Airwallex brings Chinese investment to Australian fintech

It's not only Australian mining the Chinese are interested in.

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Melbourne-based startup Airwallex has scored US$13 million in Series A funding, with most investment coming from two Chinese companies, Tencent and Sequoia Capital. 

The deal has attracted significant media interest because it marks the first time an Australian company has received money from Tencent Holdings, China’s biggest web company and fourth largest in the world. 

Airwallex is a fintech that provides foreign exchange digitally at low rates. Its platform “calculates the most cost effective route for your money” and tries to offer a stable mid-market exchange rate.

Whereas most exchange platforms profit through spreads, Airwallex profits instead through a flat transaction fee. Its technology can process thousands of transactions per second.

“We aim to make international payments as cheap and simple as domestic payments,” said CEO and founder Jack Zhang. 

The company is no stranger to Chinese investment. Last year, it landed $3 million from Alibaba’s venture capital fund as well as Gravity VC and Huashan Capital One, both based on China’s mainland. 

The company has licenses to operate and offices in both China and Hong Kong. Chinese licensing gives it an edge over competitors such as Western Union, which have failed to secure licenses to operate on the mainland.

With investment from both Alibaba and Tencent, Airwallex has the two biggest names in the Chinese internet business behind it.

While only two years old, the stakes are high for the company and its investors, all of whom hope to ride China’s swelling online retail wave. 

A growing middle class and high internet use has meant China is the world’s largest and fastest-growing e-commerce market. The trend is set to continue, with there being an estimated 290 million cross-border e-commerce customers in China by 2020, according to research group eMarketer.

The growing demand promises to be a boon for digital payments platforms such as Airwallex. Tencent already owns China’s second largest domestic payments platform.  

Airwallex has said that the money raised will help build its programming tools as well as grow its physical presence overseas.

The funding round has been hailed by FinTech Australia, the peak industry group, as evidence Australian fintech companies are “truly world class” and building stronger links with China.

“It also continues the trend… that showed investments into Australian fintech companies more than tripled in 2016, outpacing the growth of investment in other regions, and well in line with other leading Asia-Pacific fintech hubs,” said Danielle Szetho, the group’s CEO.

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