Flywire: Fintech Unicorn for B2C Consumer Payments Solution

29 February 2020 | 1418 Views | By Mint2Save

What do you do when you face or see a problem in your daily life? Most of us, will criticize or ignore and move on. Right? But some people decide to solve the problem. Today’s all big companies started with the same intention at one point – solving day to day problems of people.

Let’s say you are an Indian student studying at Columbia University and you need to pay your course fee. Every year you have to send $50,000 as your tuition fees and some more dollars for your other expenses to the US. You have money in INR and your tuition fee is in dollars, so you have to use a bank transfer wire, which is going to cost you foreign exchange rate fees of shocking 3% to 5%. On an average, you will have to pay an additional $2000. If this was not enough to bear, you/university will have to wait up to 10 days for the transaction to settle.

There are thousands of students who are studying in international schools and colleges and are facing the same problem. There was one such Spanish student, Iker Marcaide, who experienced the same problem and decided to do something about it. The solution came in the form of peerTransfer(later changed to Flywire). Marcaide was confident of the solution he had in mind and he welcomed employees from various backgrounds like education, technology, payments, and customer support and each of them brought in their expertise with them to form Flywire. The company has come a long way since then both in terms of the solution they provide and customers it serves.

How is Flywire changing the B2C Consumer Payment Game?

They started by building a payment network and then built the technology platform to support the solution. They initially started with a network which connects bank to universities. So now the Indian students pay in their local currency and the Columbia University receives the fee in dollars. The students have to pay a lower foreign exchange rate of about 1% to 2% which is less than half of what banks were charging. This is not only helping students but also the universities. Universities are receiving the settlements in less number of days and they don’t even have to manage multiple currency system. How are they managing such a low exchange rate? They are processing high volume and they have created end to end process which removes a number of middlemen.

Flywire was founded by Iker Marcaide in 2009 and was mainly working with the universities. It was known as peerTransfer until 2015. They are now into multiple industries like healthcare, travel, education, and businesses. We live in the era of globalization and people need to navigate everywhere without letting borders be a hindrance in the way they make payments. Flywire aims to remove any boundaries on the world map when it comes to global payments. They aim to provide seamless transaction experiences to all consumers across the globe.

In less than a decade, Flywire has grown from a small startup that was started to solve the problem of international students in payment space to a full-fledged payment and receivables service. They are currently working and securely processing payments of more than 2000 organizations. The company is headquartered in Boston and has offices in Singapore, Chicago, Tokyo, London and Manchester (UK), Valencia (Spain), Shanghai, Sydney, and Cluj (Romania).

How big is the cross border payments industry? It is not big, it is huge. As per stats, cross border payment industry is worth over $20 trillion worldwide. The global education is valued at $800 billion while the healthcare market is valued at $500 billion. Flywire’s 80% business comes from the education vertical while remaining is healthcare and travel. For the education sector, they are the leader in the five core destination markets and they plan to expand further.

A lot of businesses are operating globally now and Flywire provides them a solution in four easy steps once the company is enrolled with them –

The company enrolled can bill its customers in their own currency or can use free of cost Flywire’s invoicing service
The customers decide the exchange rate and pay in their local currency using the methods which they are familiar with.
Flywire receives the payments and processes foreign exchange using its end to end system
Funds are deposited in the company’s account and payment is automatically reconciled.

The above process holds true even to the universities and students.

Some of the advantages of using Flywire are:

Faster payment processing and less settlement time
Payment methods in 240 countries and in 150 local currencies
Multilingual customer service
Expert knowledge and navigation of country-specific regulations and requirements.
24/7 online tracking

The company recently turned unicorn when it received a funding of $120 million from Goldman Sachs Group. Some of the other big investors of Flywire are Temasek, Bain Capital Ventures, Spark Capital and F-Prime. Flywire’s new valuation vaults it into the ranks of about 60 fintech unicorns, startups valued at $1 billion or more.

Best Price Guarantee program

Flywire claims to offer the best rates to the students and if the payer’s bank is able to find a better exchange rate within two hours of booking payment with Flywire, the payer should send the bank receipt showing the bank’s exchange rate. If their exchange rate is accurate and quoted within the two-hour window, Flywire will match the rate and also award the payer a $25 gift card!

Different industries, same seamless experience

Healthcare: They provide a solution around – presenting a consolidated bill, identifying patient financial needs, engaging patients with self-service payment plan offers, managing flexible cash posting and funds allocation, addressing cross-border payment challenges, ensuring payment security, simplifying the complex.

Travel: allows you to make payment in the currency of your choice, eliminates fees, simplifies reconciliation, provides elevated guess experience, and reduces back office work.

Education: Flywire helps you with education payments, payment plans, A/R collect, billing, refunds, secure checkouts, third party tools.

Businesses: can invoice their international customers. They can use features such as easy track and identify payments, no unpredictability, Familiar payment options, security.

Some Big Tie-ups

Bank of America – The association provides a solution that simplifies the cross-border billing, payment and receipt process for Bank of America Merrill Lynch’s higher education and corporate clients.

JCB International – The relationship will provide international students in Asia with options for making cross-border tuition payments. When payers use JCB cards to pay tuition fee they will have 13 currencies options across the network and they can pay tuition fees at more than 2,000 schools across the globe. JCB will use Flywire to facilitate international payments.

Union Pay – This is a big association for Flywire because its entry in the China ecosystem (which is very enclosed) guarantees the volume of transactions processed by Flywire to take an uphill. The partnership with UnionPay provides a familiar payment method for Chinese payers in Education and Healthcare industry for cross border payments. It ensures speed, security, and cost for our payers and clients.

The company CEO, Mike Massaro (named Entrepreneur of the Year 2019 National Award Winner), sees a lot of growth in the next five years. He sees the global movement of funds to be uninhibited irrespective of the markets involved. Payers will not only have local payment experience regardless of where the destination of their payment is but also it will be cost effective and transparent. Flywire is working towards the future and they are clearly on the right path. The market is so huge that there is an opportunity for there to be more than one winner, and Mike wants Flywire to be one of them.