Once close for an acquisition, Stripe and Airwallex are now going after each other

Jack Zhang is 34 years old, three and a half years into running a startup, and sitting across from one of Silicon Valley’s most powerful investors. Sequoia’s Michael Moritz invited him to his house — a place with, Zhang recalls, a couple of floors and a view straight to the Golden Gate Bridge — to make the sales case.

Stripe wants to buy Airwallex for $1.2 billion. At the time, the Melbourne company had nearly $2 million in annual revenue. The math is almost irresistible: that’s somewhere around 600 times more. Patrick Collison, Moritz argued, was a generational founder. The deal will be to “mix” something unique. Zhang listened. He walked around San Francisco for two weeks, restless, unable to think straight. At one point, he said yes.

Then he flew nearly 8,000 miles home.

“I’m really looking into what inspired me to build Airwallex,” he said earlier this week, speaking to the editor from abroad. “I’ve been in the business for three and a half years. The business grew 100 times in 2018. And I just got a taste of what it’s (like) to be an entrepreneur. And that’s what I dream of.

Two of his three co-founders voted against the deal, which helped. But he said the clearest signal came from looking at the whiteboard back in his office. The vision is still there, unfinished: to build the financial infrastructure that will allow any business to operate anywhere in the world as if it were a local company.

That decision seems more accurate. Airwallex now claims more than $1.3 billion in annual revenue and is growing 85% year-over-year. It processes nearly $300 billion in annual transaction volume. None of this will come easily – and Zhang argues that’s exactly the point.

It is a conviction that goes deeper than business strategy. Zhang grew up in Qingdao, a port city in northeastern China, and moved to Melbourne at age 15 without his parents, barely speaking English, living with a host family. When his family’s finances collapsed, he took four jobs to get through a computer science degree at the University of Melbourne, according to the Australian Financial Review — bartending, washing dishes, working a graveyard shift at a gas station, picking lemons in a farm during school holidays, which he called the hardest job he 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 “satisfied.”

Before Airwallex, he started almost 10 businesses: a magazine at the age of 14, a real estate development company, import-export operations running wine and olive oil from Australia to Asia, textiles that go in the other direction, a burger chain.

He was managing a coffee shop in Melbourne when the idea for Airwallex took shape. While trying to pay coffee bean suppliers in Brazil, Indonesia, and Guatemala, his co-founder Max Li continued to see payments disappear from correspondent banking systems – flagged and frozen by American intermediary banks enforcing OFAC’s sanctions rules, sometimes returning weeks after being sent. “That pushed me to really look at how correspondents work,” Zhang said, “how SWIFT works, and how we can create our own global money movement network.”

It’s the same idea, just scaled up. Airwallex currently has around 90 financial licenses in 50 markets. Zhang estimates that Stripe has about half the number of the best. Obtaining such licenses is very time-consuming – in Japan alone, the process took seven years. In some developing markets, the company needs to acquire shell companies whose licenses are no longer issued by central banks, then rebuild the technology under them completely.

“You can never vibe-code a merger with Mexico’s central bank,” Zhang said. “We need to have a safe room – you have to do a biometric scan just to get in to access the 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 transfer the funds to the merchant’s bank account immediately. Airwallex, with a fund transfer operator license, can hold funds within the ecosystem. That means a customer can open bank accounts, issue cards, and spend money without leaving the platform.

The economics of foreign exchange alone are huge: a US merchant settling transactions in Australian dollars avoids the 2% to 3% conversion fee that processors like Stripe usually charge to convert money back into US dollars – and can use local balances to pay local vendors, run payroll, and cover digital marketing expenses, all at interbank rates.

“You don’t act like a US company anymore,” Zhang said. “You act like a company with entities around the world, but you don’t have to physically set up those entities.”

The slow build is intentional, and Zhang has a framework for it that he often returns to: the “path of maximum resistance.” Every license, every bank integration, every local payment rail that Airwallex painstakingly assembles creates a layer that makes it difficult to compete. “It took us six and a half years to reach $100 million in annual recurring revenue,” Zhang said. “But after that, it took more than three years to reach a billion.”

The competitive logic, he says, comes down to something fundamental about what it means to own the infrastructure versus riding on someone else’s. If you can’t control the end-to-end payment flow and something goes wrong, you won’t be able to access the underlying data to explain it to your customer. You can’t extend new products cleanly on top of someone else’s stack. “Building on top of other infrastructure,” he said, “just doesn’t scale.”

For most of its life, Airwallex and Stripe have mostly operated in different geographies, selling to different buyers. That is changing. As Stripe pushes deeper into international markets, and Airwallex makes its first serious move into the United States, the overlap is growing.

The buyer for Airwallex has historically been the office of the CFO in Australia and Southeast Asia, where the company is already well established – finance directors, treasury teams – which puts it in a different sales movement than Stripe, whose customer acquisition is driven mostly by US developers who choose a default starting point for a new company. More than 90% of Airwallex customers are first in a business account product, and payments and spending management follow from there. More than half use multiple products, Zhang said.

However, there are challenges that Zhang does not try to downplay. At its biggest it could be that Stripe is the golden child of Silicon Valley, its privately held shares having millionaires across the tech industry. Another is the accompanying brand gap. Airwallex needs to embed itself in the mindset of engineers and developers – not just finance teams – so that builders can approach it naturally. “Our brand wasn’t there yet,” he said. “That’s a tougher competition to win.”

It is a competition that is closely watched from different points. Sequoia backed Airwallex early on – although the deal was secured through Sequoia Capital China, which has since been rebranded as Hongshan – and remains one of the company’s largest shareholders. Investment firm Greenoaks Capital has stakes in both companies, too. Zhang dismissed any suggestion of awkwardness around the overlapping cap tables. Investors, he said, are betting on a big market.

However, this brings up the question of valuation. Stripe is valued at $159 billion in a February tender offer – up 74% from a year earlier – after processing $1.9 trillion in total payment volume by 2025. Airwallex, assigned a $8 billion valuation in December, valued at almost a twentieth of that. But according to Zhang, Stripe’s payment volume is only about six times that of Airwallex, not 20 times. With 85% annual growth and projecting $2 billion in revenue within the next year, Airwallex is closing the revenue gap faster than the valuation gap suggests.

Whether the market finally takes notice is a different question — one that an IPO, which Zhang says is at least three to five years away, will be forced to open.

In the meantime, Zhang said he is focused on longer-horizon targets: one million customers by 2030, $20 billion in annual revenue, average revenue per customer growing from $12,000 to $13,000 today to nearly $20,000. A suite of AI-powered autonomous finance products — agents that don’t just surface data but actually execute transactions — are now operational. The thesis is that a decade of financial data across the entire corporate finance stack, 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 eat into Stripe’s market share. For now, the competition seems to be playing out at a distance. Zhang and Collison were never friends, but they were friendly as the merger talks continued years ago. Last year, Zhang and Collison were both at Greenoaks Capital’s annual gathering. They didn’t say a word.