TransferWise, which launched in 2011, said Valar Ventures was leading a $6 million funding round, marking the US fund's first investment in Europe.
TransferWise co-founder Taavet Hinrikus said having Thiel on board would enable the company to accelerate its expansion plans.
"This year we're aiming to add a dozen new currencies and launch the site in new markets including Germany, Spain, France, and Italy," he said on Tuesday.
Hinrikus and his fellow founder Kristo Kaarmann realised they could exchange pounds and euros between themselves at the mid-market exchange rate, saving on the fees imposed by banks.
The business has now transferred more than 125 million pounds ($192 million) worth of customers' money, the company said.