Airwallex lands AFSL, outlines retail investment ‘evolution’

Melbourne-founded fintech Airwallex has announced it has become the first major payments company to be granted an Australian Financial Services Licence (AFSL) enabling it to provide retail investment products.

The AFSL, the second for the company, specifically enables the provision of retail investment products. Airwallex landed its first AFSL back in 2016 to provide payments and foreign exchange services.

“The authorisation from the regulator formalises Airwallex’s move into investment products and signals the company’s evolution toward becoming an end-to-end financial services platform,” Airwallex said in a statement.

The announcement comes just eight months after the fintech launched its “Australian first”, J.P. Morgan-backed wholesale investment offering, ‘Airwallex Yield’.

Yield enables customers to earn returns on AUD and USD Airwallex balances, foregoing the need for a foreign bank account.

The wholesale Airwallex Yield fund required a minimum investment of AU$500,000 or the USD equivalent.

The AFSL enables Airwallex Yield to be expanded to the broader retail market, with the minimum investment threshold lowered to AU$10,000 (or USD equivalent).

Yield’s underlying fund is managed by J.P. Morgan, with the fund AAAm rated by Standard & Poor’s, Airwallex says.

Promoting the fund as a “competitive alternative for businesses” to traditional interest-bearing business savings accounts, Airwallex said that returns from its Yield fund track more closely with the RBA cash rate than the rates on offer from traditional providers – “a priority in this current high inflation environment”.

As at 1 July 2024, Yield offers a daily rate of return of 3.67% on AUD balances, and 3.95% on USD balances, taking advantage of the Fed’s current higher cash rate.

Businesses could earn more than triple the amount of a saver account with a big four bank by investing with Yield.

Airwallex SVP of product Shannon Scott said the evolution of the fintech’s investment offering “underscores our role as a comprehensive financial services platform that can help businesses manage their finances more efficiently”.

“Yield empowers them with its flexibility, attractive rates of return and multi-currency capabilities – a solution businesses have been craving for years.”

George Boubouras, investments & advisory research chief at K2 Asset Management (which issues the Yield product) noted “the benefits of a blended single multi-currency cash account” provided by Airwallex.

“[This] offers exposure to multiple currencies in a single account can assist with lower transaction costs and shorter settlement times compared to traditional currency accounts that offer lower yields and are more burdensome.”

Collectively, Airwallex Capital oversees more than AU$100 million in funds under management.