Cross-Border Payments For Higher Education

In a press release announcing Flywire’s launch of a cross-border payments service in Japan, CEO Mike Massaro described the country as one of the keys in Flywire’s APAC expansion.

What specifically appealed to the company about Japan, as Massaro explained in a recent conversation with PYMNTS, was the sizable number of international students in the country. He notes that the growth numbers in emerging markets, like China, Vietnam and Nepal, are “really strong” (and similar to corridors into Australia and New Zealand, where Flywire was already operating).

Those three APAC countries, in fact, represent more than 50 percent of the home regions of international students in Japan, the total number of which rose 10 percent in 2014 and is on pace to reach 300,000 by 2020.

What is driving that increase, explains Massaro, is proximity.

“When you compare it to the United States,” he observes, “it’s typically much less to seek some of the higher levels of education, especially professional colleges and training in those markets that are much closer to home, more accessible and more affordable.”

Although, as is the case for a payments company making any international expansion, there were specific regulatory elements that Flywire had to take into account in its move into Japan, Massaro states that the company’s existing relationships with banking partners in the area helped make things relatively seamless.

And while Flywire is more of a payment processing model — high dollar/less frequent payments — as opposed to a remittance model — smaller dollar/more frequent payments — (and, therefore, falls under a different set of regulations), Massaro attests that it was nonetheless “something we wanted to make sure we got right, right from the beginning.”

“Part of what we do that’s unique on the payments processing side,” he adds, “is we already process payments from 200 countries and territories for any school that we have. Now that we have clients across 15 or 16 countries, the fact that we can collect in all those markets really puts the barrier to entry into a new market low for us.”

Since all that was required for Flywire to pay out for students coming into the region was to connect into its existing local network, Massaro states that the process was “not that difficult from a payments perspective.”

Where Massaro believes that a lot of payment companies misstep in Asian expansion — be it into China or Japan — is that “they know they should be there, so they kind of rush in.”

Flywire, by contrast, was a little more meticulous in its doing so. Massaro tells PYMNTS that the company spent a year planning on how to get to Asia in “the proper way,” beginning with the hiring of a regional general manager and then building out the team.

Having a strong regional director to help with local expertise is “critical,” says Massaro. “You really can’t enter [any] new market without it.”

That thoughtful approach — which led to Flywire establishing the numerous connections in Japan from which it now benefits — shows to a country that a company is entering that it is able to commit, something that is geographically not possible to do regarding too many markets at once.

“Where a lot of companies usually skimp in that expansion challenge,” remarks Massaro, “is that they end up finding less experienced people or trying to spread themselves too thin across a lot of markets.”

“We’ve been very good at avoiding that,” he adds, explaining that establishing a reputation in the country was of particular importance in Flywire’s building connections in the largely etiquette-driven culture of Japan.

In the short time since the announcement of its move into Japan, Flywire has added four schools as partners in the country, bringing the current total to 10, and Massaro actually views them more as partners, sharing that all have signed multi-year exclusive agreements for the company to process their international tuition.

Flywire’s goal moving forward, states Massaro, is to have “hundreds more clients over the next 12 to 24 months.”

He believes that referrals will help continue to drive that increase, observing that “oftentimes, we’ll see recurring clients or clients with other campuses, as we enter a new market, that will come online.”

“It’s a pretty exciting time,” concludes Massaro.