Airwallex is set for expansion in China

Written by Kapronasia || March 14 2023

China’s payments market has been gradually opening to foreign competition in recent years for different reasons. On the one hand, the Chinese government is wary of allowing a couple of tech giants to indefinitely monopolize a market worth US$3.5 billion at the end of 2022, according to Daxue Consulting. On the other, financial services is one sector of the economy in which Beijing wants more foreign investment. It is against this backdrop that we should evaluate the prospects of Airwallex in China now that the Australian-founded and Hong Kong-based firm has secured an e-payments license for the China market.

It is no walk in the park to acquire an online payments license in China, so the first question we should be asking is how did Airwallex do it? The answer is by thinking locally. First of all, Airwallex moved its headquarters from Australia to Hong Kong several years ago. So while Airwallex is often seen as an Australian company due to its roots in Australia, its corporate headquarters have been in a special administrative region of the People’s Republic of China (PRC) since August 2018. Second, Airwallex is backed by Tencent, which probably helped facilitate its acquisition of Chinese company Guangzhou Shang Wu Tong Network Technology.

Airwallex’s products are exclusively for B2B payments, a market segment in China that has more room for competition than retail. It is not fully clear yet how Airwallex will use its e-payments license in China, but the company’s core strengths lie in providing affordable, fast and efficient solutions for cross-border business transactions. We imagine that Airwallex’s capabilities in foreign exchange transactions and international fund transfers will serve it well in China. The Airwallex platform covers over 150 nations, handling US$50 billion in transactions annually, so it has considerable reach and scale.

"To better address the pain points encountered in cross-border transactions between China and the rest of the world, our team will work towards integrating our platform," Kai Wu, chief revenue officer and general manager of APAC at Airwallex, said in a statement.

Further, Airwallex’s leadership has previously emphasized its intention to build alternative payment rails for cross-border payments that can compete with SWIFT. The company says that more than 90% of its transactions travel on its own proprietary network, while less than 10% travel on SWIFT’s. While China works closely with SWIFT, it also has long had an interest in creating its own cross-border payments ecosystem. With that in mind, Airwallex may find that its business goals align with the thinking of the Chinese government.