UTU, a travel technology firm that is transforming the customer experience in tax-free shopping, has announced the close of a massive $33 million deal in combined transaction value.
The deal involves an acquisition and a funding round, which consists of both a portion of new funding from SC Ventures, as well as earlier funding from Singapore-based investors who supported the company through the pandemic. UTU used the Covid hiatus to establish key partnerships with leading global airlines, hotel chains, and retail brands and plans to leverage this deal to scale its products globally.
As part of the deal, UTU announced its acquisition of CardsPal, a Singapore-based platform focused on hyper-localised rewards and 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. UTU’s decision to acquire CardsPal was pivotal, and SC Ventures’ support incubating the startup to become a full-fledged tech platform that UTU can leverage to bolster its tax-free shopping offerings was a critical factor.
Asad Jumabhoy, co-founder and CEO of UTU, commented on the deal saying, “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.”
The travel industry is expected to reach US$9.5 trillion or 95% of 2019’s pre-pandemic peak by 2023, 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. Additionally, UTU is also able to issue an immediate store voucher equivalent of up to 120% of the VAT or GST paid during overseas shopping.
This news of UTU’s massive deal and acquisition comes as no surprise to those who have been following the company’s progress. UTU has been making waves in the travel industry by transforming cross-border tax-free shopping experiences. Their technology-based solutions are set to revolutionize the industry by unlocking previously unattainable value for all stakeholders, while also enabling governments to compliantly recycle VAT refunds within their borders.
UTU’s acquisition of CardsPal is a significant milestone for the company as it furthers its goal of providing more value to travellers and strengthening its tax-free shopping offerings. With the expertise and talent of CardsPal’s team onboard, UTU is poised to scale its products globally and make more significant strides in the travel industry in the coming years.
