Coffee with Innovate Finance – Season 3 – Episode 12 – In conversation with Airwallex

Airwallex bets on owning payments rails to expand across Europe and Israel

Airwallex is a cross-border payments company that built its own infrastructure rather than renting it. Owning the rails and licences lets it serve businesses both managing their money and offering financial products to their customers. Patient investors funded that build, and the company is now using it to expand into the EU and Israel and to add products.

Takeaways

• Airwallex competes on owning payments infrastructure. Sood says its own infrastructure, licences, APIs and developer toolkits set it apart in a crowded market. About 93 to 94 percent of transactions bypass Swift and use local rails instead of correspondent banking networks.
• The product solves two sets of customer problems. Businesses can manage their own money, as Me and M does by settling US funds through a virtual account. They can also offer financial products to their customers, as Qantas does through embedded finance without holding licences.
• Origins in a coffee shop shaped the product. Friends from Melbourne University ran a coffee shop, Tuck and Co, and hit the complexity of paying suppliers and customers across borders. Cofounders include Jack, Max, Lucy and Xu Jing.
• Expansion is selective, led by the EU and Israel. The UK business is about eighteen months old, with roughly 70 people in London and nearly 10 growth last year. The EU push includes offices in the Netherlands and Vilnius, plus interest in Benelux. Israel is a priority.
• Patient investors let Airwallex build before monetizing. Sood says investors gave the company three or four years to build infrastructure before earning revenue. He doubts today's startups will get that room, so founders need a clear superpower and target customer.
• Operations are split by function across locations. London hosts most commercial and support functions. Lithuania is an operational hub focused on KYC and onboarding, where staff work more flexibly. Sood advises founders to build a culture that works across borders.
• The product suite will widen beyond money movement. Airwallex plans expense management, online payments, card issuing and billing. It may also extend its infrastructure into areas such as credit. It has a San Francisco presence and expects to announce US customers in three or four months.