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Utu, a travel tech company specializing in tax-free shopping, recently announced the successful completion of its $35 million Series B funding round, led by SC Ventures. A portion of the funds raised was allocated for the acquisition of CardsPal, a Singapore-based fintech company renowned for its provision of nearby deals and promotions to users.
During the pandemic-induced travel hiatus, Utu diligently forged partnerships with prominent travel, hotel chain, and retail brands. Despite the resurgence in travel, Utu highlights that a meager 1% of venture funding in the past 15 years has been dedicated to the travel sector, with a focus primarily on short-term rental hospitality. Utu aims to bring innovation to the tax-free shopping industry, empowering tourists to reclaim VAT on their purchases.
Utu’s flagship offering is the Tax Free Card, which provides customers with two main options. Tax-free shoppers can choose to receive frequent flyer miles or hotel points instead of VAT refunds. Alternatively, they can opt for an immediate store voucher equivalent to 120% of the VAT or GST they paid while shopping overseas. Utu emphasizes that by partnering with them, retailers, airlines, hotels, and other organizations can enhance customer loyalty and increase their revenue from tourist shopping by up to 40%.
Utu boasts a network of esteemed partners, including 10 global airlines such as Air France-KLM, Emirates, Qatar Airways, and Singapore Airlines, as well as Accor, a prominent European hospitality brand. To facilitate seamless payments, Utu collaborates with fintech partners like Nium, while also leveraging its proprietary technology. The company plans to unveil additional partnerships later this year.
Traditionally, customers pay VAT upfront and subsequently reclaim it through operators like Planet or Global Blue. However, they do not receive the full amount of VAT back, which is where Utu steps in to bridge the gap.
Co-founder Asad Jumabhoy brings valuable expertise to Utu, with eight years in the duty-free business and an additional 25 years in tax-free shopping. Jumabhoy’s background includes managing fashion and perfume stores at Singapore’s Changi Airport during the late 1980s and early 1990s, where he established a tax refund business that eventually evolved into Global Blue. Following the sale of Global Blue in 2012, Jumabhoy embarked on the development of Utu, leveraging his comprehensive understanding of retail margins, value-added taxes, and customer shopping habits.
Jumabhoy explains that despite tax-free shopping being a common practice, two major issues persist. Firstly, the process of obtaining VAT refunds remains arduous, and secondly, tourists only receive a portion of their VAT spending back. Utu aims to address the latter problem by providing tourists with enhanced value during their shopping experience. For instance, they can now receive over 90% of their refund value in airline frequent flyer miles.
The acquisition of CardsPal equips Utu with a digital marketplace, a promotions engine, and a self-service merchant registration portal. Furthermore, it expedites Utu’s expansion into markets such as France, Italy, and an additional 50 countries that offer VAT and GST refunds.
Utu intends to utilize its funding to expand its product distribution across all countries offering VAT refund services, invest in technology and new product development, and strengthen its management team to effectively execute its growth strategy.