Flywire — the payments business that aims to make large-sum, cross-border transactions in education and health care simpler, more transparent and less friction-filled — had gotten pretty good at being invisible. So good, in fact, that the six-and-a-half-year-old firm actually took down the silver medal at Innovation Project 2016 for most invisible innovation.
But 2017 has been a new year and, in many ways, a whole new ballpark for a firm that has spent more than a half decade hidden in plain sight, according to CEO Mike Massaro.
“Our status as most invisible was very iconic and reflective of where we were as a company. A lot that year was about emerging from that stealth mode in a way that caught people by surprise. They didn’t understand how big we have become.”
And Flywire has gotten quite a bit bigger than it was a short time ago, noted Massaro, from 60 Flymates (the in-house term of art of the firm’s employees) to 150. The firm has also expanded its vertical reach, adding international health care payments to the mix of cross-border tuition around which Flywire burnished its reputation and captured market share. It has also pursued a larger geographical footprint, with presence in over 150 nations worldwide.
“The company has gone through some amazing growth,” Massaro noted. “In 2016, we expanded and doubled our client list into 18 countries around the world. We were already number one for cross-border education payments in the United States. At the turn of 2017, we’re now also leading the pack in the U.K., Europe and Australia, and we’re becoming a market leader in Southeast Asia.”
So, definitely not so invisible anymore — in fact, Flywire is getting easier to spot by the day. So, what is the secret?
An Unmet Need And A Black Box
As is often the case with the innovators we hear from, necessity was the mother of invention when it came to the development of Flywire, according to Massaro.
Moving money around the world is not easy in any case. Remittances and cross-border commerce all face their share of problems and have offered a variety of solutions.
The problems, however, get infinitely more complex as the amounts of money in question start straying well north of a few thousand dollars into the big-ticket territory one tends to see when it comes to start paying for medical treatments or tuition. And those problems, before Flywire, didn’t have an easy solution, Massaro noted.
The credit card rails aren’t really sufficient for transactions that large — “denials start just becoming endemic and really problematic, and the sender-receiver costs are fairly out of control.” Bitcoin and other blockchain-backed methods for cross-border money movement get lots of hype, Massaro noted, but simply don’t have the stability a person looking to pay for their education or life-saving medical needs is looking for.
“We hear a lot about how we need an alternative set of rails and how bitcoin is it, but that overlooks that, at this point, those rails simply aren’t stable enough. Bitcoin puts huge risks into play — with no obvious way to mitigate them.”
The road to big-ticket, cross-border payments follows the rails laid down and controlled by banks, Massaro said, and Flywire is far from trying to take banks out of the equation. If anything, he noted, it’s spent much of its year-long coming out party further cementing those relationships.
“Our top partners are global banks. We’ve been assuring a compliance and regulatory framework in all these markets to be sure we have that bank relationship,” Massaro noted of Flywire’s many partnerships with huge global — and top local — banks worldwide.
“We need the banks. Huge bank accounts are what underlies Flywire.”
But acknowledging that the large-sum, cross-border payment market is more or less dependent on the ability to work with banks instead of against them is not the same as loving every element of how banks do business when it comes to the cross-border market.
In short, Massaro noted, it is both mysterious and expensive for customers trying to send large amounts to foreign institutions, because various fees and exchange rates often keep consumers from knowing exactly what they paid until sometime after they are finished paying it out. Moreover, Massaro noted, until recently, whether customers liked the mystery or expense involved in the payment was largely beside the point. These aren’t casual commerce items — someone looking to pay for their semester at MIT or their cancer treatment at Dana-Farber isn’t in much of a position to argue with the only game in town.”
“There are all kinds of reasons for why banks have charged higher fees,” Massaro noted. “The reality is they’ve known they had a monopoly on these payments because there is no alternative to move these funds around the world without them.”
Flywire, for the last six-and-a-half years has been that alternative, Massaro noted, by simply lowering the friction in the system by taking some of the mystery box element out of it.
“Flywire found its own way to move funds from localities and to do so at a low cost way that is also highly secure and very timely. We built an end-to-end system that does that.”
Customers know exactly how much they are paying and when the payment is getting there.
Moreover, Massaro noted, they have their choice of how to pay because a lot of the work of integrating and becoming compliant in all of those nations worldwide is to make it easy for international customers of all stripes to access and pay into the system how they want to.
“Our major focus in 2016 was knowing we had the best platform to process international payments because we knew that was a strategic asset,” Massaro said, noting that a plethora of firms are limited precisely because they are only really set up to do payments in the U.S. and maybe a handful of other European markets. Flywire wants to be everywhere and set up to go however the good people of everywhere want to pay.
Coming out of stealth is tricky, but now that it is underway, Massaro said the firm is mostly excited to continue introducing itself to the world.
“2017 will see us further scaling the business We’ve been profitable for the last two years, and we we are looking to really push our R&D expansion because there are more verticals where we are seeing potential demand now that we are flying above the radar so to speak.”
Cross-border payments — particularly the big-ticket kind — are hard because, until now, options have been so few and far between. But, Massaro noted, the world is, in some sense, getting smaller each day, pushed by the power of mobile. More consumers are attending school abroad, more patients can access health care across the globe and commerce everywhere is moving from geographic territories to to the open borders of the web. The need to make payments — and big-ticket payments — go through is not going to get less relevant.
Meaning perhaps Flywire picked just the right time to start drawing some attention to itself.