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Handout photo of Jack Zhang, the co-founder and chief executive of Hong Kong-Australian financial technology start-up Airwallex. The company has just received a pre-Series A investment from Shanghai-based venture capital firm Gobi Partners, which is the first investment manager of the Alibaba Entrepreneurs Fund. SCMP Pictures (Handout)

Tencent looks to cross-border payments expansion after leading US$13m funding in Airwallex


Chinese internet giant Tencent Holdings looks poised to kick-start the international expansion of its online payments system after leading the US$13 million, Series A funding round of Australian financial technology start-up Airwallex.

Hong Kong-listed Tencent, which operates the popular social messaging platforms WeChat and QQ, “has a vested interest in cross-border payments as one of the largest mobile payments providers in the world”, according to the fundraising announcement by Airwallex on Monday.

The move follows Alibaba Group affiliate Ant Financial Services’ US$1.2 billion bid to acquire MoneyGram International, the US-based money-transfer provider earlier this year. New York-traded Alibaba owns the South China Morning Post.

Digital payment transactions are rapidly increasing worldwide, according to Capgemini and BNP Paribas’ 2016 World Payments Report. They estimated that global digital payment volumes grew 10 per cent to 426.3 billion transactions last year, up from 387.3 billion in 2015.

“Armed with a growing number of financial services licences and partnerships across numerous jurisdictions, we aim to make international payments as cheap and simple as domestic payments,” Airwallex co-founder and chief executive Jack Zhang said.

Airwallex co-founder and chief executive Jack Zhang said the company’s aim was to make international payments as cheap and as simple as domestic payments. Source: SCMP Handout

That strategy augurs well for Shenzhen-based Tencent, whose Tenpay is the second-largest online payments platform in mainland China behind rival Alipay operated by Ant Financial.

Tencent also runs mobile platforms WeChat Pay, which is marketed on the mainland as Weixin Pay, and QQ Wallet. The combined monthly active users on WeChat and Weixin reached 889 million in the fourth quarter of last year, while total monthly active users on QQ was 868 million.

“With mobile payment, we achieved over 600 million monthly active users at the end of 2016 and our daily payment volume nearly doubled year-on-year to over 600 million transactions a day,” Tencent president Martin Lau Chi-ping said in March.

Tencent, the world’s fourth-largest internet company by revenue, is currently expanding the operations of cloud-computing arm Tencent Cloud, which plans to open five data centres outside of China this year.

With mobile payment, we achieved over 600 million monthly active users at the end of 2016 and our daily payment volume nearly doubled year-on-year to over 600 million transactions a day
Martin Lau Chi-ping, Tencent president

Founded in 2015, Airwallex uses so-called machine-learning technology to determine the most cost-effective way of settling cross-border payments in more than 100 countries, while providing a transparent pricing model to avoid inflated margins and minimise market risk.

The Melbourne-based firm, which also has offices in Shanghai, London and Hong Kong, facilitates international money transfers through a combination of payment collection, foreign exchange and local payment distribution

Venture capital firm Sequoia Capital China and US financial services company MasterCard also participated in the Series A funding round of Airwallex.

The money raised will enable Airwallex to release its application programming interface tools, helping businesses automate the processing of international payments, supporting thousands of transactions per second.

“Airwallex’s solution ... allows companies to financially access markets that may have previously been out of reach,” said Steven Ji Yue, a partner at Sequoia Capital China.

Airwallex has now raised a total of US$16 million in financing, which included the US$3 million pre-Series A funding in July last year by investors led by Shanghai-based firm Gobi Partners and Gravity Venture Capital.

China saw total funding in venture capital-backed financial technology companies reach US$661 million across 14 deals in the first quarter of this year, according to venture capital database service CB Insights.

This article appeared in the South China Morning Post print edition as: Tencent to expand global online payment footprint