When Purpl’s founders launched their remittance startup in Lebanon last year, their goal was to solve an increasingly difficult – and costly – challenge for millions of Lebanese living abroad: send money to friends and family after the country collapsed. banking sector.
Founded by banker-turned-entrepreneur Karl Naim, Wissam Ghorra and Jean-Marie Khoueir in 2021, the trio is well on its way to disrupting the country’s remittance industry by focusing on financial inclusion, lowering fees and allowing beneficiaries to withdraw money from ATMs belonging to its banking partner Banque Libano-Française.
“I was based [in] Paris until October 2021,” says Naim.
“Every time I traveled to Lebanon, I had friends in Paris asking me to take some money with me to give to their family. Obviously the maximum you can take is €10,000 [$9,979]so people will give me thousands of euros and say, “Please, once you get to Beirut, distribute them to my uncle, my parents and my cousins”.
“Finally I was [asking myself]why is it so difficult to send money to Lebanon?
Remittances to Lebanon — in pictures
People no longer trust banks “because they are afraid that [if] you send it to their bank account, they can’t cash it,” says Naim.
By sending money home with a trusted friend, people were also trying to avoid the high fees charged by a few money transfer companies, which enjoy near-monopoly status thanks to an extensive network of branches, he adds.
“That’s how we came up with the idea of building an aggregator, where we are the piece of technology that integrates with new players in digital money transfers to open the corridor to Lebanon, which will ultimately reduce the fees for the sender, and at the same time bring an application that allows the recipient to collect in a much more transparent and efficient way.
Lebanon is facing its worst economic crisis since the country’s independence in 1943. Its economy shrank by around 58% between 2019 and 2021, with gross domestic product falling to $21.8 billion in 2021 compared to around $52 billion in 2019, according to the World Bank. This is the strongest contraction on a list of 193 countries.
Lebanon’s economy collapsed after defaulting on around $31 billion in Eurobonds in March 2020, with its currency collapsing more than 90% against the dollar on the black market and inflation hitting the three digits.
Banks imposed informal capital controls, preventing depositors from accessing their savings, which created enormous difficulties for people to withdraw money from their accounts.
Last month, a local man won the admiration of many in Lebanon when he robbed a bank branch in Beirut, demanding access to his stranded savings, so he could pay for his father’s medical treatment.
Watch: Bank of Beirut hostage situation ends
The company’s mission is to “democratize remittances, cross-border transfer flows and enable financial inclusion in a country where 80% of the population is unbanked. It is very important to promote financial inclusion,” says Mr. Naim.
“So we built technology that allows us to use bank ATMs, which are only supposed to be used by banked people or people who have a card, by unbanked people. With our prepaid app, you can even withdraw money from an ATM without having an account or a card.
Remittances are important for the Lebanese economy and represent 54% of the country’s GDP, which is the highest among Mena countries, according to the World Bank.
Lebanon received $6.6 billion in remittances in 2021 and is the third largest recipient of remittances in the Mena region after Egypt and Morocco, according to World Bank data.
“Today, our users are people residing in Lebanon. For now, we are focusing on inbound remittances. Once we get a digital wallet license, which we expect very soon, we can also focus on outbound remittances allowing foreign workers in Lebanon to send money home.
The digital wallet license will also allow “users to store value on their app and spend digitally at merchants instead of just cashing in that money all the time,” he says.
The company, which is part of the Hub71 ecosystem in Abu Dhabi, plans to expand to other countries including Iraq, Syria, Jordan and Egypt as part of its future growth plans .
It has already signed an agreement with a partner in Iraq to replicate the same model of cardless ATM withdrawals for remittances, Naim said.
Purpl has so far raised $2 million in funding from international investors, venture capital funds and family offices and plans to do another funding round in late 2023 to expand its operations in the region.
Being part of the Hub71 ecosystem in Abu Dhabi will help the company secure more funding and partner with remittance companies, Naim adds.
“Today, for example, we are in talks with a few money transfer companies in the UAE, thanks to the help of Hub71.”
Q&A with Karl Naim, co-founder and managing director of Purpl
What successful start-up would you have liked to start?
For me, startup success is a measure of disruption, empowerment, and community building. In 2014, I launched my first FoodTech start-up, called ChefXchange, a marketplace for private chefs. I was then inspired by Deliveroo. A second start-up I would have liked to start would be Revolut, which reinvented banking in Europe.
What is your vision for the business?
We launched Purpl to offer a new alternative to a banking sector that has collapsed in Lebanon and lost the trust of the Lebanese people. Our vision is to connect, empower and enable financial access for everyone in Lebanon and eventually the Mena region.
What new skills did you acquire during the process of launching your start-up?
Life in a start-up means continuous learning. When I launched my first start-up in 2014, I learned all about resilience and perseverance, but more importantly, I learned the hard way to never fall in love with your original idea and accept the change. Being agile and accepting to pivot according to what your market and your customers are telling you is the key to success.
If you could start all over again, what would you do differently?
I wouldn’t change anything. Everything I’ve done has made me who I am today and it has come with its share of failures, successes and, above all, learning. I cherish and am grateful for all that I have been through and the people who have shared these adventures with me.
Who is your role model?
Every entrepreneur I meet and every person I have the chance to work with are role models in one way or another. If I had to choose people who inspired me to start my entrepreneurial journey, it would be the founders in whom I invested as an angel investor.
Where do you see yourself after 10 years?
Hopefully in a position to give back, mentor and invest in ambitious and disruptive founders. I don’t believe, in 10 years, that I will still have the necessary energy to start new adventures myself.
How would you describe the current state of the Lebanese economy?
A difficult condition to grasp. So much value destruction in such a short time. In figures, a currency that has lost 94% of its value, 75% of the population living below the poverty line, 80% of the unbanked population, three-digit monthly inflation and a drop in GDP of more than 50% in three years. That being said, adversity breeds opportunity and it is our duty not to sit idly by and try to make a difference. This is the mission we have set ourselves at Purpl.
Updated: September 19, 2022, 5:30 a.m.