utu, a travel technology company transforming the customer experience in tax-free shopping, has closed a deal of US$33 million in combined transaction value. The deal comprises of an acquisition and a funding round, which consists of both a portion of new funding from SC Ventures, and the roll-over of earlier funding from Singapore-based investors who supported the company through the pandemic. utu, which used the Covid hiatus to establish key partnerships with leading global airlines, hotel chains, and retail brands, will leverage the deal to scale its products globally, including Thailand.
As part of the deal, utu is announcing the acquisition of CardsPal, a Singapore-based platform focused on hyper-localised rewards promotions, for an undisclosed sum. The acquisition will allow utu to accelerate growth by leveraging CardsPal’s unique mobile-first technology and incorporating its talent into the wider organisation. Pivotal to utu’s decision to acquire CardsPal is SC Ventures’ support incubating the startup to become a full-fledged tech platform that utu can leverage to bolster its tax-free shopping offerings.
Asad Jumabhoy, co-founder and CEO of utu, commented: “The cross-border travel market is ripe for a technology-driven transformation, with tax-free shopping presenting vast untapped potential. By enhancing the value of VAT and GST refunds for travellers, we’ve reimagined the cross-border retail experience and devised a technology-based business model unlocking previously inaccessible value. This strategy benefits all stakeholders—brands, hotels, airlines, and VAT refund operators—while also enabling governments to compliantly recycle VAT refunds within their borders.”
In 2023, the travel industry is expected to reach US$9.5 trillion or 95% of 2019’s pre-pandemic peak, according to the World Travel and Tourism Council. Despite the remarkable turnaround, McKinsey reports that only about 1% of venture funding in the past 15 years has gone to travel, mostly in short-term rental hospitality. The tax-free shopping sector, where tourists can reclaim the value-added tax (VAT) on their purchases, is especially subject to this innovation lag. Tax-free shopping was designed to stimulate tourist spending, but the cost of refund processing has stymied its potential benefits for travellers.
utu, which is co-founded by travel retail and VAT refund veteran Asad Jumabhoy, collaborates with refund and travel industry partners to enhance refund value through innovative B2B and B2C solutions. By linking payments, rewards and shopping, utu introduces new value for tourist shoppers, retailers, VAT refund operators and the tax-free shopping value chain. Travellers using utu’s Tax Free Card, can gain up to 40% more value by opting for frequent flyer miles or hotel points over cash refunds. utu is also able to issue immediate store voucher equivalent of up to 120% of the VAT or GST paid during overseas shopping. For retailers, airlines and others, partnering with utu could potentially increase their revenue from tourist shopping by up to 40%. utu currently partners with 10 leading global airlines including Thai Airways International, Air France-KLM, Emirates, Etihad, Qatar Airways and Singapore Airlines. It also partners with Accor, Europe’s largest hospitality brand.
Jumabhoy continued, “Our technology, especially the store voucher, will see value retained in the local Thai economy. We are excited to bring these innovations in partnership with one of the country’s largest retail groups. It’ll be the first in the region launch and you will hear more about our plans soon.”
He clarified that utu plays no role in the refunding of VAT in Thailand. This will continue to be done by the Revenue Department, and tourists will need to obtain their VAT refunds when departing Thailand as per normal.
“We are positioned as an additional product layer above the existing VAT refund process. Our intention is to drive greater spending and shopping in Thailand by recycling value that was originally leaving the country back into the local ecosystem. We are honored to be part of Thailand’s ongoing tourism renaissance,” Jumabhoy added.
Incubated by SC Ventures, CardsPal’s technology and mobile-first technology talent will equip utu with a digital marketplace, a unique promotions engine, and a self-service merchant registration portal. It will also help expedite utu’s rollout in major tax-free shopping markets like Thailand, Italy, the UAE and some 50 countries offering VAT and GST refunds. Additionally, utu is planning to integrate CardsPal’s hyper-localised retail experience into an improved pay-with-points offer for its users.
Gautam Jain, Member, at SC Ventures said: “CardsPal is a great example of why we at SC Ventures believe in the power of innovation and support our employees to have transformational impact. Through SC Ventures’ Intrapreneurship Program, CardsPal grew to become a business with award nominated UX. We look forward to utu’s continued success scaling its products across the globe using CardsPal’s technology.”