Converting foreign coins into digital currency

TravelersBox picture: Eyal Yitzhar

TravelersBox helps returning vacationers get value for their leftover foreign currency.

Three Israeli thirty-somethings - Tomer Zussman, Idan Deshe and Dror Blumenthal - founded TravelersBox at the end of 2012, a brilliant solution for converting those foreign coins that get left around the house after an overseas trip back into hard cash. They have developed an ATM-lookalike machine into which the foreign coins can be inserted and converted into digital currency. In this way, the small change left over from a trip can go into your PayPal account, be used as credits for an iTunes account, or used for purchases on eBay or international chains like GAP, Old Navy, and others. The machine has an interface in several languages, including Hebrew, and adapts the money conversion offer to the country. While Americans can convert the small change into credits for the Starbucks chain, Israelis can do the same thing for purchases at the Aroma chain.

Like many other big ideas, the idea originated with a personal need of one of the entrepreneurs. It happened in 2010. Blumenthal and Deshe were then working at the Ecaliptoos digital marketing and advertising company, which they jointly founded. At that time, Zussman returned to Israel after a few years in New York as COO of a digital company and started working as CEO of a strategy company. He had a pile of money in small denominations. The three of them, Blumenthal told "Globes", started thinking together about a business plan and how to make these piles into money that people could really use.

"We started to see whether it was possible to make bank transfers of small denominations, and put it into a bank account or a credit card. We met with a clearance company and with one of the major banks, and they all told us, 'There's no way. If a person deposits five dollars, the transfers will cost him five dollars. Stay away from it,'" Blumenthal says. "They all frightened us with the logistics of collecting money from such machines. We had a lot of problems with the business model, and it didn't come together."

They met regularly for two years, trying to find a way to put the idea into practice. "The last meeting on the subject was in May 2012, when someone doing clearance told us we were living in a dream world. When he left the room, we told ourselves, 'Either we wasted two years of our lives, or we try to sidestep the banking system. Then we got the idea of transferring the money to PayPal," Blumenthal remembers.

In addition to the idea of PayPal, they began floating more ideas along the same lines. "One of us bought a Beatles album through iTunes for $4. Then we started thinking how to take the small cash denominations in someone's pocket left over from a trip and create value for it," Blumenthal relates. "If you transfer $4-5 to your bank account, it doesn't make much difference, but if you buy a disk with it, that's something else. We realized that, online, small denominations have more value. That's when we realized that we had something."

After a successful meeting with former PayPal Israel regional manager Oded Zehavi, they started promoting their idea. "The first prototype was made out of wood. We put up $50,000-80,000 of our money. We bought computers and mechanisms, and met with angels funds to get an opinion." One of these people was Yuval Tal, one of the experts in online commerce and payments in Israel, who founded companies like BorderFree (formerly FiftyOne) and Payoneer. They gradually raised $3 million from Tal, Pitango Venture Capital, Zohar Gilon, Hagai Tal, Ehud Levy, Yanai Oron from Vertex Venture Capital, and iAngels.

TravelersBox's machine is currently installed in three places in Turkey (Istanbul, Izmir, and Ankara), Georgia (Tbilisi), Italy (Milan Malpensa and Milan Linate), and is on the way to being installed in the Philippines (Manila). The next target is Brazil, and Ben Gurion Airport is also in the company's sights. The company says that US regulation in this matter is tough, and the process there is therefore taking much more time.

Turkey is now the hottest market for the machine. 400,000 people have gone to the machine in less than two years, and 60,000-70,000 deposits have been recorded. Most of the depositors were English-speaking Americans, but there was also a great deal of interest from travelers from Germany, and even travelers from Saudi Arabia and the United Arab Emirates, who probably did not know that the company was Israeli.

TravelersBox's machines are two meters high, and weigh 115 kilograms without any money in them. Blumenthal says it takes three people to empty the machine. Questioned about the machines' not-so-new look, Blumenthal made it clear that this was deliberate: "When you make a machine that looks like a gadget, people wonder if it's safe to deposit money in it. The first machines were narrow and looked cool, but very few people touched them."

For TravelersBox,, whose machines accept both coins and bills, educating the market is no easy challenge. "It's not only a matter of being aware of our machines; there's also the fact that you deposit money in a machine and get nothing back in your hand, because everything's digital," Blumenthal explains. Internet and security go hand in hand, and the fact that people's money is involved requires the exercise of great care.

The users do not put their personal particulars, such as their PayPal account password, into the machine. All they have to disclose is their e-mail address. After they make a deposit, they get an e-mail message from the company with a link referring them to the relevant service in which they want to deposit the money, and they continue the identification process from there. This is also what makes it possible to obtain attractive offers for depositing the money. For example, a game company like Zynga can offer users the chance to deposit $10 with it, instead of in their PayPal accounts, and get $30 of virtual money in exchange, which they can use to play Zynga games.

The company says that the average deposit in its machines is $18, and that most of the money entering is in bills, not coins. The denominations are not necessarily small, but on the other hand, the machine does not allow an individual user to deposit more than $800 in a machine, in accordance with money laundering laws.

The big question is how much it costs the user, or in other words, what the company makes out of it. The company charges a 7-8% commission on a deposit, conversion, and transfer, which Blumenthal says is significantly cheaper than the 15-25% commission charged by the classic Bureaus de Change. "In the long term, we don't want to take anything from the user - he'll get a dollar for a dollar," Blumenthal declares. "If anything, let him get more as a result of the successful agreements, such as the one with Zynga. As more time passes, we see that it's doable."

According to the company, incorporated in Gibraltar with its development in Israel, there are currently no competitors in the market. One of the world's leading tax refund companies, Global Blue, met with TravelersBox. It realized the importance of the product, and wanted to acquire part of the company through a strategic investment, which has not yet gone through. "In my opinion, it will take them two years to develop a similar system of their own," Blumenthal predicts.

The big question is what will happen along the way. Not when competitors appear, but when cash disappears from the world, to be replaced by cellular and digital wallets. "I estimate that it will take another 15-20 years, so we've got a long time before then. But if cash disappears from the world tomorrow, then we've got no company," Blumenthal concludes.

Published by Globes [online], Israel business news - www.globes-online.com - on April 15, 2015

© Copyright of Globes Publisher Itonut (1983) Ltd. 2015

TravelersBox picture: Eyal Yitzhar
TravelersBox picture: Eyal Yitzhar
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