Australian FX fintech raises A$17 million
(1 May 2017 – Australia) Melbourne-based fintech Airwallex has raised A$17.4 million in a new funding round to continue its expansion overseas.
The cross-border payments startup, has secured funding from global firms including card issuer Mastercard, tech venture capital firm Sequoia Capital China and Chinese web giant Tencent Holdings.
Sequoia partner Steven Ji said: “Foreign exchange transactions pose a real challenge for businesses that operate across borders, and Airwallex’s solution has seriously impressed us in its ability to close the gap and allow companies to financially access markets that may have previously been out of reach.”
In contrast to non-bank competitors such as Western Union, Airwallex has access to a licence in China to conduct international transactions.
Airwallex founder and chief executive Jack Zhang said the funding will allow the firm to expand its overseas operations in locations such as London, Shanghai, Hong Kong, Indonesia, Malaysia and Taiwan.
“There’s still a lot of improvement we can do to make our product easier to adopt – that’s probably 30% of the money will be used for. The other 70% will be used for market expansion into other countries, especially Europe and Singapore,” Zhang said.
This funding round is in addition to A$4 million Airwallex raised in July last year.
According to East & Partners' global business foreign exchange program, which interviews more than 13,000 importers and exporters across Australasia, Asia Pacific, Europe and North America, non-bank FX providers have largely had a difficult time in wrestling market share from banks.
Small businesses (annual turnover of $1-20 million) continue to undermanage their exposure to currency volatility, citing a combination of lack of knowledge, experience and product understanding. However, that trend is slowly shifting as businesses recognise and seek to mitigate currency risks to their profit margins.
According to the research, Asia-based small businesses represent the highest engagement with hedging tools, with around 1 in 3 reporting that they either “occasionally” or “frequently” use such as Options and Forwards products.
Further, the research shows that businesses chasing low cost providers, is causing an increase in “multi-banking”, fragmenting the market and impacting on providers’ wallet share.
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