utu, a travel tech company that helps flyers get more out of their tax-free shopping, announced today it has raised a $33 million Series B from investors, including SC Ventures. utu also announced it has acquired CardsPal, a Singapore-based fintech that offers deals and promotions nearby to users.
During the pandemic-induced travel hiatus, utu worked to establish partnerships with travel, hotel chain and retail brands. The company notes that even though travel has rebounded, only about 1% of venture funding over the past 15 years has gone to travel, primarily short-term rental hospitality. utu’s goal is to create innovation in the tax-free shopping sector, which allows tourists to reclaim VAT on their purchases.
utu offers customers a Tax Free Card, which has two main offerings. First, tax-free shoppers can opt for frequent flyer miles or hotel points instead of VAT refunds. Or they can select an immediate store voucher that is equal to 120% of the VAT or GST they paid while shopping overseas. utu says that retailers, airlines, hotels and other organizations that partner with them can not only increase customer loyalty, but also grow their revenue from tourist shopping by up to 40%.
utu’s partners include 10 global airlines, like Air France-KLM, Emirates, Qatar Airways and Singapore Airlines, as well as Accor, one of Europe’s large hospitality brands. To facilitate payments, utu works with fintech partners with Nium and also uses its own proprietary tech. It plans to announce more partnerships later this year.
Customer pay VAT upfront, and can reclaim it through operators like Planet or Global Blue. But they don’t get back the full amount of VAT, which is where utu comes in.
utu co-founder Asad Jumabhoy spent eight years working in the duty-free business, before another 25 in tax-free shopping. While operating fashion and perfume stores at Changi Airport in Singapore in the late 1980s and early 1990s, Jumabhoy started a tax refund business that evolved into Global Blue. After selling Global Blue in 2012, Jumabhoy decided to take his understanding of retail margins, value-added taxes and customer shopping habits to develop utu.
“The way we think about our work is that we are unbuilding new product layers on top of the existing tax-free shopping infrastructure that unlocks value for all stakeholders connected to tourist shopping — brands, tourists and our VAT refund partners,” he said.
Jumabhoy said even though tax-free shopping is a common practice, there are still two problems. The first is that the process of getting VAT refunds is difficult, and secondly, tourists only get part of their VAT spending back. utu focuses on the second problem and wants to give tourists more value when they shop. For example, they can receive over 90% of their refund value in airline frequent flyer miles.
The CardsPal acquisition will give utu a digital marketplace, a promotions engine and self-service merchant registration portal. It will also expedite utu’s rollout in markets like France and Italy, plus another 50 countries that offer VAT and GST refunds.
utu’s funding will be used to grow its product distribution across all countries that offer a VAT refund service, invest in technology and new products and strengthen its management to execute its growth plan.
