Investment Value Analysis of 'Channel-based' and 'Native' Business Models in Cross-Border Payments

Based on the case background and market research data you provided, I will conduct a systematic analysis from three dimensions: the essence of business models, investment value evaluation framework, and in-depth case analysis.

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The channel-based model is essentially a

, providing customers with fund channel services by connecting to existing infrastructures such as banks, clearing networks, and payment channels. Its core characteristics include:

Feature Dimension	Specific Performance
Asset Composition	Light-asset operation, core assets are licenses, technical interfaces, and customer relationships
Revenue Sources	Transaction fees, exchange spread income, value-added service fees
Competitive Factors	Channel resources, license coverage, fee competitiveness
Technology Investment	Mainly used for interface development, system integration, and user experience optimization

The native model is a

, building independent account systems, clearing engines, and risk control middle offices from scratch to construct new financial infrastructure[1]. PhotonPay is a typical representative of this model — ‘Through upfront investment in self-developed systems and direct clearing connections, on the foundation of compliance, we have built our own moat’[1].

┌─────────────────────────────────────────────────────────────────────┐
│                    Comparison of Underlying Logic of Business Models                              │
├──────────────────────────────┬──────────────────────────────────────┤
│         Channel-based Model           │           Native Model                 │
├──────────────────────────────┼──────────────────────────────────────┤
│ 'Optimize on existing systems'         │ 'Redefine underlying architecture'                   │
│ Rely on bank and card network organizations         │ Self-built global multi-currency wallet system               │
│ Value capture in transaction links           │ Value capture in the entire capital circulation chain           │
│ Low marginal cost, fast scalability           │ High upfront investment, decreasing marginal cost             │
│ Prone to homogeneous competition               │ Has network effects and economies of scale               │
└──────────────────────────────┴──────────────────────────────────────┘

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Evaluation Indicator	Channel-based Model	Native Model	Investment Implication
Technical Barriers	Medium-low (relies on third-party systems)	High (self-developed core systems)	Native model has long-term technical leading advantages
Switching Cost	Low (customers can migrate easily)	High (deep integration, customization)	Native model has stronger customer stickiness
Network Effects	Weak (channel resources are replicable)	Strong (local clearing network coverage)	Native model is more likely to form a winner-takes-all situation
Economies of Scale	Strong (marginal cost approaches zero)	Strong (high fixed costs, significant scale benefits in the later stage)	Both need to reach the critical point of economies of scale

Financial Indicator	Channel-based Model	Native Model
Initial Investment	Low (tens of millions of USD)	High (hundreds of millions of USD)
Gross Profit Margin	15-25%	35-55%
Cash Flow Characteristics	Mainly transaction cash flow	Deposited funds + transaction cash flow
Profit Cycle	Short (2-3 years)	Long (4-6 years)
Capital Efficiency	High (light asset)	Medium (heavy asset but high asset quality)

Growth Dimension	Channel-based Model	Native Model
Market Coverage	Fast (relying on cooperative networks)	Slow (needs to build own network)
Product Expansion	Limited by partners’ capabilities	Has full-link product capabilities
Pricing Power	Weak (prone to price wars)	Strong (supported by differentiated services for premium pricing)
Growth Ceiling	Medium (limited channel value)	High (infrastructure-level platform)

The above chart intuitively shows the performance differences between the two models in each evaluation dimension. The native model has significant advantages in core dimensions such as

, while the channel-based model is more flexible in .

From the radar chart, it can be seen that the native model leads comprehensively in four key dimensions:

, which indicates that its long-term investment value is more certain.

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PhotonPay announced the completion of its

in January 2026, led by IDG Capital, with co-investors including Hillhouse Ventures, Enlight Capital, Lightspeed Faction, and Shoplazza[1][2]. Chen Min, the founder of the company, was once responsible for building the overseas payment system of Baidu’s international business unit, a background that gives him a deep understanding of the fragmentation issue of global payment infrastructure.

PhotonPay chose the ‘reconstruct infrastructure’ model instead of the ‘channel-based’ model, and the logic behind this strategic choice deserves in-depth analysis:

‘The original intention of PhotonPay is not just to transfer money faster, but to think: What kind of financial infrastructure do global enterprises really need? Can we derive a fundamental solution that can accommodate global complexity?’[1]

This thinking reveals the essential differences between the two models:

Comparison Dimension	Channel-based Mindset	Native Mindset (PhotonPay)
Problem Perception	Payment efficiency issue	Infrastructure deficiency issue
Solution	Optimize channel connections	Build new infrastructure
Value Proposition	Faster channels	Fundamental cost reduction (75%+)[1]
Competitive Strategy	Channel resource competition	Comprehensive barriers of technology + network + compliance

:

• Cost Advantage
  : Helped enterprises reduce capital circulation costs by
  over 75%
  [1]
• Efficiency Improvement
  : Improved the financial operation efficiency of enterprises by
  60%
  [1]
• Coverage
  : Serves
  200+ countries and regions
  [2]
• License Layout
  : Systematically obtained key financial payment licenses globally
• Team Scale
  : A professional team of over
  300 people
  , with 11 global operation centers

:

• Serves core scenarios such as e-commerce, B2B trade, OTA, and international logistics
• Deeply penetrates emerging digital economy tracks such as AI, SaaS, and digital entertainment
• Plans to launch enterprise-level value-added services such as balance wealth management and flexible credit

The viewpoint of IDG Capital, the lead investor in this round, is highly referenceable:

‘We have long focused on structural opportunities in the global fintech field, and are committed to finding industry changers that can build certainty through technology amid uncertainty. PhotonPay not only demonstrates technological leadership, but also a deep insight into the essence of finance… What PhotonPay is building is not just a capital channel, but a trust hub for the global digital economy. We are optimistic about its potential to become an infrastructure-level platform connecting global markets.’[1]

This statement reveals the judgment of top investment institutions on the two models:

, while the channel-based model is difficult to break through the limitations of being a ‘channel’.

