When it’s close enough to find out, Stripe and Airwallex are now next to each other

Jack Zhang was 34 years old, three and a half years old, and sitting across from one of the most powerful investors in Silicon Valley. Michael Moritz of Sequoia had invited him to his home – a place with several floors, Zhang and a direct view of the Golden Gate Bridge – to open the sales case.

Stripe wanted to buy Airwallex for $1.2 billion. At the time, the Melbourne company had an annual turnover of about $2 million. The numbers were almost irresistible: revenue multiplied somewhere close to 600 times. Patrick Collison, Moritz argued, was the founder of a generation. The agreement was to “merge” into something extraordinary. Zhang listened. He walked in San Francisco for two weeks, restless, unable to think straight. At one point, he said yes.

He then flew nearly 8,000 kilometers back home.

“I am very deep in what motivates me to build Airwallex,” he said earlier this week while speaking to this editor from overseas. “I was in the business for three and a half years. The business was growing 100 times in 2018. And I just tasted that [was like] to be an entrepreneur. And that’s what I’ve been dreaming about.”

Two of its three founders voted against the deal, which helped. But he says the clearest sign came from looking at the whiteboard back in his office. The idea was still there, not yet finished: to create a financial infrastructure that would allow any business to operate anywhere in the world as if it were a local company.

That decision seems to be improving. Airwallex now claims over $1.3 billion in annual revenue and is growing at 85% year-on-year. It operates up to $300 billion in annual transaction volume. Nothing came easy – and Zhang argues that’s the point.

It is a conviction that goes much deeper than a business strategy. Zhang grew up in Qingdao, a port city in northeastern China, and moved to Melbourne at the age of 15 without her parents, not being fluent in English, living with her own family. When his family’s finances collapsed, he took four jobs to earn a computer science degree at the University of Melbourne, according to the Australian Financial Review – bartending, washing dishes, working graveyard shifts at a gas station, picking lemons on a farm during school holidays, which he called the hardest job he’s ever had. He went on to spend years writing trading code in the front office of an Australian investment bank, a job that paid well and never felt “deeply fulfilling.”

Before Airwallex, he started about 10 businesses: a magazine at the age of 14, a real estate development company, export operations running wine and olive oil from Australia to Asia, textiles to the other side, a burger chain.

He was running a Melbourne coffee shop when the idea for Arwallex came up. While trying to pay coffee bean suppliers in Brazil, Indonesia, and Guatemala, its founder Max Li kept watching payments disappear from banking systems – flagged and enforced by American white-collar banks using OFAC rules, sometimes going back weeks after they were sent. “That forced me to really look at how banks work,” Zhang said, “how SWIFT works, and how we can build our network of global withdrawals.”

That’s still an idea, it just went up a lot. Airwallex now has nearly 90 financial licenses in 50 markets. Zhang estimates that Stripe is probably half that number at best. Obtaining those licenses takes a lot of time – in Japan alone, the process took seven years. In some emerging markets, the company had to acquire shell companies whose licenses were no longer issued by the big banks, and completely rebuild the technology under them.

“You can’t code with a vibe to integrate with the central bank of Mexico,” Zhang said. “We have to have a secure room – you have to do a biometric scan to enter to access central bank integration.”

The point of holding these licenses is not regulatory window dressing. In Japan, for example, Stripe and Square can process payments, but are required to immediately transfer funds to the merchant’s bank account. Airwallex, with its fund transfer license, can hold those funds within its ecosystem. That means a customer can open bank accounts, issue cards, and spend money without ever leaving the platform.

The economics of foreign exchange alone are huge: a US merchant paying payments in Australian dollars avoids the 2% to 3% conversion fee that processors like Stripe often charge to convert money back to US dollars — and they can use those local balances to pay local merchants, process payments, and cover digital marketing costs, all at interbank rates.

“You no longer operate as a US company,” Zhang said. “You operate like a company with companies around the world, but without needing to set up those organizations.”

The slow build was intentional, and Zhang has a framework for it that he returns to again and again: “the path of great resistance.” All licenses, all banking integrations, all local payment trains carefully integrated by Airwallex create a layer that makes it difficult to compete against. “It took us six and a half years to reach $100 million in annual recurring revenue,” Zhang said. “But after that, it took just over three years to get to a billion.”

The competitive mindset, he says, comes down to something fundamental about what it means to own the infrastructure versus riding someone else’s. If you don’t control the payment workflow from end to end and something goes wrong, you don’t have access to the underlying data to explain to your customer. You can’t cleanly extend new products on top of someone else’s stack. “Building on top of other infrastructures,” he said, “is not dangerous.”

For most of its life, Airwallex and Stripe have operated in different areas, selling to different consumers. That is changing. As Stripe moves deeper into international markets, and Airwallex makes its first serious forays into the United States, the overlap is growing.

Airwallex’s customer has historically been the CFO’s office in Australia and Southeast Asia, where the company is already well established – financial directors, treasury teams – which puts it on a different sales path than Stripe, whose customer purchases have been largely driven by American developers who choose the first automatic location of the new company. More than 90% of Airwallex customers come first to the business account product, and payments and expense management follow from there. More than half use multiple products, Zhang said.

Still, there are challenges that Zhang doesn’t try to downplay. The biggest possibility is that Stripe is the golden child of Silicon Valley, whose privately held shares are worth billions in innovation across the technology spectrum. Another product gap that goes along with it. Airwallex needs to embed itself in the minds of engineers and developers – not just finance teams – so that innovators can access it automatically. “Our product hasn’t arrived yet,” he said. “That’s a very difficult competition to win.”

It is a competition that is closely watched in different areas. Sequoia supported Airwallex early on – although the deal was acquired by Sequoia Capital China, which has since been spun off and renamed Hongshan – and remains one of the company’s largest shareholders. Investment firm Greenoaks Capital has a stake in both companies, too. Zhang dismissed any suggestion of awkwardness at those tables of overlapping caps. Investors, he noted, bet on the big market.

However, it raises the question of balance. Stripe was valued at $159 billion in February’s tender request — up 74% from last year — after considering $1.9 billion in total payment volume through 2025. Airwallex, which was assigned an $8 billion valuation in December, is worth about two-twentieth of that. But according to Zhang, Stripe’s payment volume is only about six times that of Airwallex, not 20 times. At 85% annual growth and projecting $2 billion in revenue within the next year, Arwallex is closing the revenue gap faster than the valuation gap would suggest.

Whether the market finally sees it is a different question — one that the IPO, which Zhang says is at least three to five years away, could put into the open.

For now, Zhang says he’s focused on long-term goals: one million customers by 2030, $20 billion in annual revenue, average revenue per customer growing from about $12,000 to $13,000 today to about $20,000. A suite of AI-powered personal finance products — agents that don’t just present data but actually perform transactions — are launching now. The theory is that a decade of financial data across the company’s myriad finances, from revenue collection to treasury management to vendor payments and expenses, has created a training set that no competitor can replicate overnight, he suggests.

Now to see if all that hard work is enough to feed into Stripe’s market. At the moment, this competition seems to be playing a long way. Zhang and Collison were never friends, but they were friendly when merger talks were going on years ago. Last year, Zhang and Collison were both at Greenoaks Capital’s annual meeting. They did not speak.