Airwallex, a major international fintech player, has acquired MexPago, a peer payments corporation situated in Mexico. The commercial transaction amount has not been revealed. This acquisition is expected to help Airwallex, which is supported by Tencent and Li-Kashing, the wealthiest individual in Hong Kong, broaden its business in the Americas. Latin America is a desirable area for fintech firms, particularly because it has a large proportion of young citizens. On Thursday, Airwallex announced that it had agreed to acquire MexPago, a rival payments company in Mexico, in order to extend its Latin America footprint.This transaction is pending regulatory approval and customary closing conditions, but it indicates a major move from Airwallex into the Latin American market.Jack Zhang, Airwallex's CEO, cited trade tensions between the U.S. and China as a reason for wanting to hedge against the uncertainty.He stated that Mexico offers a prime opportunity, given its large population, close proximity to the U.S., and lower labour costs. Additionally, he highlighted potential for growth in e-commerce and the ability to take global companies into Mexico while helping global companies make payments to the supply chain.
Airwallex, headquartered in Australia, services global markets such as the U.S., Canada, China, the U.K., Australia, and Singapore. This startup is the second most valuable unicorn in the country, surpassed only by Canva, which was recently estimated at $40 billion.
Airwallex, whose customer base includes Papaya Global, Zip, Shein and Navan, transcribes over $50 billion each year. It has also joined forces with American Express, Shopify and Brex to expand its services abroad.
Recently, it's been a challenging climate for financial technology companies to function in as interest rates have dramatically increased. This has made financing more expensive for startups to acquire from investors.
To date, Airwallex has gathered over $900 million in venture capital from backers such as Salesforce Ventures, Sequoia, Tencent and Lone Pine Capital. It had a valuation of $5.6 billion in its last evaluation.
Zhang mentioned that the firm is currently at the stage where it is adequately developed to contemplate going public, with more than $50 billion in annual transactions processed. Although, Zhang added that Airwallex won't initiate the IPO process until it meets a certain revenue total. The target that Zhang has set is $100 million of yearly recurring revenue for its software business within the next one to two years. Upon reaching this objective, Zhang declared that they would then consider a public listing. He further stated that currently, the aim is to enable smaller companies to run operations anywhere in the world, and to keep creating new software tools, to strengthen their margins and cost efficiency. In comparison to Airwallex, MexPago presents many of the same services like multi-currency accounts for SMEs, foreign exchange services, and payment processing. Additionally, MexPago offers some payment methods not available through Airwallex.
Zhang pointed out that the major benefit of the MexPago arrangement is that it allows for the obtaining of a regulatory license in Mexico without undergoing an extended period of filing with the central bank. The business has already acquired an Institute of Electronic Payment Funds (IFPE) license from MexPago.
Airwallex's customers, both in Mexico and across the globe, will be able to access local payment systems such as Mexico's SPEI interbank electronic payment system and OXXO, a voucher-based payment method that allows customers to purchase online, receive a voucher, and then pay in cash. CEO Jack Zhang noted that access to Mexico's infrastructure will give them a great competitive edge. In the last year, Airwallex has seen great success in the American market, with its revenues boosted by 460%. Other companies, like the British payments firm SumUp, have discovered the Latin American potential with offices located in Brazil since 2013. According to SumUp's CFO, Hermione McKee, they have witnessed success in Chile and will be introducing new countries in the near future. Given that over a fourth of Latin America and the Caribbean's population are young people aged 15 to 29, who are naturally tech-savvy and distrustful of banks, there is no better time to enter the market.
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