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:

• Suitable Stage
  : Early-stage investment, rapid expansion period
• Investment Logic
  : Rely on channel resources to quickly seize market share, pursue scale growth
• Risk Warning
  : Gross profit margin under pressure, prone to homogeneous competition, lack of pricing power
• Typical Targets
  : Some aggregated payment platforms, vertical payment service providers

:

• Suitable Stage
  : Growth to maturity period, long-term value investment
• Investment Logic
  : Build infrastructure-level platform, pursue network effects and economies of scale
• Core Advantages
  : High barriers, high stickiness, strong pricing power
• Typical Targets
  : Airwallex, PhotonPay, XTransfer (with partial self-built capabilities)

                    Investment Decision Tree
                    
                    ┌─────────────┐
                    │  Investment Stage   │
                    └──────┬──────┘
                           │
            ┌──────────────┼──────────────┐
            ▼              ▼              ▼
        Early/Angel       Growth Stage         Maturity/Pre-IPO
            │              │              │
            ▼              ▼              ▼
      ┌─────────┐   ┌───────────┐   ┌─────────────┐
      │Channel-based   │   │  Both Considered  │   │  Native Model Priority  │
      │Model Priority │   │  Prefer Native Model│   │  Verification Period Completed  │
      └─────────┘   └───────────┘   └─────────────┘
            │              │              │
            ▼              ▼              ▼
      Pursue Growth Elasticity   Pursue Certainty + Elasticity  Pursue Stable Returns

Indicator Category	Focus for Channel-based Model	Focus for Native Model
Growth Indicators	Transaction volume growth rate, number of customers	Network coverage breadth, wallet retention rate
Profitability Indicators	Gross profit margin, customer acquisition cost	Unit economic model, marginal contribution
Barrier Indicators	Number of licenses, channel partnerships	Technical patents, local clearing network
Cash Flow	Operating cash flow	Scale of deposited funds, financing efficiency

:

1. Homogeneous Competition
   : Channel resources are replicable, prone to price wars
2. Reliance on Third Parties
   : Subject to policy and fee adjustments of partners
3. Gross Profit Margin Pressure
   : Intensified competition leads to continuous fee reductions

:

1. High Capital Demand
   : High upfront investment, financing rhythm is crucial
2. Long Execution Cycle
   : Infrastructure construction requires time for verification
3. Compliance Complexity
   : High compliance requirements in multiple jurisdictions

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1. Model Selection Determines Competitive Pattern
   : Channel-based model is prone to homogeneous competition, while native model is easier to build a long-term moat

2. Generational Gap in Investment Value
   : Native model has significant advantages in core dimensions such as technical barriers, customer stickiness, compliance capabilities, and moat depth, with more certain long-term investment value

3. Market Trends Confirm the Judgment
   : In 2025, the focus of global fintech investment has shifted to B2B models, native AI fraud detection, and payment orchestration platforms, and investor preference is shifting from ‘channel-based’ to ‘builder-based’[3]

4. Demonstration Significance of the PhotonPay Case
   : Its Series B financing indicates capital market recognition of the native model, and also verifies the commercial feasibility of the ‘heavy-asset, long-cycle’ strategy

• For Investors Seeking High Elasticity
  : Appropriately allocate to channel-based model targets, but need to closely monitor changes in the competitive landscape
• For Investors Seeking Certainty
  : The native model is a better choice, but need to be prepared for long-term holding
• For Industrial Capital
  : The strategic value (infrastructure, data, network) provided by the native model far exceeds financial returns

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[1] PR Newswire - ‘PhotonPay Completes Tens of Millions of USD Series B Financing, Redefining the Next Generation of Global Digital Financial Infrastructure’ (https://www.prnewswire.com/apac/zh/news-releases/photonpayb-302657099.html)

[2] 36Kr - ‘PhotonPay Completes Tens of Millions of USD Series B Financing, Led by IDG Capital’ (https://www.36kr.com/newsflashes/3631615433458694)

[3] KPMG - ‘Pulse of Fintech H1 2025’ (https://assets.kpmg.com/content/dam/kpmg/cn/pdf/zh/2025/09/pulse-of-fintech-h1-25.pdf)

[4] Woshipm - ‘Analyzing XTransfer: The Underlying Logic of a Cross-Border Payment Dark Horse Becoming a B2B Financial Infrastructure’ (https://www.woshipm.com/pd/6203066.html)

[5] Airwallex Official Blog - ‘Airwallex vs. Wise: Which is More Suitable for Foreign Trade Business?’ (https://www.airwallex.com/cn/blog/comparison-wise-vs-airwallex)