The following is a guest post by Mike Massaro, CEO of Flywire.
1. The growth of “global citizens”
Global Citizens are a relatively new demographic, but the group is growing in size and stature for the financial services world. These individuals do not consider borders in terms of lifestyle, access or travel and they are spending more than ever on goods and services outside of their home countries — on education, medical care, real estate, luxury items and other offerings that bring diversity and culture to their life experience. Businesses looking to appeal to this segment must take steps to reduce the friction in today’s cross-border payment process and find ways to make them more convenient, transparent and cost effective.
2. The domination of digital channels
As international payments become more common, consumers are seeking out the most convenient, cost efficient and transparent channels available. We are already seeing these transactions moving more quickly to web channels vs. traditional agent or bank-based alternatives due to the significant advantages of online options. In 2017, international payment service providers that depend on physical agent-based models will see increasing pressure to move even more of their business to digital, and do it quickly.
3. The increased relevance of security and compliance
Security is not a new concern, but it will rise even further in importance in 2017. Both payers and payees are looking for protection against fraud and assurances of compliance with government and international regulations. Any entity processing large, cross-border payments will need to have secure systems in place to verify sources and recipients, ensure strict compliance with anti-money-laundering laws and provide detailed transaction reporting. In 2016, we saw an increase in more local forms of fraud – bad actors trying to take advantage of international students and patients by offering supposed discounts on their tuition or fees, and threatening them with fictitious penalties for immigration taxes and other types of fraudulent fines. This type of activity will lead many institutions to protect their customers further by clearly designating preferred payment channels and providers and investing in efforts to educate their customers to conduct their transactions solely through those channels.
4. Rising payer expectations
With consumers around the world making large sum payments from different time zones, the number and frequency of payment-related questions and inquiries will rise – at all hours and in a variety of languages. Schools, hospitals, tax agencies and others are not necessarily equipped to be in that business. Any entity accepting large, cross-border payments in any volume will need to be able to provide ancillary support services related to those payments. 24×7 customer support will become a minimum requirement.
5. The growing opportunity in cross-border payments
The international education market is estimated to be $53B worldwide in 2016-2017. Over one million international students studied at US colleges and universities alone in the 2015-2016 academic year, and another 600,000 studied in Europe and Australia. Medical care is another prime spending area for this segment. Industry groups estimate as much as $40 billion per year is spent each year by patients traveling outside of their home countries for care, and it is growing at 15-25% per year. Foreign real estate investments are not new, but they are increasing with new wealth being created in Asia and other emerging regions. Over $100B in U.S. real estate is owned by foreigners, and about one third of those same people send their kids to the U.S . for school.
Flywire is committed to serving the needs of the global citizen and we’re evolving to keep pace with their ambitions. This includes extending our global payment platform to address new types of transactions and new payment corridors while continuing to improve the speed, transparency, efficiency, choice and security of our payment services. We are also expanding our international presence in Europe and Asia-Pacific to better serve our customers at both the point of origin and destination. This includes expanding our banking relationships in different regions to continue to take friction out of the international payment process.
Flywire, formerly peerTransfer, is a leading provider of high-ticket payment solutions, connecting educational and healthcare institutions with consumers on six continents. Introduced five years ago as a way for international students to pay their tuition for studies abroad, Flywire is now welcomed by more than 1,100 colleges and universities around the world and hospitals in North America. The company has processed billions in payments from 220 countries and territories, in 70 local currencies. Convenient, fast and secure, Flywire’s scalable platform accepts bank transfers, online banking, and credit and debit cards – providing currency conversion at exchange rates that can offer significant savings when compared to home-market banks and credit card providers.
Like this article? Take a second to support us on Patreon!