The news: Visa would seek to invest in the fintech of cross-border payments Airwallexpeople familiar with the matter told Bloomberg.
The Australia-based provider is looking to raise an extension of $100-150m for the Series E funding round last November. At that time, it had raised $300 million at a valuation of $3.3 billion. Airwallex’s valuation will remain unchanged by the extension, the sources said, adding that no final decision has been made and plans could change.
What does Airwallex do? Fintech is for global companies. Its multi-currency accounts enable businesses to accept and transmit global transactions. And businesses can create virtual cards for supplier payments and business expenses through its Cards Without Borders solution.
Airwallex entered the US market last August, joining companies like Ramp, Fastand Brexit—to gain a larger share of the cross-border payments industry. And it’s recently spear its online payment application on Shopify so that merchants can integrate its solution for their online stores.
Why Visa wants a discount: Cross-border payments are on track to reach $156 trillion globally in 2022, according EY estimates. As big banks invest in the space, smaller fintechs like Airwallex are becoming increasingly popular among business customers thanks to their competitive costs and digital capabilities, making them more nimble and user-friendly.
Here are two reasons why Airwallex could be an attractive investment for Visa.
Airwallex can help strengthen Visa’s card business. Airwallex has evolved its card operations—it bring its borderless card in the United States in February, for example. Visa could see an opportunity to capitalize on Airwallex’s offerings as the cards become more popular for B2B payments: US B2B card payments expected to grow 8.3% year-over-year (YoY) in 2022, by Insider Intelligence forecast. Visa may also be interested in working with Airwallex on other card products to help maintain its payment volume, which grown up 17% year-over-year in its second fiscal quarter (ended March 31, 2022).
And it can complement Visa’s cross-border payment efforts. Visa has evolved its push card payments platform, Visa Direct, by partnering with global fintechs such as Payment and Veem. And last July, Visa acquired currency cloud, an API-based cross-border payments startup. As transactions go global, investments in cross-border technology can help increase Visa’s revenue potential: 30.2% of U.S. businesses cited receiving faster cross-border payments as a benefit for enabling cross-border B2B innovations, by PYMNTS and Visa.