Fintech Firm Airwallex defies Fintech Recession: Insights into the $6.2 Billion Investment in Cross-Border Payment Solutions
Airwallex, a cross-border payments specialist based in Singapore, announced a $300 million investment round on May 21, boosting its valuation to $6.2 billion. Despite a decline in venture investment in the fintech sector, this move has surprised many observers, including myself.
Data shows that investment in "banking tech" deals dropped 72% year-on-year in the first quarter of 2025, according to industry sources. However, Airwallex's fundraising success, along with similar moves by Navro and OpenFX, suggests that the cross-border payments niche remains attractive to investors.
Investors seem to view cross-border payments as a fundamental infrastructure sector, rather than a cyclical trend. The sector's inherent revenue pools, diversified corridor exposure, enterprise stickiness, and structural tailwinds all contribute to this perception.
A report by McKinsey predicts that cross-border flows will reach $200 trillion by 2025, a 15% increase from the previous year. B2B trade, which makes up approximately two-thirds of this, offers significant potential for fee income. Airwallex's financial reports show a 250% compound annual growth rate (CAGR) in gross profit in the Americas and Europe over the past four years, while Asia remains the company's anchor.
The diversified corridor exposure and enterprise stickiness of cross-border payments providers help to hedge against geopolitical risk. Companies that integrate providers' APIs into their treasury or marketplace stack rarely remove them, increasing switching costs. Net revenue retention rates often exceed 120%.
Cross-border e-commerce, digital nomad payrolls, and the ongoing development of real-time interlinkage systems are permanent growth drivers. Up to 65% of low-value international transfers have already migrated to non-traditional providers.
In contrast, funding for neobanks, wealth-robo, and Buy Now Pay Later (BNPL) sectors has seen a decline, with valuations compressing. Klarna's 85% markdown and Affirm's trading at a fraction of its pandemic peak are examples of this trend. Cross-border players like Airwallex can monetize both volume growth and FX spreads, providing an inbuilt hedge against interest-rate fluctuations.
Airwallex's $6.2 billion valuation equates to roughly 5.5 times its forecasted $1 billion run-rate revenue for 2025. This multiple appears high relative to public-market comparatives, such as London-listed Wise, which trades at around three times forward revenue. However, private investors seem willing to pay an "execution premium" for faster-growing challengers hoping they will eventually surpass their peers once they monetize adjacent services.
CEO Jack Zhang plans to use the fresh capital to expand in Japan, Korea, the UAE, and Latin America, and increase investment in an embedded finance suite offering treasury, expense management, and credit services. The $150 million in secondary share sales included in the deal will provide early employees and investors with partial liquidity, potentially signaling a potential initial public offering (IPO) in the next 18-24 months.
For customers, this capital infusion translates into thinner spreads and more competitive cross-border payment solutions. Airwallex currently handles over $130 billion in annualized payments volume. As the company grows, it can spread margin pressure across its scale.
Infrastructure appears to be favored over interface in the current funding environment. Consumers and small businesses may switch apps, but APIs embedded within procurement systems are stickier. Gross settlement value is a better predictor of a service's longevity than interface engagement metrics. Airwallex is on track for $150 billion in annual volume, surpassing many digital banks.
Regulatory challenges, the ascent of instant domestic rails, and IPO timing risks are potential obstacles for cross-border payments providers like Airwallex. However, the company's global reach, diversified service offerings, and strategic partnerships position it well for continued growth.
The broader implications for fintech founders and investors are clear. Infrastructure matters more than interface, gross settlement value is a stronger predictor of durability, and geography still plays a significant role. For regulators, the rise of cross-border payment specialists illustrates the ongoing need for competitive regulation in the international payments space.
In summary, despite a broader decline in fintech funding, cross-border payments specialists like Airwallex continue to attract investment. Their ability to address persistent market pain points, achieve strong growth, and build innovative financial infrastructure differentiates them from traditional banks and positions them for long-term success.
- The success of Airwallex, Navro, and OpenFX in securing substantial investments indicates that the cross-border payments niche in Asia persistently appeals to investors, despite a decline in overall fintech sector funding.
- Investors are keen on funding cross-border payments providers due to their perceived potential for robust revenue pools, diversified corridor exposure, and enterprise stickiness, making them an essential part of the infrastructure sector rather than a cyclical trend.
