Using a peer-to-peer model to get the best rate for consumers, the company claims to have already saved users more than £0.5 million since its launch in January 2011.

The latest round of funding has been led by IA Ventures, Index Ventures, Max Levchin (co-founder of PayPal) and a group of strategic angels, including the people behind hot financial start-ups such as Simple.com, Wonga, and Betfair.

TransferWise essentially matches transfers in one currency to those in another, and sends the money from a bank account in the host country to the target account. The company uses the mid-market interbank rate, and charges a low flat fee on small transfers (just £1 on transfers up to £300), to undercut the banks and traditional currency exchange shops.

Taavet Hinrikus, a former Skype alumni and co-founder of TransferWise, says: "We are using the power of technology and the crowd to disrupt the industry and cut out the middlemen, and many of the middling fees, from a service that is dominated by banks."

He says users currently taking advantage of the service are workers employed overseas, international students, pensioners now living abroad and a growing number of small-to medium-sized businesses.

Kima Ventures, Seedcamp and The Accelerator Group also participated in the funding.

Roger Ehrenberg, managing partner at IA Ventures who will join TransferWise's board of directors, says: "TransferWise is moving the money transfer market to the 21st century at a time when many banks and traditional financial services firms are forgetting innovation and customer experience."