How Airwallex Business Accounts work in Australia and why your funds are safe

In the wake of the collapse of Silicon Valley Bank (SVB) and Signature Bank in the US, we’d like to take a moment to clarify how our customers’ funds are kept safe.

Airwallex is not a bank but we are regulated by the Australian Securities and Investments Commission (ASIC) under an Australian Financial Services Licence. We treat client funds as “client money”, which means we hold the funds in a client segregated trust account.

We partner with banks worldwide to offer multi-currency accounts, money transfers, foreign exchange, payment acceptance and more to global businesses. While we share many features with banks, there is a key difference in how we store our customers’ money.

How deposits work at Airwallex

When you deposit funds into an Airwallex business account, those funds are held in a separate safeguarded account on your behalf. The money in this safeguarded account is not available to Airwallex’s creditors, our banks or third parties. It cannot be lent or used for other purposes, such as to fulfil operational needs or to invest in assets. That means that whenever you wish to withdraw money or make a payout from your Airwallex account, that money will be available to you. Our operations team rebalances our safeguarded funds daily to ensure all our clients’ wallets are safeguarded in line with regulations.

In the unlikely event of Airwallex ceasing business operations or going into insolvency, liquidation or bankruptcy, your funds will be safely set aside in the safeguarding account, and you will receive them back in priority to all our creditors.

Unlike Airwallex, banks invest a proportion of their customers’ deposits in loans, bonds and other assets. If a bank experiences a ‘run’, where a large number of customers withdraw their deposits at the same time out of fear that the bank will fail, the bank may suffer a liquidity crisis, particularly if it has made a loss on its investments. This, in turn, increases the likelihood that the bank will fail.

Why you should diversify

When you deposit money in a bank in Australia, the government has guaranteed funds up to A$250,000. But this is only for individuals, not businesses. If your business keeps all its funds in a single bank, you could lose your funds if the bank fails. Whilst it is rare for a bank to fail, recent events are a stark reminder of the importance of managing risk exposure.

Any business that has money in a single bank account should consider spreading their cash reserves across more than one financial institution to ensure their funds are protected by diversification.

Our team is working around the clock to support businesses by fast-tracking applications for our global business account during this difficult time. If you’re interested in joining Airwallex, you can sign up for a business account here.