March 16, 2017
By John Stewart
Boston-based Flywire Corp., which for years has been processing tuition payments for students attending universities in foreign countries, is in the closing stage of a plan to enter the enormous market for processing payments between businesses in different countries.
Moens “There’s a unique set of pain points when it comes to receiving.”
Pilots involving nine companies will run through the end of this month, when Flywire will flip the switch to turn on the commercial service, Jeff Althaus, general manager and executive vice president for Flywire B2B, tells Digital Transactions News. “All the customers we have talked to have kicked off a pilot with Flywire,” Althaus says.
The 8-year-old Flywire, which was known as peerTransfer until September 2015, hopes that’s indicative of demand. Its rationale for moving into cross-border B2B payments is twofold: these payments are devilishly tricky for companies, creating an opening for processors that can ease the pain; and it has already built much of the infrastructure it needs through its concentration on international payments for schools and, latterly, health care “We’re applying that platform,” says Jason Moens, who was the company’s second employee and now serves as vice president of product.
The $155-trillion market has been attracting increasing attention from technology companies. Toronto-based nanoPay, for example, last month announced it has created a platform to enable businesses to make fully digital payments cross-border to other businesses. And companies like New York City-based Payoneer Inc. have concentrated on services like mass payouts in this business for years.
The problems companies face in international payments range from foreign-exchange headaches to hidden fees to slow processing times to capricious regulation. “Moving international money is very expensive,” notes Althaus.
So, instead of working on the send function of cross-border money transfer, Flywire decided to concentrate on the receiving end, where it has already build expertise with colleges and universities trying to collect tuition from foreign students. “There’s unique set of pain points when it comes to receiving,” says Moens.
To start with, Flywire will focus on businesses based in the U.S., Western Europe, Japan, Southeast Asia, and Australia. Using its education model, collecting businesses will establish local accounts, so all fees and regulations should be well-known, and currency risks are eliminated. The payor overseas will likewise pay into a local account in its own currency. Flywire quotes a foreign-exchange rate to the payor and deposits the funds in full into the collecting business’s local account.
“From end to end, it stays within the rails of Flywire,” says Moens. “Everything is agreed upon so there aren’t any surprises.” The company is not discussing pricing for the service, but with education payments it has been compensated with a spread, charged to the student, over prevailing foreign-exchange rates.
The new platform will enable payments in more than 100 local currencies and in more than 220 countries. Lines of business the company will focus on include travel, luxury goods, publishing, import/export, business and professional services, and technology.
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