Thought Leaders in E-Commerce: Flywire CEO Mike Massaro (Part 2)

One Million by One Million Blog – By Sramana Mitra

Sramana Mitra interviews Flywire CEO Mike Massaro on how cross-border payments are transforming the efficiency in the sector.

Sramana Mitra: Talk about the variety of different ways that people do make these kinds of payments. It sounds like education is one of your big segments. Is that your only segment?

Mike Massaro: It isn’t now. We started the company there. We’ve been around for about five years. We had focused on education exclusively. Very recently, we opened up another vertical for medical payments. Hospitals started having a similar challenge. There are these large dollar payments coming from consumers all over the world who are coming for medical care and there’s no easy convenient way to pay. That’s our second vertical that we’ve just opened up and found some great traction there. We opened up other segments as well like consumer large payments. We’ve got a number of other segments that will likely be interesting to us in years to come.

Sramana Mitra: As it pertains to the roots of your business, you are serving a segment of big ticket fund transfer. Is that part of your segmentation?

Mike Massaro: That’s right. It’s typically tens of thousands of dollars.

Sramana Mitra: Am I right to say that, traditionally, this segment operated in wire transfers?

Mike Massaro: That’s exactly right. There are challenges that exist around wire transfers for both the consumer and the receiver. The receiver ends up with high wire fees. Schools would come to us and say, “We just received a wire into our account. We can’t identify which payment belongs to which consumer.” At the same time, sometimes there were intermediary bank fees.

The consumer’s experience is less than ideal. They have to, oftentimes, physically go to their bank. Oftentimes, the bank will apply a spread that is sometimes as high as 5%. Throughout that whole process, neither the consumer nor the educational institution can easily track and identify where their payment is in the process. That’s the problem that our platform is built to solve.

Sramana Mitra: If you look at ROI in terms of what your solution does versus wire transfer, what kind of numbers are we looking it?

Mike Massaro: There’s really two sides of that equation. For the consumer, that consumer will typically pay roughly a $30 fee in whatever home country they’re sending the wire. That fee immediately goes away. In addition to that, the spread of 5% is pretty average. We don’t charge that transaction fee. We charge a foreign exchange rate. Our rates depend on the country or currency pair, which comes out to 1.5%. It’s significant savings for the consumer.

If you’re a biller, you’re literally saving that $20 or $30 wire fee that you would be assessed on receiving the wire. In addition to that, the receiver doesn’t have to handle the customer service and the reconciliation cost which often involve lots of manual hours of tracking.

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