Stripe, PayPal Ventures bet on India’s Xflow to fix cross-border B2B payments

Xflow, a fintech startup based in India, has successfully raised $16.6 million in funding, with notable investments from Stripe and PayPal Ventures. This infusion of capital comes as Xflow aims to disrupt the traditional landscape of cross-border B2B payments, which is still largely governed by banks and outdated manual processes. The Series A funding round, led by General Catalyst, also saw contributions from existing investors such as Square Peg, Lightspeed, and Moore Capital, while PayPal Ventures entered as a new investor. With this latest round, Xflow's post-investment valuation stands at $85 million, bringing its total funding to over $32 million. Despite significant advancements in domestic payment digitization, Indian exporters still face challenges with cross-border B2B transactions. These payments often rely on banks, which can obscure transaction fees and settlement timelines, presenting hurdles particularly for larger exporters transferring substantial sums into India to support salaries and local operations. This scenario creates an opportunity for fintech players like Xflow, which promises enhanced transparency and speed in international money transfers. Founded in 2021, Xflow offers a robust cross-border payment infrastructure tailored for a variety of businesses, including exporters, SaaS companies, platforms, and freelancers. This service enables clients to collect international payments, manage foreign exchange, and settle funds within India. Co-founder Anand Balaji, who previously contributed to building Stripe’s presence in India, emphasized that cross-border B2B payments have lagged behind domestic solutions like the Unified Payments Interface (UPI). With a strong team that includes former Stripe colleagues, Balaji has positioned Xflow to tackle this market gap. Last year, Xflow facilitated payment collection for Indian businesses from over 100 countries and in more than 25 currencies, boasting nearly $1 billion in annualized cross-border payment volume—an impressive tenfold increase from the previous year. The startup’s clientele now comprises around 15,000 businesses, encompassing various sectors such as global capability centers, IT services exporters, and freelancers. Transaction sizes differ significantly, with global capability centers averaging between $1 million and $2 million per transaction, while goods exporters typically handle amounts around $30,000 to $40,000, and freelancers about $3,000. Rather than positioning itself as a direct payments application, Xflow aims to serve as a payments infrastructure provider, offering APIs that empower other platforms and exporters to integrate cross-border payment functionality into their services. Balaji stated, “We didn’t want to build the next Wise — we want to power the next thousand Wises.” Additionally, Xflow has unveiled an AI-driven foreign exchange tool designed to assist finance teams in optimizing currency conversion timings. This innovative feature allows businesses to set target conversion rates, similar to limit orders in trading, which could lead to improved financial outcomes based on data-informed foreign exchange strategies. While Xflow faces competition from traditional banks and other fintech companies like Wise and Payoneer, Balaji believes that the startup’s emphasis on high-value transactions and API-led infrastructure sets it apart. The capital raised will further enable Xflow to enhance its product offerings and secure regulatory licenses in new markets, including upcoming import capabilities and licensing efforts in Singapore, along with its existing payments license in Canada. Xflow has also received final approval from the Reserve Bank of India for a Payment Aggregator–Cross Border (PA-CB) license covering both exports and imports. Furthermore, partnerships with platforms such as Easebuzz and Drip Capital will help integrate its cross-border capabilities into their services. With support from Stripe and PayPal Ventures, Xflow has bolstered its standing with banking and regulatory entities as it continues to expand its workforce, which currently consists of about 65 employees, to scale its cross-border payment infrastructure.