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By Kim Bo-eun
Fintech startup Viva Republica, operator of financial services platform Toss, is growing fast. Toss has 13 million customers and continues to expand the range of its services. Yet its losses continue to grow, and its business model appears to have limitations in long-term growth.
Starting with mobile money transfers in 2015, Toss has now become a mobile finance services platform valued at over $1.2 billion, offering over 40 types of services. It grew rapidly as it offered money transfer services that streamlined the ID verification process.
The amount of monthly transfers has reached 4 trillion won ($3.4 billion), and the accumulated amount of transfers reaches 49 trillion won.
Viva Republica became Korea's first fintech unicorn in December, after receiving $80 million in investment from investors including Silicon Valley-based venture capital firms Kleiner Perkins and Ribbit Capital. It also received investment from U.S. global payment system company PayPal.
Toss users can check the balance and transaction history of the bank accounts they own, make savings and installments as well as get loans. They are also able to make investments through mutual funds and stocks. The accumulated investments amount to 700 billion won.
In addition, users are able to check the market rates of cars and data on auto insurance on Toss.
Yet Viva Republica's business model appears to be limited for further growth, as it is based on receiving fees for acting as a platform for products of other financial firms. Meanwhile, the company requires the fees customers would usually pay to transfer funds, to be paid by banks.
Accordingly, its operating loss has continued to grow. Its sales grew from 99 million won in 2015, to 3.44 billion won in 2016, 20.59 billion won in 2017 and 54.82 billion won in 2018.
Its operating loss grew at the same time, to 22.98 billion won in 2016, 39.14 billion won in 2017 and 44.47 billion won in 2018 from 2.55 billion won in 2015.
"Based on this model, costs grow as the number of our customers grows, but this is set to be alleviated when the open banking system is introduced later this year, as this will be reduced," a Viva Republica Toss spokesperson said, noting the company could post a surplus when this happens.
"We chose this business model and the associated costs it generates. While we only recently started making sales, the scale has been growing. It is too early to be assessing our performance," she said.
"We are a startup seeking to provide quick, easy and convenient services to users."
