Airwallex, the Australian fintech firm renowned for developing robust global payments infrastructure over the past decade, is now venturing into in-person payments. This strategic move intensifies its competition with Stripe, while also positioning Airwallex against established players like Square and Adyen in a crucial segment of financial technology.
The new innovation, a point-of-sale (POS) product, distinguishes itself by allowing businesses to accept in-person payments across multiple countries through a single platform, eliminating the need to partner with local vendors in each market. CEO and co-founder Jack Zhang noted that typically, businesses entering new markets must contend with onboard procedures involving local acquirers, compliance issues, and numerous vendor relationships. Airwallex’s solution aims to streamline this process significantly.
Back in 2019, Stripe reportedly offered to acquire Airwallex for $1.2 billion, despite the company only generating $2 million in revenue at the time. Zhang almost accepted the deal but ultimately chose to continue building Airwallex after reflecting on his motivation for founding the company. Established in 2015 to address the challenges of international money transfers, Airwallex took an unconventional route by developing its own payment rails rather than relying on existing systems.
Currently, Airwallex is valued at approximately $8 billion and boasts an annual revenue exceeding $1.3 billion, growing by around 85% annually. The fintech serves over 46,000 businesses in the United States and handles about $100 billion in annual transaction volume. Its expansive operations are supported by nearly 90 regulatory licenses across various regions, direct connections to payment networks in over 120 countries, and the capability to settle transactions in over 90 currencies. This extensive infrastructure is a significant advantage over competitors like Stripe and Square, particularly due to Airwallex’s local banking licenses, which allow it to maintain and manage funds within specific markets.
Zhang pointed out that while Stripe and Square can process payments in countries like Japan, they cannot hold funds before paying out to the merchant’s bank account. In contrast, Airwallex’s hard-won license in Japan allows for such flexibility.
The new POS product extends Airwallex’s capabilities to physical retail environments, uniting in-store and online transactions with cohesive reporting and integration into back-office systems. This feature lets businesses across borders operate seamlessly without the complications of multiple vendor relationships.
In the U.S., Airwallex is committing $1 billion in investments through to 2029, a significant increase from the $150 million invested in the previous five years. The challenge ahead lies in convincing businesses already aligned with Stripe or Square that Airwallex’s robust global infrastructure is a compelling alternative. Zhang expressed a desire for increased competition in the market, deeming it surprising that no significant contender has emerged to challenge Stripe over the past 15 years, especially given the vast opportunities present in the sector.
Fanpage: TechArena.au
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