Tencent-backed Airwallex aims to disrupt global finance

The payments firm’s founder explains his route to profitability and how he plans to undercut other parts of banking such as trade finance.

Chinese-Australian Jack Zhang sees the company he founded in 2015 handling a growing slice of Asia’s digital payments explosion. Profitability is within his grasp but he doesn’t want it just yet, because he's thinking big – very big.

As small businesses across Asia migrate online they are looking for ways to send bite-sized chunks of money overseas as cheaply as possible. Fintech firms are stepping up.

“From e-commerce firms to travel sites, they all need to do payments,” said Zhang, a former FX trader and investment banker, in a telephone interview with FinanceAsia.

While there are already a plethora of fintech startups and also bank initiatives in this space, such as DBS’s Digibank and BTPN’s Genius, Zhang’s Airwallex has an interesting edge: it has Tencent as an early-stage investor.

What likely appealed to the Chinese internet conglomerate's founder Pony Ma when Tencent got involved last year is that Zhang thinks big.

Melbourne-based Airwallex is knitting together a global network of banks to create an end-to-end payments platform – dramatically undercutting Swift, the vast messaging network for money transfer instructions.

Zhang, who previously worked at ANZ and National Australia Bank and at UK insurer Aviva, claims Airwallex’s fixed transaction fee for pay-out is less than 30% of what Swift charges.

“So we can attract users quite quickly,” he said.

Other fintech firms such as Stripe or Braintree focus on how clients collect money; while brokers and commercial banks handle currency conversions; and still other financial institutions move money across borders such as China’s New York-based Payoneer or UK-headquartered Earthport.

“But there are very few that can connect the entire ecosystem,” Zhang said.


As yet, Airwallex is unprofitable. However, Zhang appears unruffled and much more focused on growth. 

So far Airwallex has relationships with around 50 banks to enable them to make cross-border payments in real time, unlike Swift which can incur delays.

Swift is a correspondent banking model – sending money via the global banks such as Citigroup, JP Morgan or Bank of China. Each of those banks will charge a fee and that cost varies between $5 to $10 with possibly hard-to-identify intermediary banks in between.

Airwallex’s banking partners are mostly in the Asia-Pacific region but it is in the process of signing up partners in the Middle East, South America and Africa. Right now, it is still using global banks to send payments to those emerging markets.

“Hopefully by the end of the year we will have become a truly global network,” Zhang said.

While the vast majority of payments startups are loss-making, many investors are focused on the velocity of their growth in revenues and their potential to become dominant players in their sub-segments.


Zhang is very clear about his business model.

“It’s a volume game – we offer the best price of every single product we offer to the market and charge a very transparent fee,” Zhang said.

The acquisition of new business is relatively quick as the firm provides clients with a cloud-based suite of web applications, or APIs, to plug into its ecosystem.

As the customers roll in, Airwallex plans to offer them other financial products, such as invoice financing, trade finance, letters of credit and offer working capital loans to SMEs.

“As our volume grows we are looking at becoming profitable quite soon if we don’t look to do any major projects – but as a fintech company ultimately we’re going to keep investing, so profitability short term is not a goal – it’s more about how we are servicing our customers,” said Zhang.

Drawing upon the data Airwallex is gathering and its connections to the Enterprise Resource Planning systems of banks, Zhang sees an opportunity to automate large tracts of finance. 

“There are a lot of opportunities to become profitable,” the 30-something year-old said. 

Founder Zhang is posied to scale up


Investors seem to understand that the fintech firm needs time to build its banking network and grow its staff, which currently numbers about 110 people.

“They have spent years building their infrastructure and testing it, this is not something that will be profitable overnight,” Michelle Suteja, a director at Central Capital Ventura told FinanceAsia, which has invested in the company. 

Airwallex’s earliest investors included Tencent, Matercard and Sequoia Capital China.

Airwallex said on Tuesday that it had raised an additional $80 million from Chinese private equity firm Hillhouse Capital and Horizons Ventures, which manages the private wealth of Hong Kong billionaire Li Ka-shing.

Airwallex also attracted Sequoia Capital China and corporate venture capital firm Central Capital Ventura, which is backed by Indonesia's Bank Central Asia. Another investor in this series B round was Square Peg Capital, which is run by Australian serial entrepreneur Paul Bassat.  

Roughly a third of the capital raised in its series B round will be deployed in research and development, mostly in its Melbourne and Shanghai offices.

“The winners change very quickly; the life-span of companies is getting shorter,” said Suteja, who is very bullish on the likelihood of Airwallex disrupting the payments industry. 

In Shanghai, Airwallex is looking to hire around 50 to 100 people and it plans to double the size of its Melbourne-based team of engineers.

The rest of the fresh funds raised will be used to bolster the ranks of its staff in its Hong Kong, Singapore, London and San Francisco offices. It will grow its Hong Kong office from around 10 people to 50 people. Airwallex is also applying for a virtual banking licence in Hong Kong. 

“This is a chance for us to step up and build our capabilities,” Zhang said.


Airwallex is one of six Australian startups profiled in the Fall 2018 issue of FinanceAsia's magazine. We selected young companies that already have an established customer base and are generating revenue. Each has raised capital in the past 12 months – ranging between $15 million and $80 million – and they have a number of large-name venture capital firms behind them.


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