Airwallex shows why crypto will struggle to win the cross-border payment game

If you go to any crypto conference, it’s not long until you hear someone bring up SWIFT. I’m not talking about a certain pop star, of course, but the financial messaging protocol devised in the 1970s that lets banks send money to each other across borders. Crypto folks will be quick to tell you SWIFT is slow, antiquated, and expensive compared with blockchain. They are right about that, which is why cross-border payments of the sort, facilitated by Ripple and Circle, have long been held up as a potential killer use case for crypto.

There’s just one problem. Since Bitcoin came on the scene 15 years ago, the traditional finance industry hasn’t been standing still but has been improving money transfer networks—“rails” in payment speak—as well. I was reminded of this when speaking with Jack Zhang, the founder and CEO of Airwallex, a Melbourne-based firm that helps companies move money across borders quickly and cheaply.

Zhang told me he started Airwallex when he was a forex trader who had a side hustle running a coffee shop and discovered it was an expensive headache to pay suppliers in places like Guatemala. Airwallex, which competes on the payments front with the likes of Stripe and Adyen, works by keeping pools of money in numerous different countries.

This means when a merchant in Australia wants to pay a supplier in Mexico, Airwallex just arranges each transaction in the local currency, rebalancing the relative money pools from time to time—a much quicker and cheaper process than sending wires and carrying out currency conversions. Airwallex is basically a B2B version of Wise, formally TransferWise, a service that offers the same arrangement to consumers. Its clients include credit card service Brex and race car brand McLaren, and Zhang says the company is profitable after pulling in revenue of $350 million last year.

I asked Zhang about the viability of using stablecoins or XRP, the cryptocurrency that Ripple is using to facilitate cross-border transfers in regions like the South Pacific. He said that he finds crypto interesting but thinks it has no chance of catching on because, in terms of liquidity, it is dwarfed by fiat currencies. No business, he says, is seriously going to forgo the multitrillion forex market to try and pay people in crypto instead—especially since the spreads are often much wider.

As for SWIFT and other legacy systems’ reputation for being clunky and expensive, Zhang said this is changing, too. He points to a host of new so-called RTP (real time payment) networks that are sprouting up in various countries—India’s UPI, Brazil's PIX, FedNow in the U.S.—that make transactions much faster and cheaper. Companies like Airwallex are taking advantage of them, making the infamous three-day delays associated with SWIFT and ACH less of an everyday obstacle.

All of this means that, while blockchain keeps evolving, the traditional financial system isn’t exactly standing still. Enjoy your weekend—and if you’ve found any of these newer TradFi services to be a game changer, I’d love to hear about it.

Jeff John Roberts
jeff.roberts@fortune.com
@jeffjohnroberts

This story was originally featured on Fortune.com