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FINTECHS

Chinese startup brings cross-border payments to Brazil’s small businesses

For all the world’s advances in financial technology, moving money across borders still poses challenges — especially for small businesses navigating regulatory hurdles and limited access to traditional financial institutions.

XTransfer, a Chinese startup aiming to simplify international payments for small importers and exporters, sees an opportunity in that gap. Founded in 2017 by former Ant Group executives, the company says it now processes roughly 2% of China’s trade volume. It raised USD 138 million in a Series D round in 2021, led by US-based 1D Capital Partners, reaching a valuation north of USD 1 billion.

With operations in roughly 20 countries, XTransfer pitches itself as a kind of “PayPal for small businesses.” It is now entering Brazil and other Latin American markets.

XTransfer offers a platform where businesses can open accounts to send and receive payments abroad. It partners with local banks and fintechs to lower costs and accelerate transactions — cross-border B2B payments can take up to 14 days and involve multiple intermediaries, according to a 2024 report by Ebanx, a Brazilian fintech now working with XTransfer.

The global business-to-business digital payments market is expected to grow by 11% annually through 2027, according to the Capgemini Research Institute. Emerging markets in Latin America, Asia and Africa could account for 40% of global volume by then.

Bill Deng, XTransfer’s founder and CEO, says the company serves many one-person businesses that import or export about USD 1 million a year — and that often shift products based on demand, which makes them unpredictable and difficult for large banks to serve.

These micro-enterprises, Deng explained, typically fall outside traditional banking due to low profitability and high compliance risk. Many turn to informal money transfer networks such as hawala — a system common in Asia that operates outside the regulated financial sector.

XTransfer aims to bring these businesses into the formal system by offering a compliance framework designed for small, frequent transactions. Using artificial intelligence, its platform monitors and flags suspicious activity to help local partners meet regulatory requirements. “With all the data we have accumulated during the last eight years, we are able to automate risk management,” said Deng.

In Brazil, XTransfer works with Ouribank, a 40-year-old investment bank specializing in foreign exchange, and is looking into finding other intermediaries. The partnership allows local companies to pay overseas suppliers in Brazilian reais — and receive payments in return — through direct transactions. Bruno Luigi Foresti, a director at Ouribank, said the collaboration is part of the bank’s push to expand its fintech services for small and mid-sized companies.

While imports and exports were excluded from a recent (and unpopular) tax hike announced by the federal government, the IOF financial transactions tax on international remittances and other foreign exchange operations was raised to 3.5%, up from 1.1% in some categories. The company said it is following the new policy closely and seeking ways to better adapt their offers in Brazil in this new context. 

XTransfer is also pursuing a license to operate as a financial institution in Brazil. If both buyer and seller use its platform, the company enables 24/7 instant payments, similar to Brazil’s popular instant payment system, Pix. In practice, Deng explained that the company tries to mimic the experience of international money transfer cards offered by fintechs such as Wise, but for businesses.

Meanwhile, Brazil’s Central Bank has announced plans to expand Pix internationally, though implementation details remain unclear.

XTransfer has already launched operations in Mexico and plans to expand to Chile and Colombia. According to Deng, demand is driven in part by exporters looking to diversify amid trade tensions between China and the United States. Around 70% of the company’s client base today is already focused on trade with other emerging markets.

The company typically launches in new markets by first serving local Chinese communities. In Brazil, that includes an estimated 300,000 immigrants, many of whom operate in retail sectors like clothing and electronics. These hubs, while vital to local commerce, have also drawn scrutiny over counterfeit goods.

“Compared to other countries, Brazilian small businesses have a much harder time buying and selling abroad,” Carlos Eduardo Navarro, a tax and customs lawyer, told The Brazilian Report. 

According to him, there are bureaucratic processes that small companies often cannot handle on their own. Most rely on intermediaries for licensing, payments and currency exchange, which can significantly raise costs.

A 2024 study by the International Chamber of Commerce found that while many small firms in Brazil, Argentina, Colombia and Mexico are eager to export, they face barriers ranging from language and regulation to limited resources.

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