Flywire Lands In The B2B Payments Market

Cross-border payments company Flywire is stepping into new territory: B2B payments. The company announced today (March 16) that its B2B payments processing and receivables solution, which has so far been running in testing phase with a few clients, is now open to its clients looking to receive payments from their cross-border corporate customers.

With its start in the education and healthcare sectors, Flywire’s expansion into B2B payments isn’t far of a stretch for the company, which already supports high-value international payments like tuition or medical care costs. But as Jason Moens, Flywire’s VP of product, and Jeff Althaus, GM and EVP for the firm’s B2B efforts, recently explained to PYMNTS, stepping into B2B payments means taking on challenges separate from the international consumer-to-business payments space.

“We were surprised to see businesses actively selling into markets because they had a vehicle to receive payments there, and they were actively avoiding other markets because they didn’t know how to get paid there,” Moens said of Flywire’s conversations with companies revealing their B2B payment pain points. In international corporate payments, the challenge of receiving payment from corporate clients in unfamiliar territory can be the difference between company growth and simply maintaining the status quo.

Althaus explained that, across industries and across company size, businesses essentially experience the same pain points of international accounts receivable: visibility, speed, cost, complexity and compliance.

Traditionally, B2B payments across borders is a manual, opaque process. Payment senders and receivers don’t have visibility into where funds are as they travel through bank rails, while both ends of the transaction get hit with unfavorable FX and other bank fees.

Often, a company may finally receive payment, but the funds don’t match the invoice balance that was sent to the corporate customer.

“It could happen for a variety of reasons,” said Althaus. “Sometimes it’s the fact that maybe an invoice was short-paid. Another reason could be that it’s very common to have fees associated with international payments on both the sender and receiver side. In 100 percent of cases, though, there is always an unpredictable and unfavorable exchange rate applied to the money being moved.”

Meanwhile, each particular geographic market has its own set of regulations, geopolitical and compliance demands. With all of these hurdles in mind, it’s no wonder a business may choose not to sell to a corporate client in an unfamiliar market.

Time For Change

These five pain points Althaus identified are not new revelations: The B2B payments space is notorious for being slow, expensive and seemingly allergic to innovation.

“It’s true,” Moens said of B2B payments’ reputation. “A lot of innovation has happened in the lower end of the transaction side.”

The rise in variety of payment rails, from eWallets to cards, has certainly turned consumer payments on its head. But as payment values increase, these payment vehicles are no longer sustainable, he said.

“There is a threshold that these vehicles are not able to cross when you’re talking about B2B transactions,” he said. “The average ticket size starts to get high quickly, and a lot of these options aren’t viable.”

It’s the traditional process of inter-bank payments that demands innovation, the executive added, with bank rails able to handle the value and volume of B2B payments, but having been ignored by innovators for some time now. Today, considering the size of the B2B payments space — worth trillions of dollars — and the technology available to overcome some of these points of friction, the Flywire executives said it’s time for the industry to see a much-needed injection of progress.

For the company’s entrance into B2B payments, Flywire is helping corporates across several verticals — including business services, publishing, luxury goods, travel and others — make it easier for their own clients to pay invoices when they’re in another country. According to Flywire, the service supports cross-border payments between 220 nations and territories and 100 currencies, as well as automated compliance and anti-money laundering solutions, reconciliation and receivables tracking.

“The business segment is worth multiple trillions of dollars,” said Moens. “The size and challenges related to these types of transactions is substantial. So I don’t think there’s any desire to keep things the way they are.”

He added that banks, businesses and FinTechs are all in the midst of conversations about overcoming these hurdles.

“There is high potential for fundamentally changing the way these transactions can flow,” continued Moens. “There is no shortage of conversations taking place right now about a new paradigm and new standards when it comes to sharing information and value across parties.”

Still, with new innovations like blockchain creeping into the B2B payments space, he noted that the industry remains incredibly cautious about any overhauls. For Moens, the pace of change in corporate and global payments hasn’t been as accelerated as he said he would like to see. But with Flywire’s expansion into the market, he said the company will continue to push for progress and innovation.

“We’re very much pushing our payment and banking partners to understand where innovations can play a role,” he noted, “whether it’s blockchain or other technologies that reduce costs, provide visibility, speed up transactions.”

“My hope is that things continue to pick up — not fast enough,” he added, “but, as far as we’re concerned, it’s definitely a dynamic space.”