BANGKOK, 30 June 2023: Utu closes USD33 million deal, acquires the SC Ventures-Incubated CardsPal to re-engineer Tax-Free shopping globally.The travel technology company says its latest USD33 million deal in combined transaction value will enhance the customer experience in tax-free shopping.
The deal comprises an acquisition and a funding round, which consists of both a portion of new funding from SC Ventures and the rollover of earlier funding from Singapore-based investors who supported the company through the pandemic.
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 mobile-first technology and incorporating its talent into the wider organisation. Pivotal to utu’s decision to acquire CardsPal is SC Ventures’ support to incubate the startup to become a full-fledged tech platform that utu can leverage to bolster its tax-free shopping offerings.
Utu co-founder and CEO Asad Jumabhoy 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 enabling governments to recycle VAT refunds within their borders compliantly.”
In 2023, the travel industry is expected to reach USD9.5 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 refund processing cost has stymied its potential benefits for travellers.
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 can also issue immediate store vouchers equivalent to up to 120% of the VAT or GST paid during overseas shopping. Airlines partner with utu to increase revenue from tourist shopping. Utu currently partners with 10 airlines. They include Thai Airways International, Air France-KLM, Emirates, Etihad, Qatar Airways and Singapore Airlines.
Jumabhoy clarified that utu plays no role in refunding VAT in Thailand. This will continue to be done by the Revenue Department, and tourists must obtain their VAT refunds when departing Thailand as normal.
“We are an additional product layer above the VAT refund process. We intend to drive greater spending and shopping in Thailand by recycling value leaving the country back into the local ecosystem,” Jumabhoy added.
