9 billion company made its first-ever overseas investment this spring, it was a surprising one: a 40% stake in Satoshi Citadel Industries (SCI), a Manila-based Bitcoin startup with no connection to messaging.
The decision is puzzling, unless you know something about how money moves between the Philippines and South Korea. While there are only 60,000 migrant Filipinos working in South Korea—far fewer than in neighboring Japan—they collectively send home more than $231 million in personal funds each year. That works out to about $300 per person, 50% higher than the global average.
A few large players tend to facilitate these payments, and the lack of competition in certain markets (including the Philippines-South Korea corridor) can make costs prohibitive. Enter Kakaotalk, one of a growing crop of companies aiming for a cheaper alternative.
An expensive habit
The typical international money transfer requires loads of communication between the persons on either end of it. They have to calculate exchange rates, synchronize amounts, collect personal details, agree on a transfer method, and then confirm