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In specialized cross-border payments space, Flywire expands from universities to hospitals

Fierce FinanceIT – By Renee Caruthers

Started as a way to help university students drastically reduce fees associated with cross-border tuition payments, Flywire began partnering with hospitals last year to extend its business model to international patients.

The expansion is a sign of both the growth of cross-border payments, and the growing number of choices targeting the parties making those payments.

The cross-border payments space, estimated to be $300 billion at the end of 2015, has become increasingly competitive in recent years. The number of companies eyeing cross-border payments as a corner of banking where technology can slash traditional costs, prompted PYMNTS.com to begin tracking 192 cross-border payments companies last year, through its X-Border Payments Optimization Index, powered by Digital River World Payments. Many of those companies are highly specialized, focusing on subsets of the cross-border payment industry ranging from remittances to large international business to business transactions.

“People look at cross-border and think that it’s one bucket. The reality is its so many different use cases and it isn’t the same solution to solve all those different scenarios,” says Mike Massaro, Flywire CEO.

For Flywire, the target market is institutions that may be as frustrated by cross-border payments as the customers who are paying them.

“We think the underserved part of cross-border is where both the sender and the receiver have difficulties. We have a solution that uniquely solves both the sender’s and the receiver’s pain, which is high fees, short balances showing up at the other end, and for the receivers, difficulty determining whose money ended up in their bank account,” Massaro said.

Flywire partners with universities and hospitals to offer its service to the institutions’ customers as a seamless billing and payment option. Institutions sign a multi-year exclusive agreement to have Flywire process international payments. Regardless of the billing and payment method the institutions had been using – whether billing through an online banking system, sending out PDFs of bills, or just posting banking instructions on their Websites – Flywire’s payment service can integrate with or replace that method.

Now in business for five years, the company has 900 institutions as clients and hit profitability in 2014. Approximately 700 clients are in the US, with the rest spread across 14 different countries. Flywire raised a $22 million growth round of capital in January 2015, and has doubled in size year-over-year.

Flywire makes its revenue from the currency conversion spread, which Massaro says is in the 1 percent to 2 percent range, compared to banks that often charge a 4 percent to 6 percent spread in addition to fees.

For customers, Flywire also offers transparency into true charges they are incurring, 24/7 customer service from a multi-lingual call center, and a choice of payment methods and features, including mobile, credit card and ewallet payments, and text payment alerts.

“Just giving customers the choice of which payment method is for them is by far the number one issue. I can’t tell you how many times people have said thank you just for the option to pay through ewallet, or credit card,” Massaro says.

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